 Felly, rwy'n ei ddweud i'w gwleitio i gael y cwmennu 27 yn 2014 o gychwyn o'r Llywodraeth Cymru, ac rydych yn ddiddordeb angen i'w rhan o'r ddweud yma i'w ddiwedd. Y gondol yma yw ddigwydd y mae'n gweld Ion, a'n ei ddweud i'r ddweud i'r ddweud i'r ddweud i'r ddweud i'r ddweud. Mae'n eitamau sy'n ei ddweud i'r 9 a 11 i'r ddweud. 19 – Unaillwch y Llywodraeth Cymru yn cyfnodol i'r Uderddur cyfeiri yn ddyrfaenol Nwysselt oeddwn ni yn ei ddechrau'r Cymru fel Ysgol, a'r hyn o'r amddiffnoriaethau ddechrau unol, i'r cyflodau o'r cyflodau 11 o'r cyflodau o'r dysgu hyn am hynod o'r cyflodau bydd y cymytiau yna wneud i 2013 o'r 14. yn cydyn nhw'n gwyfynwch i'r cychydigol i'r cymlwadau 9 ac 11 o'r cymoed i ffordd yn cyfroddol, fewn i'r cyflodau. The committee also agreed to take further consideration of the Community Empowerment Scotland Bill at stage 1 in private. Members should also note that, in line with the previous decision of the committee, item 10 will also be taken in private. Gender item 2 is the Community Empowerment Scotland Bill, and our first gender item today is oral evidence on the Community Empowerment Scotland Bill. The session allows the committee to follow up on matters that it previously raised in writing with the Scottish Government in relation to this bill. I welcome the first panel of the cast of thousands for today. Ian Turner, who is the bill team leader. Norman McLeod, who is the Scottish Government legal directorate at North Shore Rachel Rayner, from the Scottish Government legal directorate. Dave Thompson, yes, from the Land Reform and Tendency Union. Dr Amanda Fox, food and drink policy lead. Good morning. Annamarie Conlong, from the performance unit. Good morning one and all. I hope we will test you a great deal this morning. I also hope we won't take absolutely forever because we've got lots of lawyers to hear from later. That takes me to the appropriate sheet and questions which I think will be started by Stuart Stevenson. Thank you very much. Can I start by looking at how the government and parliament work in determining what the objectives in relation to national outcomes are? I thought it wasn't on so I'll just say that again. I want to just look at how the legislation provides for what the national outcomes are and what role parliament has in seeing whether they're met. Before I ask my questions, I'm just going to go back to the progenitor of the Scotland's outcomes, which is of course the Virginia performs model. In particular, I want to explore with perhaps Mr Turner and Ms Conlong the extent to which we've looked at the Virginia performs model, because it differs in some particular ways from the way that it's constructed as a bill here in that the council on Virginia's future, which essentially determines what the targets are, is one that is not simply a government body, but specifically, for example, requires that the majority and minority leaders from each house are part of the council that sets the targets. Therefore, there is in their context a role for a much more widely based, not simply government driven setting of the targets. I just wondered to what extent, perhaps in the first case, officials and ministers perhaps have looked at the Virginia performs model and the council of Virginia's future in particular in deciding how they want to take that forward. I'm happy to take that, obviously. Back in 2007 and before that, when Scotland performs was being developed, there was a huge amount of research and liaison with the people involved in Virginia's performs. Obviously, a lot of what has happened there did inform Scotland performs and lead across, but you're absolutely right that the key difference is around the council on Virginia's future. I would say where that brings us to the difference between there and what we're currently proposing, and the provisions is currently laid out. The Scottish Government believes here that the situation that we've laid out in the provision reflects the current separation of powers between the Scottish Government and the Parliament. Therefore, it would be for the Scottish Ministers to co-ordinate government business, set out the strategic direction for government, but, of course, within their overall accountability to Parliament. Parliament would also exercise the scrutiny function holding Ministers to account on progress towards the national outcomes and objectives. Of course, the Scottish Parliament may wish to debate on the national outcomes as set by Scottish Ministers, and the arrangements proposed wouldn't prevent that in any way whatsoever. I want to pick up on your point about the widely-based element of the outcomes in Virginia's performs. Part of the work that we are doing under Mr Swinney and the round table chaired by him, which is a quite diverse group of stakeholders, includes cross-party support from the Parliament and key civic organisations in Scotland, such as the Carnegie Trust in Oxfam Scotland as well as the Macadamics, is working together to develop and improve Scotland's performance. In fact, that is where the impetus to put provisions in the community empowerment bill came from. Therefore, the national outcomes in development would be widely consulted upon. In fact, within the provisions, we have left the basis for that consultation as open as possible, so that as many people as possible, including the whole of the public of Scotland where that is appropriate, would be consulted upon. There is that broad base for setting the national outcomes. However, the fundamental difference is that the council in Virginia performs, as you see, quite separate and quite different from what we are proposing in the bill. However, we would be more than welcome to take the views of the committee on the respective roles of the Scottish Parliament and the Scottish Government in setting those outcomes and to take that back for further consideration with ministers. Can I just say that this committee's role is more restricted perhaps than looking at the broader policy issues? It is simply about whether the construction that is before us is appropriate in the policy committee that perhaps picks up some of the points that you are making. I am simply just trying to explore the process to make sure that what we have in the bill properly reflects the policy outcome. I note that the Virginia performance framework and the council is something that is established not by ministerial fiat but by the governing legislation that has been passed in Virginia. All I really want to be clear is that that is forming part of the consideration. I think that, from the answer that I have had, we should properly as a committee conclude that it has been, even if in policy terms elsewhere, that there might be a difference in view as to what its sense should be taken of that. Perhaps looking at the specific provisions, the bill itself makes no specific provisions as to persons or bodies that should be consulted about national outcomes. It would seem that you would be able to identify particular bodies that we consult. Is there any particular reason why we are not seeing a list in the bill? The intention behind that is to leave the potential scope for consultation as broad as possible. This is something that our stakeholders have been keen on. In some cases, a review of the national outcomes might focus on a very specialist-specific issue in which case only certain bodies or persons would be consulted because that would be the most appropriate thing to do. Obviously, in other cases, the consultation might be much wider if the consultation or the review of the outcomes is of a much more general nature. Really, the intention behind this and not listing a body was not to limit it or narrow in any way the scope of those bodies and people who could be consulted. If the committee felt that there was a minimum list that should be included, we could go away and consider that. However, we would be very clear that we would not want that to limit the scope of potential consultation in any future review. I do not think that it would be for this committee to suggest what would be on the list or not. That would be, again, a policy matter, but I think that the point that I want to be clear about is whether consideration has properly been given to whether there are some people or bodies who should be involved in looking at the whole thing, but in ensuring that the bill does not restrict consultation to that. That is, I think, from the nodding head I am getting at the other end of the table exactly the consultation that has taken place. Let me just move on to reporting, because the bill provides for no particular provision for regular periods of reporting unless I am misreading it. Is there any particular reason why that is the case? Again, this was to keep some flexibility. The situation that we have at the moment is that the Scotland performs website as the reporting tool for the national outcomes. That is quite unique in that the website is constantly updated. Updates are constantly made as soon as new data becomes available. We have had debates—again, this might be more of a policy matter—but we have had debates with our colleagues in the round table around whether it would be helpful and how much value a static reporting time adds to that reporting process. That is definitely something that is still under consideration, is how we could maintain that constant dynamic reporting of Scotland performs but also provide some other form of regular reporting if there is an appetite for that. Again, in formulating the policy, we have got a situation in what is drafted that public bodies beyond Government would have a duty to have regard to the outcome set, but that is not a duty placed on the Government itself. In drafting this, is there any particular reason why—if you like—let me just characterise this in the most extreme way possible. The Government gets to choose the questions in the exam sheet and then answers them, but that is not the case for other public bodies. I would assume that the questions are set—the role of scrutiny in the Scottish Parliament—that is holding the Government to account on the national outcomes. If those outcomes have been set on that broad basis, based on public and civic consultation, it is a collective view of what the national outcome should be, and it is progress against that that is tested on that wide consultative basis. Perhaps I will allow others to come in with a final question. The body that the Cabinet century has brought together, the Government has brought together, including Opposition representatives, but there is not, in fact, directly a parliamentary. We have a whole range of bodies and individuals representing a range of political views, but there is no process within the bill for Parliament to be part of that. That is correct. That is correct. It is important that we understand that and get that in the record. Can I just pursue that, though? If this is some kind of framework to which other people have to have regard, and I take your initial comment that this is subject to parliamentary scrutiny, as one would expect in a parliamentary democracy, then it seems strange that there is no mechanism for the Government to bring this to Parliament in the form, perhaps, of an affirmative statutory instrument setting out the principles, which we could consider, reject or approve. I am struggling to see why there is no such process. As I say, the position up until now has just been that the provisions that have been laid out have reflected the Scottish Government view of the separation of powers between scrutiny and setting the strategic direction for government. That has been the thinking up to now around that separation of powers. However, as I say, we welcome the views of committee and we can go back and consider that further with ministers. I think that what I would argue is that we will always scrutinise things, but we have got to find them before we can scrutinise them. If the Government does not set it out in any form that a parliamentary committee can actually get its teeth into, then it is not going to be scrutinised other than peripherally, which is not really a good process. At the moment that Scotland performs is set out publicly, everything is publicly available, all of the information is publicly available. In fact, last year and this year we have assisted parliamentary committees in scrutiny of the draft budget by specifically producing performance score cards for each of the committees. There are processes there, yes, albeit not laid out in a formal statute, but Scotland performs as publicly available and that information has been used very well by the Parliament to scrutinise performance. At the risk of pursuing this too far, can I just make the point that if within the law there is something set out which public bodies have to have regards to, then I would suggest that that set of things to which they have to have regard ought to be laid out in such a way that a parliamentary committee, miles or others, could specifically scrutinise them. Rather than having to work the way round and generate some debate about the general principles we think we have when these things are actually in law for others to consider, there seems to be a process point there, which I think is what worries us. Okay, thank you, I'm certainly happy to take that back. Okay, thank you. I think that completes that section unless others have questions on that, which I think takes me forward to what we have as question 5 and John Scott. Thank you. Sections 4, 6, 8, 3, 16, 2 and 3 and 51, 2 are all broadly concerned with the procedure to be applied to powers which enable bodies to be added to or removed from the list in the schedules to the bill. In the bill the power to both add or remove a body is subject to the negative procedure in that regard. We draw a parallel with the Freedom of Information Scotland Act 2000. More recent acts however have taken a different approach to the power to add a body subject to the affirmative procedure and the removal of a body subject to the negative procedure. For example both the Public Service Reform Scotland Act 2010 and the Regulatory Reform Scotland Act 2014 have taken this approach. Why have you not adopted this more recent approach and why in particular have you chosen to apply the negative and not the affirmative procedure to the power to add a body to a list? That will be for me. The powers provide flexibility to make changes should it be necessary. The powers themselves in those provisions across the bill are limited to amending the list of public bodies which can be involved. The time we put forward the regulations we believe that it would be unlikely to generate any controversy. It is unlikely to be a particular issue at those stages therefore the negative procedure would be the more appropriate procedure to use at that point. Right. We would be happy to consider that. I appreciate the points about more recent acts and we would be happy to consider the views of the committee. I think that would be our view. Why should there be a sudden reduction of standards as it were? I am happy to make the point and your answer. Leave it at that for others to come in if they want to see more. I would suggest that the point is well made but I suspect the problem is unless you know which ones you are referring to. It is not quite so obvious which process you would actually necessarily want. I suppose we would tend to give the government the benefit of the doubt that you would consult on things that needed to be consulted on and therefore you wouldn't bring a negative instrument if you hadn't consulted the appropriate people. Absolutely. I think that there is some sense on this and therefore in practice the procedures might be almost the same. Yes, I think that is our view. The whole bill has gone through a hugely consulted process with different explorative consultation and a more detailed consultation on the draft bill and that is what we intend to do in regulations going forward. I suspect that we have made the point and perhaps that is all we are going to for the moment. I suppose, as parliamentarians, we just want to see a reduction in parliamentary scrutiny and both of these answers suggest a reduction in parliamentary scrutiny which is a departure from what we have been used to. Would that be fair, Cymru? It is still a negative procedure, it is still not. It is a reduction over an affirmative procedure certainly but it is probably appropriate, we believe, for those powers as they stand at the moment. Thank you very much, John Wright. I think that brings us to Stuart McMillan, please. Good morning, panel. Just regarding the section 10 of the bill, there is a possibility that the corrections may stray into policy matters which I clearly understand that you wouldn't be able to answer but I'll pose a question then and we'll take it from there. Section 10 of the bill provides that the community planning partnerships and partners must carry out their functions in relation to community planning in accordance with any relevant guidance issued by Scottish ministers. In terms of the guidance, why is the guidance under section 10 proposed to be binding on community planning partnerships and partners rather than there being a requirement that they will actually have any regard to it? It's become an important point during the process as we develop the bill, the intention is that this section would be used for community planning partnerships which have been in place for a number of years but we're putting them on statutory footing in this bill, is that this section will ensure a consistency of approach to community planning across Scotland and there may be some, while we want local discretion, we want local innovation in how they approach it and how they deal with it, there may be some matters which we feel are fundamentally enough that they should apply on a national level and hence the reason to comply with national guidance. I sit on the local government committee as you are aware as we met last week and certainly over the last few years much of the work that's been undertaken in the committee has certainly highlighted that particular point regarding community planning partnerships and much of the community face work that we have undertaken has highlighted the stark differences in the public understanding, public knowledge of community planning partnerships but at the same time one of the key issues that has been raised time and time again has been the issue of the perception of top down whereby the government imposing, the government of whichever few imposing restrictions upon local government upon community planning partnerships. In terms of this particular section, what really was the thinking behind, not so much about putting the community planning partnerships into statute but what was the thinking behind what's proposed here in this particular section in terms of the guidance? The community planning part of the bill, it feels a bit top down in the bill because it places duties on the statutory partners, you can't place duties on voluntary bodies or community bodies in that way. The statute does have a bit of a feeling of a top down approach whereas what we are trying to do is put those duties on to make sure that community bodies do participate, that they resource that process properly and there may be processes within that if there is good practice emerging, if there is best practice emerging that we want to see that being promoted and encouraged as you heard about in the committee to some extent is the culture change as well within public sector bodies about how they engage and get community bodies to participate and we think the guidance can actually help with that process of culture change in that way. Could some of this culture change and some of these methods actually not happen through other routes? Absolutely. The benchmarking tool that COSLA has started using? Absolutely. This doesn't rule out those ones as well, it's just in addition to those. Okay thank you. In terms of this particular power, how do you foresee this power to actually be utilised? It's hard to know at the moment because I think along with the, as I talked about in the last question, the guidance will be subject to quite a lot of consultation before we put out. It will be consultation with the public sector bodies, it will be consultation with community bodies and all the interested partners we've had throughout the Bill process. So it's hard to say what particular provisions we will use this for, I think it will emerge from that process about if we use it, this is what we will use it for. Is there an opportunity for Parliament to actually be involved in that particular consultative process and for Parliament to have an opportunity to actually discuss any guidance? There's always an opportunity for Parliament to discuss, there's not any specific provision in the section at the moment when we're aware of that and I'm certainly happy to consider if the committee would want to include that within a provision. Do you consider it an appropriate use of Parliament at a time to consider the use of guidance or scrutiny? It would depend I think sometimes on the guidance, sometimes it may go into a lot of detail and it may not necessarily be you want a negative procedure, it may not be you want a affirmative procedure, it may want just the guidance to be laid before you or something like that. It might not necessarily be the kind of process itself. Okay, well thank you very much. Okay, thank you Stuart. Right, that brings us to Mike McMinsey, please. Thank you convener. The new section 97C Part 3A of the 2003 Act provides the eligible land does not include land on which there is a building or structure that is an individual's home other than the buildings or structures that may be set out in regulations by ministers. It appears therefore that ministers may make regulations which have the effect of the provisions of the new part 3A to buildings or structures which constitute an individual's home. Can you explain in more detail why you have taken this power? In your response to written questions in this matter you suggest that it is to allow for flexibility. What other factors did you take into account when taking this power? The flexibility on these powers is the key part on that moment. Clearly the policy intent of it is not to take people's homes away from any circumstances but yet still allow community bodies to take control of assets. Essentially the powers that we are looking to take on on this is simply to allow that flexibility to put in detail the types of buildings or assets that can be included or excluded in this. At this moment we don't have specific examples hence the need for the flexibility in the powers at the moment. I am sure that you appreciate the need to get this right in terms of there will be lawyers across the country scratching their head and hanging on their every word on this I suspect. It is a wee bit disappointing that you have not got to a stage in your thinking where you are able to provide more detail. I will move on though. When previously asked to justify the length of the power in the new section 97E part 4 of the Land Reform Scotland Act 2003, the government cited examples of similar powers in section 1 and 2 of the Transport and Work Scotland Act 2007. However the connection between these powers and the powers in section 97E 4 is not wholly apparent to the committee. Can you shed a bit light on that? The connection between the two is largely in terms of processing perhaps which will better explain the legal connections between the... If I just maybe take you quickly through the example of the power in the Transport and Works Act, Transport and Work Scotland Act 2007, section 1 gives ministers a power to make an order relating to or for matters connected with construction of transport systems or inland waterways. And then section 2 goes on to set out the sort of matters about which provision can be made in such an order and in the schedule that makes it clear that this includes compulsory acquisition of land. And then section 2 goes on to provide that the order that ministers can make can apply, modify or exclude enactments which relate to those matters. So that's used as an example because the power we're proposing in section 97E would enable provision for ministers to make a process for acquiring land and this could be done by modifying existing processes for compulsory acquisition if that was thought to be an appropriate way of achieving what is wanted. The aim of taking the power is to ensure that where ministers do have the power to compulsory acquire land, there can be a process for this and it can be fair and robust and open and transparent. And the detail that you're asking about is just a means of making this happen and just provide... Rather than maybe necessarily writing out long-hander process, you could apply existing legislation but modify it to suit the particular purpose. I'm glad you're talking about modification because I'm quite sure you're aware that the provisions that were in existence are not without their problems. But can you explain how you can justify the width of the power in section 97E4 then? I understand it makes sense or would apparently make sense to use something that works reasonably, I suppose, in practice. How can you justify the width of the power? I think it's to ensure that the power is wide enough that the process that we would need to put in place should this happen can be fair, transparent and robust. If you have concerns about the power, I'm happy to consider those. And subject parliamentary scrutiny, that is subject to the affirmative procedure. Okay, right, thank you. And could you also explain or give an explanation as to why the power in section 97E4 is drawn in such wide terms? I mean, has there been any consideration given to restricting this power? I think that's something we'd be happy to take away and consider further if there are particular concerns. The power can only be used in limited circumstances in that set out where ministers have the power to compulsorily acquire the land. So the regulations aren't setting out when ministers can acquire land. They are just setting out the process for where that power is being exercised to ensure that the process is transparent and fair and includes the appropriate detail. Okay, thank you. And can you provide examples of the kinds of modifications to primary legislation that the Scottish Government anticipates making in exercise of this power as permitted by the provision in section 97E5? We don't have any examples at the moment other than it would give us the opportunity to use other existing schemes for compulsory acquisition and modify and apply them if that was thought to be the most appropriate for this particular power. Okay, I'm sure you appreciate that some of this is going to be quite contentious and although that's a policy matter, I think there's an interlinking here between policy and the work of this committee that's really quite crucial to the successful operation of the Bill of Act when it becomes an act, but thank you very much. Thanks. Can I just go back to question 8, which is linked, I suppose, to this? I'm disappointed that you don't have notwithstanding the powers you're assuming, which are certainly massive. We have no idea of what sort of assets that you would be considering would be eligible for compulsory purchase. Yeah, I mean, I think at this stage... Can you try a little harder to give us, and I should, of course, declare an interest as a landowner and as a farmer, and therefore this is quite specifically interesting to me, but certainly to many others as well. Yeah, I mean, I think at this stage, again, going back to the flexibility point, it is to allow us to ensure that, as I said at the beginning, homes or persons home is not going to get taken off them, for example. Land that's currently being used is not going to get taken off them. The width of the powers at the moment that one of the changes in the bill is the fact that the land reform act will apply to an urban situation as well as rural, and that brings with it a whole different set of considerations that need to be taken. What we are considering at the moment is a way to ensure that what we put in the bill can cover both urban and rural. I mean, as you appreciate, there are two completely different beasts in terms of assets, and the bottom line is we want to make sure we get it right. We tense the need for the flexibility at this stage until we've managed to narrow down the sort of buildings, the assets and the land, et cetera, that we would like to include or exclude from this. At the moment, it's certainly not homes. It's certainly not land that is constructively being used. The whole basis is to ensure that you get the sustainable development of land. If a community purchase of a particular asset or a piece of land helps that, that's what we would like to include. If it's simply a means to acquire without any particular means to sustainable development of land, then that's not something we'd be interested in. That's why we're still considering it at the moment. I can't give you any more specific examples at my friend. If I could just add that, obviously, any regulations that Ministers made would have to comply with the Convention on Human Rights. As you will be aware, that article 8 provides a right to respect for private and family life, and that can include rights to respect for home. So that is something that would have to be taken account if that power were to be used, and that's something we're obviously aware of. That was my next question. Was it going to be ECHR compliant? Because the recent history in this committee has been with a problem with the 1993 act, and I noticed that you use the word constantly, a process of transparency and fairness, and that was a Supreme Court judgment turned on the fact that it wasn't fair to both parties, so I would trust that this legislation will endeavour to be fair to all sides, otherwise we will find ourselves back in the position of making legislation again, which is note down subsequently. Just to observe, thank you for the answers. Can I just observe that we're looking again at a piece of legislation which is fairly wide-ranging, which has fairly wide powers, and officials like yourselves come along, and absolutely rightly, in your perfectly good faith, of course, tell us that there's no intention of doing this, this, this and this, which we understand, and that's undoubtedly what government wants, but the once upon a time was a principle that you're only legislative for what you wanted, and that the man in the street was defended against misuse of power because government was never given it. We increasingly seem to be looking at legislation where government has very wide powers, and Parliament is having to trust government, which is not difficult to do, and to trust government not to abuse those powers. Now, I'm conscious, of course, that the specific purpose of everything is in the top line of the bill, and you couldn't use any of the powers underneath it for what purpose that wasn't within the purpose of the bill. Nonetheless, I get the impression that increasingly we're looking at bills that are just widening the scope of what government has within its discretion, and as a part of me, as a parliamentarian, is actually just slightly worried about that trend, but that's not your problem as officials, of course. Grateful to you for your answers, and I think we now go to a point of detail with Stuart Stevenson. Thank you very much. I want to explore the use of the word prescribed in the section 97 November, which is going to be inserted by the operation of section 48 in the bill. Section 98 of the Land Reform Bill says that prescribed is intended to mean prescribed by regulations made by ministers. However, when we look at 97 N that's to be inserted, it uses the word prescribed in the number of occasions, in particular in subsection 1, ministers made by regulation make provision for or in connection with prohibiting, during the prescribed period, prescribed persons from transferring, et cetera. Is that implying, because it's not clear in the written answers we've got, that prescribed period, prescribed persons are therefore subject to the definition in section 98, and therefore will have to be done through secondary legislation what prescribed period and prescribed persons are? Perhaps I can help you with that. Yes, we agree that prescribed will mean prescribed in regulations made by ministers, and that is what is intended in section 97 N. The use of prescribed that you've given will definitely be in regulations. The provision that you read out, the whole, it is a regulation power, ministers may make regulations, and then what it is saying is that those regulations may set out the period for which the restriction on the transfer of land may apply, they may set out who can be restricted from transferring the land, and so yes, it is, they are matters that will be in regulations, and they will be in regulations under section 97 N, subsection 1 or subsection 3, and both of those attract the affirmative procedure. And in subsection 2B, we talk about prescribed persons and prescribed circumstances. And in 2C, those prescribed circumstances prescribe the information. And in subsection 3, prescribed period. And in subsection 4, prescribed circumstances. So you're confirming that in each and every instance in the inserted 97 N, the use of the word prescribed is as described in the existing section 98 of the act. Yes, for example in subsection 2, that is setting out further detail of the regulations that may be made under subsection 1. So yes, and the same applies for subsection 4, which is making details about the provisions that may be made in regulations under subsection 3. So yes, those examples you confirm, they will be matters in regulations. But subsection 3 uses the word prescribed without making backwards reference to subsection 1. Subsection 3 is a separate power. Subsection 1 is about a power to make provision about restricting transfers of land during the application, while there's an application process. Subsection 3 is about suspending rights in land. So for example, possible other rights to buy or preemption rights. And so that is a separate power. And then in subsection 3 and then subsection 4 is making for providing further detail about that. Right, I understand that. Let me just test our mutual understanding of this by asking how many powers you think section 97 N creates for ministers to provide secondary legislation. In practice, I think it provides two powers because the details about the prescribed period and the prescribed persons, though will have to be set out in regulations, will all fall within regulations made under subsection 1 or subsection 3. And prescribed circumstances in subsection 4? That is the same because that relates back to regulations made under subsection 3. If I would be happy to put this further in writing, would that be of assistance? I think it would be of assistance to me. The convener will decide a bit of assistance to the committee. But I think it would be a right to flag up. It's a technical area. But I think we are going to have to be very satisfied that we understand what we've been told today and what your subsequent right to us. Because at the moment I think we probably until we discuss it remain a little bit uncertain as to the effect of the use of the word prescribed. I think if you felt able to set that down, that would be helpful. Not least because it would absolutely guarantee to yourself that you and your colleagues that you really have got it. I'm not doubting you. Right, that takes us on to Stuart McMillan, please. Section 54.1 gives the Scottish Ministers power to make further provision by regulations about asset transfer requests. In terms of the Government, the Government, they've explained that the power in this section has been drawn in relatively wider terms in order to allow for flexibility in the making of regulations relating to asset transfer requests. However, the committee, we're still seeking some clarity on this particular power. For example, it could that the power actually be used to make any further provision as long as it's about asset transfer requests. That's me this again. Yes, it has been deliberately drawn quite widely to deal with asset transfer requests. It's wide in the sense that it deals with that part of the bill. The detail is set out in 54, subsection 2, prize an indication of the areas where we think the provision will mostly be used, which is the manner of requests, the procedures to be followed, the information to be included on the request. But 54.2 doesn't provide an exhaustive list. Issues may emerge either during consultation on those regulations or it may emerge during the practice in the light of experience to problems to do with potential problems or issues that may require regulations to do with asset transfer regulations as a whole. That's why we think the power might be useful to ensure that flexibility approach. Has any consideration been given to restricting the power in such a way that it still allows for a degree of flexibility? Not at the moment, no. We're happy to consider any improvements to the bill that could be made. Because asset transfers happen at the moment and we're putting a kind of statutory framework around what asset transfers can do, the way the provision may be used by community transfer bodies themselves by public sector organisations, issues may arise and we want to make sure that without having to return to the bill as a whole we can perhaps deal with some of those problems if they arise during regulation. I mean, also in terms of the asset transfer requests, I mean Scotland has made up of a wide variety of communities. So from what you've said, I think, my taking what you've said now is that this flexibility is to allow for an island community, for them to go through a process that might be somewhat different compared to maybe somewhere like some Glasgow or Edinburgh or Dundee. Am I correct in thinking that? Potentially. I think we would want the process to be as consistent across Scotland as possible. But there may be instances where different communities require different things in order to get that transfer application process going and then into the procedures defined by the bill. Often those issues are about the pre-transfer process where it's about how they want to set out the business case of how they want to use their asset, how they're going to maintain the income streams that they might have and that's probably not the sort of thing that we're talking about in the bill. That's probably to do with other guidance and other funds that might be available to the community transfer body. Is that an accurate word to use or should it be definitely? It's probably at this stage. Okay. Thank you. Thank you very much. I think we've got to Richard. Go procedures please. Thank you, convener. My questions relate to sections 58, 4 and 59, 4 of the bill regarded at the powers laid out in section 58, 3 and 59, 3. We've asked you about these powers previously in our correspondence with you and in particular why it's deemed appropriate for appeals procedures to be left to the discretion of Scottish Ministers or local authorities. So could you explain further which aspects of the appeal or review that the Government considers might be subject to discretion of Scottish Ministers or local authorities, respectively? Yes. The regulations are yet to be formulated in terms of exactly what they're contained, but there are powers to make regulations in connection with procedure. The provisions in this bill, sections mirror very closely the provisions which apply in relation to appeals under the planning legislation. So, apparels can be drawn there. The parallel here is essentially that the process will be set out in the regulations and the discretionary element is really up to the decision maker to decide which of the processes should be applied and how those particular processes apply within the flexibility allowed by the regulations in that particular case. Now, this already works in exactly the same terms for, as I say, all appeals under the planning legislation. That's the model that's been used here. So, can you explain why the Scottish Government, is it for that reason that visas are adequate for this to be left to discretion of Ministers or local authorities as opposed to specifying the appeals procedure in subordinate legislation? I mean, the purpose to put into a more concrete example would be that is to allow the decision maker who's faced with how to determine a particular appeal or review to choose the process that they consider best suited to enable them to have the information that they need in front of them to reach a decision. So, typically, that might be a choice between using a written submissions procedure which is likely to be set out in the regulations or a hearings procedure which, again, will be set out in the regulations. Can you explain why the negative procedure is considered to be appropriate here, given that aspects of appeals and reviews are going to be left to discretion of Ministers or local authorities, and what consideration did you give to use the affirmative procedure? The negative procedure is fairly standard in use for this type of procedure of regulation and certainly all the regulations for planning appeals are done by negative resolution. Thank you. Sorry, I think I'm out. As well, we want the process to be as transparent, effective and as efficient as possible, and you talked about fair process for all parties before, and I think this applies to this as well. Forgive me, it isn't specifically here, but are we clear that the appeal process is itself sufficiently disconnected from Government to satisfy the requirement of itself being fair? The thing that's always worrying is when one party, the Government, or the public organisation, is in any sense involved in the appeal that it perceived to be biased in, at least potentially, in the direction of the public body. Are we clear that the process of just here is adequately independent? It doesn't change that much in that the decision maker will be the authority in the end, the appeal process, that process about the public authority who made the decision in the end. The bill doesn't change that. Who makes the decision in the process? I take it that the Government's lawyers are confident that that is ECHR compliant? Yes, certainly. We are confident of that. Just as a general observation on this, obviously somebody has to meet the appellant body, but ECHR compliance in this sort of context is reliant upon the oversight of the courts, so ultimately it's the powers of the courts to consider the way in which decisions are made that makes any of these administrative type decisions ECHR compliant. On that point, convener, there are a far greater assumption of powers to the Scottish ministers throughout this bill, and yet usually these sort of appeals are decided by the Scottish ministers. Unless I'm missing the point, there's an inherent contradiction in there. I don't see the contradiction. Again, it may be helpful to draw a comparison with planning appeals. Ministers obviously are the final port of call for planning appeals. There is judicial authority to the fact that these are all compliant with ECHR, and the reason for that is that the courts can have the oversight that it's necessary to ensure that those powers are exercised in accordance with law and fair and transparent processes. But the difference in this case potentially is that whereas a planning appeal would only allow somebody to use a land on the presumption that they owned it by the time they wanted to, we're talking here about the ability to expropriate people's land? No, not in the asset transfer section. No, we're not. Would it be fair to say that there's a significant assumption of extra powers to Scottish ministers throughout this bill without apparent justification such as asset transfer by compulsory purchase, apparently, and with, throughout the bill, a reduced level of parliamentary scrutiny? Would that be a fair summary? In terms of the asset transfer part, I don't think that's true. Asset transfers can happen at the moment and they often do. I mean in the generality where previously things that were looked at under affirmative procedures are now looked at through negative procedures and there seems to be a great deal of argument towards that. Therefore, the level of parliamentary scrutiny to me, and I'm certainly no expert but I'll first admit that, but it appears to be reducing. Would that be a fair comment? Question we originally asked on section 58. No, I think... I'm sorry, I was widening it out into the generality rather than the particular, so I was perhaps too early in my summary of the points. No, I don't think, we do think that there is a general reduction in parliamentary scrutiny and in fact, by including a statute process on things like asset transfer requests is an increased amount of scrutiny generally about the process. Okay, Richard? Final quick question is regarding a process regarding appeals of these decisions and you talked about ECHR compliance, that this might ultimately be deemed by the courts. Doesn't strengthen the hand of ministers, local authorities respectively, if actually they're laid out more clearly in terms of prime legislation and therefore there's a standard process which is being followed rather than what potentially seems to be quite an ad hoc arrangement. Well, I think the power to take regulations to set out processes and how appeals and reviews will be conducted, so that will be transparent and set out in the regulations. And the discretionary element which won't be set out is the choice of processes and choices within those processes and it needs to have that flexibility to work efficiently. Okay, thank you, Stuart. I just wondered if we might seek officials confirmation about what the difference between affirmative and negative instruments is because it seems to me that the opportunity for scrutiny is the same for both. What is different is that a negative instrument can have immediate effect whereas an affirmative instrument requires the consent of Parliament before it has effect. And then in fact, the distinction between the two lies in the period at which becomes effect in the process by which it may be undone rather than the parliamentary process around scrutiny. And I just wondered whether I have the wrong end of the stick No, you are absolutely correct. A negative instrument could come into force immediately. Obviously there are rules about a 28-day period before it should come into force which are normally adhered to. Whereas an affirmative order would have to have the approval of Parliament before it could come into force and how quickly that could happen would be a matter of parliamentary process. No doubt it could happen quickly and could indeed happen faster on some negative instruments which allow potentially 40 days or more before they come into force but you are correct in your understanding. But in essence there is no difference in the opportunity for scrutiny. In either case, they both are laid before Parliament. Parliament equities consider them and it is a matter for members of Parliament whether they choose to bring a debate on whether a negative instrument should stand or not. Thank you. Okay, thank you very much. I think that brings us to Margaret McCulloch. Good morning everyone. The Scottish Government has previously explained that the power in section 87 allowing ministers to make further provision in relation to the removal of unauthorised buildings from allotment sites as provided for in section 82 is required in order to allow for flexibility. Llyrda, can you give us more explanation, more detail the intended purpose of the power in section 87 and particularly can you provide examples of the types of further provision the power in section 87 may be used to make? Please. Hello. Section 87 permits but does not require Scottish ministers to expand on the detail in the procedure cited in section 85 and section 86. In terms of flexibility the current procedure provides for a period of notice to be given from the local authority to the tenant. Detail the tenant's right to make representations and then subsequently the local authority to take account of these and the duty to inform the tenant of the outcome and the provisions also enable the tenant's right of appeal through the Sheriff's Court in terms of what these additional powers might be used for they could be used for adding time frames to those areas which don't already have them specified so for example it might detail a time frame in which the local authority might take account of the representations it might also detail the methods through which those representations by tenants might be made so it's those types of things that we would expect in relation to cover. Can I ask a question when the committee wrote to you asking that question why did you not provide that level of detail initially when you wrote back? I can't comment I don't know why we have failed to provide the extra level of detail and I can only apologise for that. Does anybody else know? Can anybody else answer that question? No. Okay, thanks. I think maybe there's a point made there. Has that covered everything the committee wants to consider at this stage? I think it has. Can I thank the team very much for your extensive answers and your patience with us? I shall suspend this meeting for a moment to enable everybody to change places and also to move around I think. Let me just get back into my script and this will be convened. Thank you very much. Writer, gender item 2 um no my past. Gender item 3 indeed, thank you. Is the legal writings, counterparts and deliveries Scotland Bill. I will now move on to oral evidence on that and I welcome from the faculty of advocates Robert Howey QC who has agreed to give us an opening statement. I had the most concerns about this among those who provided evidence to us so I look forward to what you have to say please Mr Howey. Indeed, thank you very much ladies and gentlemen I should indicate at the outset that it is of course the case that faculty deals with far fewer large international transactions than perhaps are done in some of the larger commercial firms particularly those which are cross border English firms which have taken over Scottish ones. Our involvement in the making of contracts tends to be contracts to settle litigations. They are formed on the floor of Parliament House everyone is there and a necessity the problems to which this bill is directed don't exist. However, we do see litigation about a number of the contracts which are made in Scotland perhaps those numbered among the larger contracts made in Scotland for example large building contracts dare I mention it PFI contracts commercial shipping or sales of company contracts and in a number of these one sees sometimes unhappy consequences and we rather fear that there is a danger lurking in this bill not that it may necessarily be a reason for refusing this bill but perhaps causing dangers that ought to be contemplated by the committee in relation to this bill which are in danger perhaps of being overlooked in view of the desire that is expressed particularly by a number of the larger commercial firms that that which is proposed should go through pretty much as proposed. The faculty's main concern is the risk that this form of execution in counterpart as opposed to a situation in which everyone executes the same document is a situation which can lead to opportunities for fraud and more probably for its far more common just sheer downright error and mistakes in which if you have enough people signing enough different copies the copies aren't actually identical somebody thinks that some contract is in or it's been deleted or some computer glitch has happened so that somebody thinks something's there and the other side thinks it isn't and you only find out that people haven't signed up to the same things or want to maintain they haven't signed up to the same things when matter comes later before the courts. That's where we tend to see it and that's where we therefore have reservations it seems all too easy for example if one were to permit execution by the exchange of signed back pages of a contract as it were a particular party who signed it plus the front page it's all too easily for the rogue or the fraudster to decide to amend what goes in the middle of the sandwich which is actually the critical stuff once upon a time one used to be required to execute at least initial every page our forefathers weren't stupid and there was a reason that one had to do that our suggestion is perhaps that human nature hasn't changed all that much in the intervening years that that risk has entirely gone away now there may of course be counterveiling advantages and there are some advantages that we can see in this bill and we freely conceded it may save a degree of cost though we confess we're trying to be skeptical as to just how much most of the contracts which will be made under Scots law will be smaller scale contracts and they won't be made in Glasgow and they won't be made in Edinburgh or Aberdeen either though we made in small towns around Scotland and in such cases the kind of saving of cost and convenience that's involved or is proposed as involved by a reference to executing say electronically and exchanging counterparts as opposed to simply having people all come into the office to do it is we suspect limited we also are inclined to invite the committee to question just how many contracts there will be governed by Scots law to which this legislation will apply at all in which the number of parties involved is say 8 or half a dozen as has been mentioned in some of the discussion in as many parts of the world I'd venture to suggest that there aren't too many contracts frankly which are going to be governed by Scots law and in which you're going to have American banks in New York Japanese banks in Tokyo writers in London and some seller or purchaser in Edinburgh with the other one being let us say in Berlin we suspect that it is unlikely that any degree of increase in legal business would be brought to Scotland by this legislation it's not going to make that great a difference we suggest to the decisions of people as to whether or not to make their contract subject to the law of Scotland or to make them subject to the law of England or anywhere else for that matter as a general rule I would suggest people decide on the contract governing law on the basis of its effects on the substantive matters in the contract rather than the ease of convenience of execution and if the case is big enough that it's the big very many multimillion pound transaction that does have all the people in different places that's the sort of transaction we've entered to suggest in which it might be thought that the saving in constant convenience that's achieved by the counterpart bill is actually so infinitesimal in comparison with the size of the contractual sums at issue that the likelihood is that the parties will be having their great big settlement meeting somewhere or two settlement meetings somewhere in any event because the relative increase in cost is not worth considering for these reasons but primarily the one about error and fraud which is our big concern we suggest that the bill might usefully be subject to your consideration with a view to as we've suggested one possibility might be that if execution counterpart and delivery is to proceed is proposed that it might be provided for example that only the entire document were to be able to be exchanged around so as to avoid or at least reduce the risk of people slipping things in the middle or finding the risk of finding that through error which we suggest to be much the more common case parties haven't actually agreed to the same thing or don't realise they haven't agreed to the same thing in the end we have an increase in the number of cases in which parties come to the court to ask for their documents to be rectified and the first problem is to find out what they've agreed to never mind what it is they were supposed to have agreed to now these are issues we suggest have to be weighed against undoubted increase in convenience in a number of cases and some degree of saving in cost though question mark we suggest how much saving in cost and to how many cases it will actually make any material difference or there will be any great advantage in bringing in business at the best we suggest it might slow a bit of the flow of business away from Scots law cases I hope so that's put in a nutshell what we've said elsewhere at rather greater length I think it has and a very great film and thanks to you Stevenson wants to come in I just wanted to test the Faculty of Advocates views on the financial size of the issue because I think I heard a substantial attempt to downplay the amounts of money that might be involved here and I just bring to this the rule of thumb that the UK's clearing banks turn over the net asset value in transactions every three days and that when I was involved in the as a non-banker but a technologist in these issues some 15 or 20 years ago the daily turnover of the Scottish banks could be as much as 100 billion pounds and I just wondered if the Faculty of Advocates have a sense as to what proportion of that traffic of money is under contracts that would be signed but mutually by parties because it's very clear that that turnover is essentially commercial turnover it's not the turnover from individuals wallots because the amount of notes that the Scottish banks issues and I'm substantially out of date but 20 years ago was only something like 2 billion pounds and I just wondered what the quantum that is round the transactions that might be covered by the kind of contracts that we are thinking about in relation to this bill The answer to that sir is it's extremely difficult to provide an answer particularly from a bar such as ours which as I indicated deals very largely in litigation we don't have the same degree of chamber practice that obtains in London for example and therefore it's quite wrong that I suggest that the faculty would have an immediate grasp of exactly how much money has been turned over on given contracts however what I do venture to suggest to you is that the very fact that we're not able to say large quantities of this comes across our desks is because of course large quantities of the work concerned that you're discussing is written under foreign law English in particular and will continue to be just whether this legislation is passed or not because the reasons that people choose to have their contracts governed by a given law are as I say generally to do with substantive reasons it's to do with what it is is the transaction they're trying to carry out it's to do with where the people who are involved in funding it underwriting it are based they all tend to have a familiarity and a concentration being in London largely of this work with English law they use English firms they have merchant banks for much more comfortable if they're using the people they know they recognize they've dealt with for the last 30 years and with respect I rather fear that nothing you do or don't do in connection with this is going to make any very material alteration to that at all it is therefore with a view to that that the suggestion is made that the financial saving which is being contemplated in this case and is being suggested in the questionnaire which appeared from the Finance Committee I think is perhaps open to considerable doubt because the number of contracts that one will find being written under Scots law which anyone would take to use this will be small and that given the number of contracts that will be thus created and the unlikelihood that they're going to be at a level at which this would make any material difference we would suggest that it's unlikely that there's going to be any great saving at all over what would be achieved today if parties wanted for example to execute a document by round robin through the post and again we suspect that perhaps realistically many of the contracts which will be formed under Scots law and done this way if they are formed internally in Scotland particularly if they're in one of the big cities frankly people will still tend to just take it round to the other chap's office to get him to sign and vice versa and that will have the advantage to people that they are more certain as to exactly what everyone was signing up to Can I bring Margaret in next I think she was Can I just run this part here on the question of fraud is this a possible option that could be considered in that the original document is actually sent to the clients but it's protected in that you can't actually add or amend any of the information within that document and the same is when you read things online and you actually agree to the terms and conditions there could be that option as well saying that once you've actually read it you take it and you agree that it's actually correct and then the document that the individual actually signs right that sheet is actually headed up detailing the document that you've actually got as an attachment to the business that you're actually doing and that you've actually read the document and you agree that it's actually correct would that do away with any opportunity of people adding or amending the original document could that be considered I'm sure Madam anything can be considered that is thought to be likely to reduce the risks of frauds or which I ask you to think about as being far more likely which is just downright error is people getting things wrong people have different copies of drafts at different times I'm sure that people can bend their minds to methods to trying to reduce the risk and by all means they should the concern of which faculty had was that if the bill were to pass on terms which would simply allow whether that was the way people operated some of the time or not although other things to be done like the front and back pages was the one we had in mind that that would be all too unpleasantly open to roguery and I'm sure that one could try to find methods which electronically or otherwise will reduce that risk the rogues of course will try to find ways around it and that's just the way of the world and we have to accept that that is the case the question which we suggest to the committee was whether they reckoned that they had got legislation which reduced insofar as they could that risk relative to whatever advantage the committee thought they could get in terms of time, convenience or anything else out of the bill I don't think with respect it's for the faculty to sit and say well you should do this this way or that way because there are other people with greater technological knowledge for example who would know whether things were or were not secure than do we and there are others who would have more immediate involvement in direct drafting of things we might be able to say that matters were more readily capable of fixed than do we we it has to be admitted have a somewhat skewed view of the world and that it only crosses the desks of persons like me if it's gone wrong so we all tend to be storm petrols but what about this risk, that risk and the next thing and what happens if these people do this or that and I freely accept that that means that we may have a skewed view of the world because we don't see the hundred that go perfectly well, we see the one that goes wrong but the trouble is for the one that goes wrong the damage could be very considerable and you want to see what you can do to try to reduce the risk that that one does go wrong okay thank you morning sir notwithstanding your skewed view of the world given that error and fraud are the faculty of advocates principal concerns and we are likely to proceed notwithstanding your reservations what improvements from your perspective of the faculty of advocates perspective can you suggest to the legislation that we are proposing? the one we suggested was that if one is to proceed in this manner one should require that the relation to the delivery deliveries have to relate to the entire document concerned or perhaps that you require that if this is to be done so as to provide immediate effect of contracts i.e. that they should come into effect to precise immediate moment that you can more readily identify this is one of the advantages that's proposed for this so you can say that it came into effect at such and such a date that it should then have to be followed up by the full postal versions that the full original goes through the post so that somebody has at least the opportunity to identify for example the error which again I apologise for repeating myself we suggest will be far more common than fraud but errors are much more common happen and they then get picked up and corrected and that would be a great deal cheaper than having it picked up and corrected when everyone has fallen out for other reasons and it all ends up in the court of session when it takes a lot longer and costs a great deal more to sort it that's the suggestion we had offered as to something that could be done in that direction it may be that others who have more immediate involvement in current practice in doing these things and the big commercial firms who have perhaps experienced these problems in a number of occasions which they've been able to be sorted out and therefore they don't come across the desks of persons like me may be able to assist you with again because of our skewed view of the world we see the ones that have gone wrong perhaps badly wrong and therefore tend to suggest stronger remedies because we see the more real patients if I may borrow that metaphor and of course we do have the opportunity to hear from some of those other organisations representatives later on which is very helpful I think Mike McKenzie is next I was interested in your use of the sandwich analogy and I think it's probably a pretty good analogy in as much as if I order a sandwich and a steak sandwich and I ask for it to be rare but I get it back and it's well done that would fall under the description I think of an error whereas if I order a steak sandwich and pay for it and I end up with a spam sandwich then that would be fraud and given that the impetus for this piece of legislation arises from the benefits that we accrue as a society through our technology can you perhaps cast your imagination into the direction that would look to that same technology to provide safeguards against both errors which we know happen already otherwise you wouldn't have any work to deal with and fraud and again if there was no fraudulent practice then again I would respectfully suggest you may find yourself out of work other ways that that same technology can be used to prevent these kind of problems that we experience in any case there are those who would smile having heard you ask me of all people that question and suggest you'd ask the very last man in the world you should have asked about it but the but the I'm very reluctant to get involved in saying yes we suggest this next thing because frankly it's not our business of the necessary technological know-how as to how that would be achieved if it can be achieved there are others better qualified in those matters who could give you better and more useful answers about what technology you could use or not use that would enable one to protect one's self from alterations and changes and whether or not that can be got around readily or otherwise that with respect seems to me to be a question about technology better directed in other directions as opposed to fraud the trouble ultimately with fraud is that fraud is a deliberate it's a crime of deliberate intention and if people are going to do that they're going to set out to get around whatever protection you've put in in order to do so the question is how difficult you can make it for them and as I indicated to your colleague Mr Scott moment or two ago we present one suggestion that can be put forward in that direction one can perhaps add on the tweak if one is going to have the ability to execute and counter cart then the originals have to follow up so that one can find the errors and spot them more quickly and more cheaply than another one otherwise one would do but I should have thought that one wants to try to secure that the drafting of the legislation is such that it reflects whatever evidence you get about the degree to which technology will protect you and how you can protect the cases which are not going to be done technologically because one has to allow for the fact that if the legislation allows simply that one can execute and counter part there will be those who will execute and hard copy in counter part as I say present the front and back pages I tend to use on such occasions the example of BAMFAS look if a contract is made in BAMF what's going to happen because that's not where you're going to get the large big contracts with a big technological background or with large scale organisations contracting and it's perhaps unfair and BAMFAN I should indicate that I'm not making any accusation against BAMF I just take it as an example of a small Scottish town which nonetheless will have some degree of contractual work in it and the legislation if I may suggest it has to be able to cope not merely with the kind of large scale deal which the big commercial firms which were in your Law Commission's original consultation list and no doubt give evidence to you are going to discuss but you also have to allow for the fact that your legislation will be used by people on a much lower level contracting work and there too you've got to have made sure that in protecting and thinking about the top slice of the work in Glasgow and Edinburgh and the stuff that's been done with London or elsewhere one doesn't overlook the ability of this to be used in smaller scale transactions elsewhere whether not necessarily operating on the technology basis at all and asking oneself if that is being done are we satisfied that we haven't opened the door here to another new potential raft of errors and contracts getting into difficulty because they were executed in what seem to be the simplest and cheapest method available because that's what people will tend ultimately to adopt on that argument and that we've opened the door to more troubles that we come to regret and what can we do about trying to put that right we've made one suggestion I don't venture to suggest that there aren't others or others that will commend themselves to who's being better what I do commend to you is that of course you think about is this a problem sufficiently grave to justify making alterations to the legislation and if so what in an attempt to try to reduce that risk thank you I think the member for Banff might want to comment I was just going to make the comment that to choose Banff is perhaps particularly unfortunate as it is the specialist court for fishing cases an industry with a turnover of some four hundred and sixty million a year and if one looks at some of the recent finds that have been levied in the pelagic sector which were in seven figures it's perhaps not quite as small as its position between Loch and Glasgow might otherwise suggest and who does shipping cases I know what do you mean so did you want to come in on this yes thank you good morning I listened carefully to what you had to say just regarding the economic aspects of the bill and what it may or may not offer but in terms of where Scotland currently sits if this bill were to pass through the parliamentary process and become an active parliament in either this shape or amended surely this would actually give would actually take Scotland onto a different platform compared to where we currently are whether the large transactions do come to Scotland that would then be up to those who actually operate within Scotland to certainly promote their skills, promote their services but if we don't actually have this particular piece of legislation then that would certainly take away the opportunity for further work to come to Scotland I would suggest would that be a correct assumption it's a possibility but I suspect on as I've said already and I apologise for repeating myself I've entered the suggestion that people decide the law they want to govern their contract by reference to matters to do with the substantive matter they're dealing with how one executes a contract falls certainly should fall a very very very very long way down the list of priorities it's an also ran or should be because one ought to be thinking I would suggest about matters about whether or not the legal background in relation to the area of work one is dealing in is one which is going to be helpful to people are going to be concerned about issues to do with the standard of the court system in where they are the standard dispute resolution they're going to be interested in matters such as whether or not it's going to cause them needless difficulties with choice of conflicts of law problems relating to other bits of their transaction if it's a big international one with bits that are governed by New York law English law whatever frequently a reason for not using Scottish law is just it's easier to put everything into the same one if you can possibly do that because it just makes it all administratively easier and cheaper lots of people will want to pick a governing law with which they're familiar with the merchant banks, the underwriters all these people have dealt with English law for many a long years and they're familiar with it they don't want to move from it in some ways it's just inertia I grant you and there might be all sorts of comments of an unkind variety which lawyers in Scotland would make about it or we've all suffered at the hands of it but the reality is that that happens and I've entered the suggestion that when it passes this legislation or not it's not really going to have much attractive effect or I suspect much reason to go well square if you don't pass it in these terms than it does at the moment yes of course it is possible that there may be some case where it does make the marginal difference but I've entered as the suggestion that that's going to be a very rare case and that the amount of commercial advantage if one will of bringing work into Scotland that will be achieved by this is limited now one might say well why not do it because if there is any advantage we can't have it now but that's of course one of the decisions you have to take it's one of the things that you're charged with doing what the faculty suggests is that it is distinctly skeptical about the idea that there is a considerable financial benefit to altering the law relating to the execution or delivery of deeds it's highly unlikely to bring work in we think or indeed to dissuade work from doing it though I read what has been said by others who deal in big value transactions about that and they'll have a more up-to-date knowledge of these and more direct involvement with it but the overall view we have is that we're inclined to be skeptical about whatever financial benefit to this at all OK, thank you, can I ask a discussion? Yes, thank you just on the issue of the electronic repository do you have a view on the likely benefits of setting up an electronic document repository maintained by the registers of Scotland? The short answer to that is not particularly we would however be of the view that if one is to create a repository and some of the responses that we saw have been made to you have clearly grasped this it would obviously be of help if that repository were of some official variety such as say the registers of Scotland one would want to be able to ensure security of it, confidentiality of it to make sure that it couldn't be a place where those of ill intent could get in and make use of things or alter things electronically one has read in the newspapers all two unhappy tales recently about unfortunate things happening with electronic communications and clouds and what have you and it is, I should have hoped, likely that the registers of Scotland or some such official governmental organisation if one is to do this would be the kind of large place which would have the ability to provide the security and confidence in its confidentiality that I should have thought would be absolutely critical to being able to make that work Thank you for that I'm wondering Mr Haywether I could just take you briefly to the original submission from the faculty which I have in front of me and I'm hoping you have it because at the end of question one of your response is that the faculty has two technical observations and their talks about upon me documents which are subscribed by parties and first of all can I just ensure that the very last sentence which says this would mean the contract could not be executed in contract should mean this would mean the contract could not be executed in counterpart that seems an obvious read but I'm just wondering if you could expand to me why it is this legislation fails if documents are produced by the parties I'm genuinely confused as to what that point means please You actually have the advantage of me in that you have a version which is different from mine but thank you very much if you'd excuse me for a moment Indeed, indeed I understand Mr Don that you're asking in connection with the technical objection the second part of technical objection A which is amongst other things construction contracts What that is about is this if one looks at one subsection to paragraph B as presently drafted it says a document is executed in counterpart if no part is subscribed by both or parties Now the concern that has arisen here is based largely in relation to construction contracts but there may well be others to which it applies to in which you end up with a document which if you stood it on its end might stand about that high off the table and what it does is it includes lots and lots of subsidiary documents and sometimes these documents are very important in themselves and have been executed and may already have been executed by the time you get to the big construction contract if you imagine a PFI or a development contract which incorporates within it the actual building contract or the specification and based plan for the building contract the specification based plan may have been negotiated and agreed in advance and it's all actually signed up and initialed from all the rest of it before you get to the stage of this big document because no part should be subscribed by all or both of the parties and the specification already is in my hypothetical example that PFI or development contract whatever it is cannot be executed in counterpart because you've provided that a document may be executed in counterpart and you then give the evidential advantages to that later on but a document is executed in counterpart if no part is executed by all or both parties so imagine my case the specification is executed by both parties not noticing this everybody has done the great new electronic counterpart net result the thing is not properly executed and it's all defective and in fact it's totally invalid because the building in front of us, the act in front of us actually says you can't do it specifically so it will be incompetent 1, 2, B, right that's what that is about and could I just be clear simply for the record that the very last word of section A, the third paragraph up of that sheet should be executed in counterpart rather than contract it it's quite obvious it should say counterparty that does at least put that on the record and we can probably amend it on the record that's fine, thank you could I then look at the section just immediately underneath that in your submission B as we have it which begins section 2, 3 imposes a duty because you did seem to make a very interesting point there about a duty being imposed but absolutely nothing said about who might be liable for not carrying out that duty on reflection does that need to be added to amended or does the general law of the land actually allow law of trust or whatever allow that to be okay? I believe that the difficulty that was being canvassed was simply this well the first point was if one looks at 2 section 2 sub section 5 it does not matter for the purposes of document having effect whether 3 applies or not but 3 says the person nominated must preserve it for the benefit of the parties and it says well its effect doesn't depend on that so why are we saying that the person nominated must after delivery hold and preserve it for the benefit of the parties what does that do? it doesn't effect delivery so suppose he doesn't and we'll assume that this is not because there's a fire in the office or something like that but supposing that he just doesn't it gets forgotten about its thrown out in an office move something of this order it clearly doesn't effect the document the effect of the document in the first place because of 5 so we are asking what does 3 achieve? why is it there? what advantage is it providing? it may be that what it is there to do is to say that the person who's been nominated as the if he's seen an agent of one of the parties is to hold it for the benefit of both so that he can't be put into a conflict of interest position and told you are my agent I want that destroyed destroy it now if the object of the exercise is to prevent that from being done then well and good but 2-3 doesn't seem to sit and it might say it better if it said both parties it doesn't change the sense but it would actually change the implication that would be so certainly if the object of the exercise is to secure that if say as one imagines it frequently will be it's the sister of one of the parties who's nominated you want to protect him from a subsequent dispute between the parties and his being put in an impossible position and you want to say right he has to hold it for the benefit of both parties in the legislation to give him a statutory duty that protects him against his own client as it were when the fallout happens so that he can't be instructed to destroy it or some such ok thank you for those observations I suspect that's a point to which we might return elsewhere you may want to deal that when we say that it's you've got to work out what the remedy is for the breach you're going to have to look to see the effect of whether or not the law relating to the duty on solicitors and things is affected by this you may want in that connection to check there's been a very recent case last week in the inner house of the court of session about the difficulties relating to unhappy frauds and documents being taken not taken and so forth so that it indicates that the problem about the solicitor finding himself acting for a client and what are his duties to the other side after the all fallout becomes quite an issue and no doubt you'll want to ask people about that who are perhaps more directly affected by it than I'm fortunate enough to be thank you very much for that advice I'm looking at colleagues to see if there's anything else that we need to explore in this part of the session thank you very much for your extensive advice to us and I'll briefly again suspend to enable the witness panel to change over thank you right if we can reconvene thank you very much once again it's my pleasure to introduce Professor Robert Rennie and Alistair Wood Professor Robert Rennie is the chair of the University of Glasgow and Alistair Wood is a member of the law society of Scotland obligations law committee thank you very much for your presence here gentlemen thank you very much for making sure that you were here the previous evidence because that saved us having to play it back to you and I think we'll have many questions on the same subject and I think it's going to be led by Margaret McCullough yes good morning or good afternoon good morning you actually heard Mr Howey sort of question the number of contracts that would actually in Scots law come into effect with the new electronic system do you agree with his comment that he didn't feel there would be an increase in business this way or do you have any other evidence to contradict that and we disagree can you tell me how you disagree we have experience of commercial contracts which start off on the basis that they will be governed by Scots law because one of the parties the main party perhaps is based in Scotland and the subject matter of the contract is Scottish and we both have experience of getting to say three weeks before the final completion of the contract and when it is suggested that it will in fact be necessary for everybody to convene in one particular place so as to execute the document at one time we are met with resistance and in a number of cases what simply happens is the clause which says this contract shall be governed by Scots law has changed to this contract will be governed by English law simply to allow the execution of the document by counterpart now I was surprised in some ways to hear Mr Howey say that this really did not matter a great deal because not only does it alter the law which governs the interpretation of the contract but it also alters the forum in which any disputes can be litigated so it takes if you like bread and butter out of the faculty of advocates mouth so I am quite clear and I think my colleague is also clear that there is a significant commercial issue Would you want to comment or you? I echo that the number of transactions we work on and the sole reason to change the law to English law or to another jurisdiction is the inconvenience of the questions over creating a valid document when people are based in different countries, different towns different offices later at night in the same city or in the same small town He also mentioned the fact that he was concerned about maybe the security aspect would be less secure with smaller law firms rather than maybe multinationals Do you think that would apply because I am thinking as well if you have got a certain standard for a large law firm that is multiple branches then the checks in place would be the same for a smaller business just now even paper wise, documentation wise so Do you understand where he is coming from when he is saying that he is concerned that it is more open to fraud possibly or error for small businesses using the electronic system rather than the paper system I disagree I worked myself in what we have been regarded as a small firm for 30 years before moving to what would now be regarded as a large city outfit and the same checks and balances applied in both and I am quite confident that a small to medium sized enterprise legal firm would be as secure as a large firm and on the point of fraud generally in 1970 when an act of parliament was passed to allow ordinary documents in convincing to be signed on the last page only there was a terrible kerfuffle among the legal profession about what was going to happen my goodness people will take out the pages in front of the signature they will take them out put in other pages to change the whole sense of the document it will be the end of western civilisation as we have known it I defy anybody to produce any evidence to the effect that there has been anything like that since 1970 I also make the point that execution in counterpart is a feature of the English jurisdiction and it is a feature of European and American jurisdictions they seem to have managed to operate it without any substantial increase in fraud I make a third point the obvious one people will commit fraud no matter what you do no matter what the process is and there is no bill and no safeguard in a bill that is ever going to prevent fraud absolutely I do not consider that this measure increases substantially the risk of fraud in commercial transactions just finally what kind of impact do you think it would have in the Scottish property transactions because my understanding is that the law doesn't permit parties to change the law of contract to English law this bill is intended to apply to bilateral or multilateral deeds property transactions in the sense of convences are not bilateral or multilateral a disposition transferring property from A to B be that a house or be that an enormous factory or indeed a retail centre is signed by one person so counterpart does not come into it ditto a mortgage document over a house or indeed a bank lending document for a commercial lending over a factory is signed only by the borrower so there is no effect this bill will have no effect on ordinary property conveyance it will have effect on a bilateral agreement or a multilateral agreement involving two or indeed more parties thank you I'm with next burden property law so I'll defer to the professor thank you just to tie that one off would it be fair to say that many of the property transactions that commercial companies may undertake on purchasing the company that controls the property because of course there's a process that for example delivers control over a property without affecting what's in the registers of Scotland and of course probably avoids things like stamp duty so therefore in the larger transactions there may well be instances where the provisions that are before us here may well matter when de facto it is about transferring control over a property if not necessarily legal ownership yes correct for company transactions where a single purpose vehicle may own a property it will enable those contracts to be entered into by two parties in different locations the same goes for a company though the transfer of those shares would require a stock transfer form which again will be needed right John good morning Professor Rennie Mr Howey suggested that would in his view be more important that the law of the country was more important than the convenience of the signing is that a position that you of evidently you don't agree with but given the differences between Scots law and English law I find it inclined to his view forgive me rather than yours that that is a reasonable position for major deals to consider which legislation they would rather work in than and particularly given the increase in the devolved powers rather than the convenience of signing a counterpart or inconvenience I don't disagree with that I think there will be cases where one of the parties will want to have a particular jurisdiction but what I'm talking about is the technical aspect of it where the parties have already agreed that it's Scots law because you're six months down the road with your negotiation it's going to be Scots law from day one until three weeks before when all of a sudden the parties say look this is a terrible this is a terrible inconvenience for us all to come up to get it all signed here so can we just make it English law after all it's not going to make that much of a difference is it so I don't I don't it's my naivety probably Alice will probably have more experience of this than I do but it is a factor I canvassed it with my own corporate department before I came and they confirmed that that has happened to them in a number of occasions your suggestion if you forgive me being so important was that this was the norm rather than that it has happened on a number of occasions which would suggest it's not the norm I'm not suggesting it happens in every occasion if it happened in every occasion you wouldn't be bothered putting Scots law in the agreement at the start but in some occasions that is what happens and why shouldn't we why shouldn't we be as up to date if you like electronically as other jurisdictions I see no particular reason for saying why don't we just stay where we are if other jurisdictions think it's commercially good and legally safe are we the only jurisdiction that has a monopoly of legal truth we could discuss that for some time do colleagues have any other questions Stuart Thank you I pose the question to Mr Howey Eloron regarding the electronic repository Do you have any views on the likely benefits of setting up an electronic document repository maintained by the registers of Scotland? I suppose really that's a matter for the registers of Scotland who I think are giving evidence here next week there are of course registers at the moment the books of counselling session is a preservation register although it's not used very much now and of course it is a physical hard copy register which would not suit the problem about repositories of course is that IT systems change and are updated from time to time and you would want to be sure I agree with Mr Howey in this regard you'd want to be sure that whatever system was used was never going to be completely outdated so you couldn't access what was there in Spain I gather where Adobe is called Adobe X and Adobe have guaranteed that it will always be accessible no matter what the changes are I'm not IT literate to any great extent so I cannot evaluate the worth of that but in due time a repository might be a good thing but this bill stands on its own this bill does not depend on having a repository at all we shouldn't get away from the focus of that but in the longer term yes thank you I wonder if I might just before coming to the things I was intending to address since the subjects come up in relation to a repository while it may not be necessary for the repository to hold all documents of whatever form would you be of the view that the algorithms and methods by which electronic signatures are provided to documents wherever they're held could usefully be held in a central repository thus allowing future generations access to the means to understand and verify documents wherever they're subsequently held that that would be one of the important things besides the holding of the documents themselves in the longer term yes I see no reason not to have something of that nature you're asking the wrong person I kind of lost the place when you said Algar Algar you're talking about how the digital signature is verified do forgive me as I spent 30 years in technology but of course I'm somewhat out of date because the 30 years started in the 1960s sorry I cut across that's an interesting concept and it seems to be a historical value to be able to maintain the property of the signatures down to the future so it seems a logical step from the signature to the electronic signature perhaps that's something you gentlemen may take away to think about while we also think about it but moving on more generally to the subject of electronic signatures in a whole I take it you would be of the view that it is helpful if we have a permissive environment that allows electronic signatures and electronic verification of the validity of content of documents to be part of Scott's law yes agree that's fine that's concise and unambiguous now the law society is developing a smart card and digital signature scheme I'm not sure the committee knows all that much about it I wonder if it would be possible if either of you are in a position to give us a little more insight into where that stands in the process of development and implementation without necessarily giving us insight into the mathematical algorithms that it will depend on the position at the moment is digital smart cards are being handed out to members of the profession I understand although I'm not directly involved in this I understand that criminal practitioners I use the phrase criminal practitioners are getting the cards first because they will also be used as security passes to enter Her Majesty's penal institutions and the cards will be handed out as the year progresses they will be two individual solicitors we were hoping to have James Ness, who is the Deputy Registrar along this morning he's unfortunately not able to come I suspect that's an area of expertise which we will now like to interrogate somehow or other he would be the person to ask if we can get Mr Ness along or written advice on that so I think that's perhaps for another day thank you Steve briefly Professor Rennie you've talked about the fact that you don't see any additional risk from these provisions in terms of error or fraud but regarding the use of pre-signature pages wondered if you thought there might be any specific risks in relation to fraud and errors in terms of using those and do you think that there's sufficient protection in legislation as proposed in this area yes I do okay well I think that answers my question thank you thank you for that succinct answer I'm wondering if I might briefly take you gentlemen to the last subject I raised with Mr Howey partly the consideration that if that bundle of papers already contains a document which has been subscribed by the parties then it appears not to be competence to execute it in counterpart which is clearly not what anybody would have intended did that strike a chord with you or is there an immediate fix that is not my interpretation my interpretation of the section is that it relates to the document which is to be executed which is the main document what Mr Howey was referring to was the possibility that there might be annexed to the main document another subsidiary agreement say a building contract this is let's say this is a big development contract involving developers and different people and funders and whoever and the next to it are a series of other subsidiary agreements which because the parties are proximate have simply been signed by both in the normal way that is an annexation to the main document which is being signed counterpart the section refers to the document which is being signed in counterpart it does not refer to any annexation I do not therefore accept the interpretation as given that's very helpful thank you Stuart just may I in my non-legal ignorance see clarity as to what an annex looks like now I just give a context to my question because for my grave misfortune had to be involved in a lot of these in my previous life and indeed had to travel to other continents to sign things with other people often commercial contracts will be a contract with many schedules which are separately signed and may describe and be expected to be changed during the course of the contract for example what equipment might be delivered on one so on so forth are those what you are describing as annexes or is an annex in the legal terms which I'm sure you're using means something different no it is exactly the same an annexation is simply something that is out with the body of the agreement but referred to in it so an annexation could be a plan it could be a list of parts for a machine it could be a list of employees it could be a copy a building contract already signed you name it right so it's exactly as I'm familiar that is so yes and indeed the schedules in most commercial contracts to which I've been party are substantially bigger in aggregate than the contract itself absolutely yeah thank you okay that makes perfectly good sense could I also just pick up on the issue of section 2, 3 no nominated must after taking delivery of a counterfeit hold and preserve it for the benefit of the parties that seem to be a suggestion that solicitors would normally be holding this agreement once it had been executed you will have heard our previous discussion about whether that's both parties and the question what's that for does that subsection give you any concerns at all not really section 2, 3 is a technical section really it is designed to cover the situation where a single person holds a document but for the benefit of both or all the parties to that document it is designed to make it clear that let us say it is party A's solicitor who is the nominated person to hold party A acts that solicitor acts for party A it is designed to prevent party A going to the nominated solicitor and saying you've got that document you act for me I'm not happy now tear it up the solicitor for party A cannot do that because he is not holding in the capacity of a solicitor they are holding in the capacity of somebody for all the parties that's why it's there and it's sufficiently accurate to say that yes I think it is I'm not doubting it I wanted your thoughts thank you just in relation to that I'm familiar with the use of escrow in certain other contexts is it the generality that in this case it would require the agreement of the two parties as to instructions that are given to the person who is holding the document is that the way it generally works yes section 2 1 says parties plural to a document in counterpart may nominate so all the parties to the document must agree to nominate a particular person and to any subsequent changes in the nature of the nomination yes that's right okay thank you gentlemen I think that completes questions are there any other issues that you think we should have covered and haven't asked you about no this is a very useful bill I agree a very useful bill and very useful for Scottish law could I just observe that if something does occur to you in the next day or two or few and you want to write to us about it that would be appreciated thank you great thanks very much for your responses and again just briefly suspend to enable the witnesses to change over thank you okay alright I think if we can reconvene thank you very much if I can welcome Paul Halley who's a partner in finance and restructuring at Sheppard and Webberden Colin McNeill who's the corporate partner at Dixon Minto WS and Dr Hemish Patrick partner banking and finance team Todd Murray thank you very much for coming along gentlemen thank you for your patience in waiting and I'm really wondering who wants to fire straight in I'm wondering whether Margaret McCurray might like to come straight back in on the same basis as you did with the law society thank you more than happy to do so we've already asked these questions to other witnesses as well but it'd be quite useful to hear from yourself and can you give me examples of difficulties that your organisation may be yourself have actually experienced with the inability to sign contracts and get everyone together and the advantages from yourself if you went down the electronic route as well I think my name is plastered all over the Scottish Law Commission report as somebody who suggested we do this in the first place and Colin McNeill will be able to support I think there's been a lot of talk about will this bring work into Scotland and I think the evidence from a law society earlier about the way in which contracts are now conducted is very pertinent and I think Colin and Hamish and I have all sat round boardroom tables in the last 20-25 years and the nearer to today that happens the more disparate the parties are to sign those contracts where yes if you're selling a Scottish company there's a logical law that should govern that contract but time and time again we will change that to English law because we will have four or five parties the director may be on holiday he may be sun shining in the Cayman Islands and the last thing he wants to do is turn up in a wet Drich Glasgow to sign the contract despite the fact that it's selling his company for millions of pounds or whatever so I think the points made by the law society is that while this bill may not bring work into Scotland in terms of people choosing Scots law there have been endless times over the last 20-25 years when I have my partners have and I'm sure Colin and Hamish have changed the law of Scotland to the law of England precisely for the reasons that were outlined by the law society and I think in the law 20-25 years ago yes, we got to the end of a transaction and all the parties met round the table and we all signed up the documents and we signed them in duplicate and it all happened increasingly parties getting together to sign contracts at the end of the transaction no matter what that type of transaction never now happens and under English law it never happens and you have to have a legal system that can facilitate the way in which businesses and companies want to do business I add my firm was involved and it's a useful example because I think everything pointed in this particular transaction to Scots law it was a fairly large Scottish company but which had operations north and south of the border it was refinancing its bank facilities with Scottish banks the head offices and registered offices are both of all the parties concerned were in Scotland at the last minute for the reasons that Professor Rennie explained the choice of law was changed from Scotland to England not because a minor inconvenience or a minor travelling cost for the parties to get to one place the costs of travel are insignificant it's the fact that you've got very many busy busy people for whom to take a day or half a day out of their lives to get to one single solicitor's office it's just it's not something that we could contemplate asking them and that gets multiplied when you've got parties that are further around or outside of Scotland and other places so in that case it was an example of a contract let's hope litigation never transpires on it but if it does the faculty of advocates will have lost that business there's a few questions on the back of your answers how confident were these businesses to transfer from Scots law to English law taking into account the security aspect of the electronic signatures utterly confident these businesses transact under both jurisdictions all the time and I think the benefit of this is that English law and Scots law in very very many in almost all respects are the same for your average commercial transactor so it was no difficulty for them and certainly no difficulty in doing it electronically because that's as Professor Rennie said that's what happens and for most of us I'm sure Hamish and Paul as well we do contracts under English law and they get done electronically and have done under a recognised procedure under English law for a number of years now so Mr Howey did actually question the number of contracts that would actually convert from Scots law to English law can you give me an example even say a rough ballpark figure over the past year how many contracts your organisation converted from Scots law to English law for the reason of getting electronic signatures we sometimes do it with with with we see the issues arising in relation to documents and obligations that cannot be written under another law and what happens is you then move the asset as it were to different jurisdiction things that have to be run under Scots law that are such a pain to do under Scots law they'll say well it's not worth it or we'll move this back account to England instead because it's easier to do it that way or we'll exclude these assets from this multi-jurisdictional transaction the Scottish element of this transaction because it's too much of a pain and I should say that I spend quite a lot of my time apologising for the inadequacies of Scots law just to give an example if you have a multi-jurisdictional financing transaction with assets in England various European countries the US or whatever they will all sign their documents in counterpart they will all be people in the US they'll be all over the place and they will all do them electronically in counterpart and they will do them in advance they will have a signing date several days before the closing date they will do them all in advance and I will say to them sorry we can't do that but we'll have documents that operate differently then we're going to have to work out how we get our footwork right so that they work and it's actually not uncommon for us to have to get signatories out again on the day of completion to sign a series of documents in a specific order to comply with the requirements of Scots law as to counterpart or as to delivery so this will make it will put some of my junior lawyers some of my junior lawyers' lives a lot easier because they will not have to jump through all of these hoops and we will look a little bit less embarrassed in those situations where we frankly appear backward when we're trying to do this and we have to do it Do you have a percentage of your work over the year that for ease of business and efficiency you choose the English model rather than the Scottish model and if so, can you give me a rough percentage of that business? I don't know, I'm not sure if I would have those figures but I would say that where we now operate is the way if you're writing contracts these days and you know that it is highly unlikely that the parties will come together to sign then the predominant motive and I think it's not about how many documents or whatever else it's actually about fitness for purpose of Scots law against the expectation of the global community we will all advise on English contracts as well as Scots contracts which are from the point of the start of the transaction properly English contracts so it's quite difficult to put a percentage on it it's not an insignificant one if you look back the last 20 odd years that Paul's been talking about it's not an insignificant percentage there's another angle in this as well actually and that is that in some more systematised situations people will choose English law for convenience there are some situations where they can't for consumer protection reasons or whatever but for example vehicle leasing vehicle leases are very often written under English law one reason for doing that is because it's easier to execute them if you've set up your now there are other reasons why you may want to use the one law in your business if you're operating throughout the UK or whatever but it's certainly something that may tip the balance for people who operate systems to originate contracts of one software or another is the convenience of that system when looked at as a whole it saves them large amounts of money now if their origination system does not require people to to sign things send them back get them back actually I think of a mundane one my son has just moved into halls of residence at university he's to sign a lease and I have as well he had to download it he had to download two copies sign those two copies send them to the residence and when he got to the residence he picked up one of them that had been countersigned it would have been very much easier for him to download one sign it scan it email it they countersign it they send it back again and that works in England now with that sort of contract it has to be under Scott's law so you have to do it that way but if this is a vehicle lease why wouldn't you write it under English law to get that sort of systematic convenience and just to position that just as an example since he's used that example during the summer I was in South Carolina my son is at London School of Economics and he woke me up one morning and said dad we've got two hours to sign the contract for the lease and on a system called DocuSign which is an electronic document system the landlords sent us the lease and the guarantee that I have to sign for the lease and all three parties because there's three tenants and three guarantors signed up using the electronic system now that is not an advanced signature system it is just simply an electronic system that people are using for commerce in England for leases and that's just an example of the sorts of things that are already happening and Scott's laws to keep up with it two very very quick questions to finish off so do you feel your business want if you had the option of using electronic signatures would all be under then Scottish law you wouldn't then have to go into English law? I think electronic signatures are perhaps a separate point but if the bill were passed to allow counterparts then it would take out that percentage of contracts that which otherwise would be Scott's law but that changed to English law and so it would make a difference in that respect and finally how long has the bill been in practice in England does anybody know? It's not a bill in England that drew attention to the problems of electronic delivery and signing in 2008 and in 2009 or thereabouts the law society in England and various other bodies agreed a number of approaches that practitioners could use to ensure certainty and those are one of those approaches is almost universally used so if it's working in England do you see any reason why it shouldn't work as efficiently in Scotland? At the moment we try and make it work in England there have been some discussion in the papers about whether or not emailing a PDF signed unilateral document counts as delivery we do it whether or not we will be sued at some point as a result of this practice varies I'm sure you guys have as well we do these sorts of things we take multilateral documents and turn them into unilateral documents so we can do this sort of thing it makes things much more complicated in other respects but we do it so that this can fit in with what people are trying to do and yes we see these emails from the south and say well how do we make our system fit in with that just because it's there in England operating but what you want is your system to operate effectively with the other systems of which it's interacting Thank you very much In the first instance Rich would you like to see the issue of fraud? Yes, thank you convener obviously you've heard the faculty raise its concerns about issues regarding fraud and error can I ask what firms do currently to mitigate against a potential fraud and area that will change when signing a counterpart is possible I think if we take the example of a simple bilateral contract negotiated between two parties each of which have their law firms even though they might be very close to one another geographically there may be no reason to meet throughout the whole transaction all the documents get referred in word format by email until they are agreed and then when they are agreed and the final version is agreed and signed off by both sides as being the final version and this is following the best practice in England one firm would convert that to a PDF now at that point if you're going to a physical completion meeting then you print it off in however many copies you need and you take it to the meeting and it gets signed if it's done electronically that solicitor will send that PDF which of course cannot be changed around all the parties and that's the one that they will then agree that's to be signed so you see no material difference on what firms will have to do in effect there have been specific concerns raised regarding the use of presigned signature pages which I think relates to that case there are many women in the change of rules down south now do you think that the sufficient protection Professor Rennie was very adamant on this point that there was but you also satisfied that the legislation has sufficient protections in regards to potential fraud in relation to presigned signature pages it's very unusual to use presigned signature pages I would be very reluctant in practice to do so very exceptionally and then what you would do this is from the perspective of an advised transaction where there are lawyers involved that I would ensure I had a very clear trail of authorisations indicating to what the approval of the document to which this has been attached I would want an email with the PDF saying you can attach this page to this document because from my own personal perspective as the person who would be doing the attaching I would be I would want to ensure it wasn't I want to know why you had to do it that way as well so you think a lot of responsibility for that working effect to be actually fallen firms themselves and practitioners themselves rather than being the effect of what's in legislation I suspect at a practical level yes the purpose of the bill though is not to permit presignature of contracts and I think in the process of the law commission's work they looked into whether that would be a desirable aspect of law reform in this area for my firm's part we didn't think it would be because I think there are more concerns over presignature presign pages than it helps there are other ways to get round someone's inability to sign once the document has been agreed thank you just as we test fraud and error is it possible for companies in Scotland to get insurance to cover that particular risk and do they? I don't think I know the answer to that one I suspect it's not possible other than general fraud by employees and that companies will have but fraud on the part of an officer entering into a transaction or perhaps worse to contemplate their advisor it may well be difficult to insure against I don't think they consciously do so I'm not sure whether all you would think it was covered by commercial insurance I wouldn't know I don't think it enters into people's conception I think again it's wonderful about what we're looking at here for commercial parties to make a contract many contracts don't need to be reduced to writing so a lot of what this is about are going to be contracts which are actually facilitated by lawyers and therefore there is a huge degree of probity in the system already by the fact that you have lawyers on the other side I have heard concerns about this being used by parties themselves and yes that could happen under this bill but at the moment a lot of the contracts that ordinary parties will be doing without legal advice at the moment they can do at the moment they don't need to be reduced to writing I could agree with you tomorrow to buy your company and we could do that verbally in shake hands and that would be a binding contract so I just don't get the fraud concerns around all of this I was only asking the question to see if someone external to the profession had done a risk assessment that is my only reason for asking but equally I can see that it may well be that it would be cheaper to self-insure to carry the risk in your own books and I think again we need to look at the bill as being facilitative and people will use this bill to do use counterpart execution and will follow the steps in it and sometimes they may sign the last page and use those provisions sometimes they might actually choose to actually ask for the whole document to be sent through I think you know where I mean solicitors are and I think the other thing that is of comfort in all of this is I think you've heard evidence on a lost site in England and there's simply no evidence I think of the practice there which comes from the common law being abused open to fraud and what we've tried to do here is build on the policy statements in England better yep that's fine I didn't want to make a middle of that particularly by the way I hope you're not relying solely on PDFs but secure PDFs because I certainly have software that enables me to edit PDFs which I do for my own reasons electronic signatures how widespread is the use of that currently and is enough in the bill to allow electronic signatures to be used as widely as the profession might find useful not used at all everywhere the world over uses pen and paper whatever jurisdiction you're in in the contracts that I certainly get involved in and I suspect for Paul and HMH2 I perhaps just ask that for my sins was the one of the project managers for the CHAPS system which of course introduced electronic signatures 32 years ago that just made that passing observation that's all and that's a good example of something that was innovative at the time and has become commonplace and who knows in 32 years time we'll be looking like the dinosaurs but we are reflecting what our clients do and I suppose overlying the CHAPS will be something with the signature on it under which the account has been opened under which they've not even in 1982 when we're live believe me can I bring John in I might need to make a more general point at the end of the question if I mean if you prefer to leave it just a statement yeah please do good afternoon gentlemen I've just been looking through your submissions again after the evidence that I've heard from the previous two panels and just a word that's come up in the submission from Shepard and Wetherburn and towards Murray was the word antiquated regarding the current system in which we work and in two of the initial bullet points raised in the submission from Dixon Minto stated there are no disadvantages to the approach taken in the bill and the bill is comprehensive and we do not believe that there are any missing provisions certainly from that Dixon Minto your position is very clear but in terms of Shepard and Wetherburn and towards Murray I'd just like to get it on the record if possible if you agree with the comments from Dixon Minto and do you think do you believe that the bill is as accurate or do you think there are any missing provisions I'm very happy to support Mr McNeill and Dixon Minto in the clarity of their submission to you As am I I think it was gone into in great detail by the law commission before it came here I anticipated that so that's what you're going to say but a second question just on something different I've posed this question to the previous two panels as well and that was regarding the situation for an electronic repository and do you believe that there will be any benefits to the setting up of an electronic document repository maintained by the Registers of Scotland I'll go first I'm not sure it's my area of expertise but I and I think it's separate from this act I think this act facilitates moving towards that I think because we are transacting very often cross-border when this happens any form of depository would therefore need to gain a degree of universal universal acceptance and the Registers of Scotland or someone may be able to provide that I don't know but in the same way and such a register might be able to become universally accepted and very helpful from that point of view in the same way as we were talking about CHAPS earlier on so yes that is I would imagine that's a possibility but I don't have the technical knowledge to know how that would work I think I would just agree with Paul that in cross-border transactions it's perhaps difficult to see how and why Registers of Scotland might have a role but also it presupposes that electronic and electronic repository is accepted anyway and I think probably in the areas in which three of us work that's not the case at the moment and very often the law firms have their own in a sense and clearly they will operate in parallel I can certainly see the advantages of having a central one rather than we have the Books of Council in session and answer to everyone's problems is to my mind another matter useful I think but not everything sure okay thank you John thank you and further to Stuart McMillan's question gentlemen as lay people notwithstanding Stuart Stevenson's obvious expertise in this area albeit historic but nonetheless we have to take the advice of experts such as yourself and Mr Howey raised concerns about the proposed legislation which you and Professor Rennie discount and disagree with are there any reservations you have about this proposed legislation and it appears you have none but are you inviting us therefore to discount and dismiss Mr Howey's concerns or is there any of his concerns that you would support and uphold well maybe if I can go first I had the benefit of sitting through all of his evidence and his first concern was the one of fraud or error or fraud and error I suspect we've covered that his second was he wasn't sure how many contracts this would affect I think we've covered that it's difficult to put a percentage on it but nonetheless there is a percentage of contracts that we all come across that this would affect and that if they remained under Scott's law would have the benefit if litigation arose of being litigated in Scotland he didn't think that this bill would influence the choice of law I think we've demonstrated in the other evidence that that isn't the case that whilst there are often very clear factors determining where the choice of law is between Scotland and England when you've got parties that operate throughout the UK it comes down to the often mundane matters as the convenience of execution so it does affect it will influence the choice of law and he finally said that large multi-party international deals cost isn't an issue and I think travelling cost as I said earlier is not an issue but the time cost of these of clients is an issue and they're not in a position to travel to Edinburgh or Glasgow or wherever because as we indicated very often whole transactions can get covered involving billions of pounds without people leaving their offices and that is a common feature of commercial life just now so I don't feel that any of the concerns he had raised are valid but others may have other things to add Others will speak for themselves doubtless Yes I don't think I've really got much to add to what Colin said Shaking my head in disbelief I think through all of his evidence I'm afraid I understood the concerns but I don't agree with them in practice and I think I just incomprehensible that you wouldn't introduce an act like this and put us on a level playing field If I may just add he did suggest that one might be that the bill required that the whole of the document be sent back electronically as a counter to error or fraud I was certainly partied to a discussion with the law commission when this was being formulated and our concern over that was that using Paul's example when he was on holiday if it instead of being a short I don't know how long his document was but if it had been a 100 page document or even sitting at home with your home printer it's a gross inconvenience at 2 in the morning to ask a director of a company to print off 100 pages and then re-scan them all back whereas printing off a single signature page to get the deal done is not an inconvenience And if he happens to be somewhere in the world staying in a hotel trying to find facilities in that hotel he happens to be staying in at small hours of the morning is just not what he wants to do and he will look at you and say why am I doing this under Scott's law and why am I using your legal firm to do this and it's just positively disincentive to using Scott's law Thank you, all that's certainly clear cut Thank you, I think that completes our questions Can I thank you again gentlemen for being here? Can I particularly thank Mr McNeill for arriving very early because the fact that you did hear all the previous evidence I was very much appreciated and helpful to us so that is, I'm grateful for that and I will briefly suspend the meeting once again to allow the witnesses to leave us Thank you Good to see you colleagues push on with this sorry Oh we do know our lawyers Do you need legal advisers? Can we get our ladies back in please or call in up or whoever They're not there? All right that's fine I think we do have to wait for our legal We do need a bugle for the legal advisers because it's really not fair to suddenly find we've got a question and they aren't here We can do, I think I've got to do all the instruments Let's reconvene into gender item 4 which is instrument subject to affirmative procedure No points have been raised by our legal advisers on the Bankruptcy and Death Advice Scotland Act 2014, consequential provisions order 2014 draft Nor on the Bankruptcy, money advice and deduction from income etc Scotland regulations 2014 draft Nor on the common financial tool etc Scotland regulations 2014 draft Nor on the DOT arrangement scheme Scotland amendment regulations 2014 draft The committee may wish to note that both of these instruments replace earlier drafts which were laid before the Parliament on the 21st of August and 22nd of August respectively but were drawn by the Scottish Government following correspondence with our legal advisers Is the committee content with these instruments please? Thank you Gender item 5 Is instrument subject to negative procedure The Bankruptcy Scotland Regulations 2014 SSI 2014 225 These regulations contain a couple of minor drafting errors Regulation 19 refers to section 54D4B or 6B without specifying that these are provisions of the Bankruptcy Scotland Act 1985 Page 27 also contains notes for the completion of form 4 Statement of Assets and Liabilities contained in schedule 1 but the page is duplicated with page 26 Scottish Government has undertaken to correct these errors by means of amending regulations which would be laid before the Parliament before these regulations come into force on the 1st of April 2015 There has also been a failure to follow normal drafting practice as various provisions in the notes within the forms in schedule 1 and not drafted in gender neutral terms The supply is at pages 34, 37, 39, 41, 124 a paragraph 3 and 127 a paragraph 3 of the regulations Scottish Government has again undertaken to correct these provisions if and when other amendments to the relevant forms in schedule 1 are to be made or if in the future the regulations were to be revoked and the relevant provisions reenacted However, the committee may consider that the various non-gender neutral references should be amended at the same time as the mining drafting errors I previously referred to and so before these regulations come into force on the 1st of April does the committee agree to draw these regulations to the attention of the Parliament under the general reporting ground? Does the committee also agree to recommend that provisions are drafted in non-gender neutral terms which are drafted in non-gender neutral terms should be corrected prior to the regulations coming into force? We do. Further more the meaning of the saving provision in paragraph A of regulation 24.1 could be clearer there could be a consistent use of tents in sub-biographs 1 and 2 paragraph A could accordingly have been clearer that it applies to sequestrations proceeding either on a petition for sequestration presented or on a data application made before the 1st of April 2014, regardless of whether the date of presentation of the petition or the date of making the data application was before, on or after the date of making these regulations does the committee therefore agree to draw the regulations to the attention of the Parliament on the reporting ground H as the meaning of the saving provision in paragraph A of regulation 24.1 could be clearer? That will be amended then the difference in tents is or not I'm unclear I think we're asking the Government to consider that it should and I think we're telling them that it should. We're seeking that they do because I'm sure the committee would like me to reiterate that we would prefer subordinate legislation said what it means and means what it says. Absolutely. Every time. Scottish Government has indicated that it may not have been consistent to use it may have been more consistent is instead of was in regulation 24.1 A2 but it is not indicated that revision will be amended. However, previous comment stands does the committee agree to recommend that regulation 24.1 should be amended at the same time as the previously referred to minor errors are corrected to provide better clarity and consistency of provision? We do. Thank you. The Bankruptive fees Scotland regulations 2014, SSI 14227 that has been, could be a consistent use of tents in sub paragraphs A and B. Regulation 13.1 could accordingly have been clearer that it applies to sequestrations proceeding either on a petition for a sequestration presented or on a data application made before the 1st of April 2015, regardless of whether the data presentation of the petition or the data making the data application was before on or after the data meeting these regulations. Does the committee therefore agree to draw the instrument to the attention of the Parliament on reporting ground H as the meaning of the saving provision in regulation 13.1 could be clearer? Aged. The local government pension scheme transitional provisions and saving Scotland regulations 2014 SSI 2014233 Regulation 1713A1 specifies a condition when membership of the local government pension scheme for the purposes of calculation of a survivor pension payable in accordance with the requirements of Regulation 1710-12 shall include additional membership under certain revisions of the 1998 or 2009 schemes. Specified condition is that a surviving spouse or civil partner was married or in a civil partnership at any time whilst the deceased was in active membership of the scheme after the 31st of March 1972. There should also provide that the spouse or civil partner was married or in a partnership with to the deceased member of the scheme which is actually specified. Does the committee therefore agree to draw the regulations to the attention of the Parliament on the reporting ground I as the drafting of the Regulation 1713A1 appears to be defective? Aged. Two minor drafting errors have also been raised by our legal advisers in relation to this instrument. Firstly in Regulation 14 there is an error in the definition of the 1998 and 1998 transitional regulations as the citation of the regulations is incorrect. The words Scotland and transitional provisions are inverted. Secondly in Regulation 1713A the reference to Regulation 41A2D of the 1998 regulations should be to Regulation 41A2D of those regulations. A committee may wish to note that the Scottish Government has undertaken to lay an amending instrument to correct these errors timuously before these regulations come into force. Whilst noting this undertaking does the committee agree to draw the regulations to the attention of the Parliament on the general reporting ground as they contain minor drafting errors? Aged. No points have been raised by our legal advisers on the bankruptcy applications and decisions Scotland Regulations 2014 SSI 2014 226 nor on the homeless persons unsuitable regulations Scotland Order 2014 SSI 2014 243 is the committee content with these instruments. Instruments not subject to any parliamentary procedure the rules of the Scottish Land Court Order 2014 SSI 2014 229 this instrument contains some minor drafting errors firstly the reference in Rule 21 to the rights conferred by paragraphs 2 and 5 of this rule should be to the rights conferred by paragraphs 2 and 6 secondly Rule 51 refers to the process in the case under Rule 49 the reference should be to the process in the application as that is the term defined by Rule 49 and finally the reference in Rule 973 to a written submission under paragraph 1 of that rule should be to a written submission under paragraph 2. There has also been a failure for a normal drafting practice as various provisions in the order are not drafted in gender neutral terms. This applies in Rules 71584 968 and 106 4 in the schedule to the order. Given the matters I have highlighted does the committee agree to draw the instrument to the attention of the parliament on the general reporting ground? Separate of the committee may also wish to note that would have been useful had the planned timing of this instrument allowed a period longer than two sitting days to date when it was laid before parliament and the date when the provisions were brought into force to afford the committee the opportunity to scrutinise the instrument before the commencement date. The committee may also wish to note the explanation of the timetable given by the Scottish Land Court and the court regrets the inadvertent failure to allow the time for scrutiny. Do you members have any comments please? No points have been raised by our legal advisers on Public Bodies Joint Working Scotland Act 2014, Commencement 2, Order 2014, SSI 2014 231 nor on the Act of a Journal Amendment of the Criminal Procedure Scotland Act 1995 and the Criminal Procedure Rules 1996, Ms Elanions 2014 SSI 2014 242 Is the committee content with these instruments please? Before we move on from consideration of instruments the committee may wish to note that the total of 39 minor points have been identified in instruments under consideration today. Although those errors are minor, the committee may nevertheless consider such a high number of mistakes to be unsatisfactory. Do you members have any comments on that? Shall we merely note it and pass on at this point? That brings us to Agender Item 7 which is the Criminal Justice and Courts Bill which is UK Parliament legislation. Under this item the committee is invited to consider the powers to be made to make subordinate legislation conferred on the Scottish Ministers in this bill. The briefing paper has been provided that sets out the relevant aspects of the bill and comments on the effect. Does the committee agree to report to the lead committee that is content with the delegated powers conferred on Scottish Ministers in this bill and with the procedure to which they are subject? We are, thank you. Agender, it might just be useful to draw the attention of the Standards, Procedures and Public Appointments Committee to this being another instance where something touching on subordinate legislation is not accompanied with our delegated powers memorandum as part of the SPPA's consideration of the legislative process. Thank you for that comment. Agender Item 8 is deregulation bill which again is UK Parliament legislation under this item that committee has invited to consider the proposed powers to make subordinate legislation conferred on Scottish Ministers in this bill. Apart from one clause that is already in the text of the bill, the clauses which will introduce these new and extended powers are contained in an amendment which will be considered at the committee stage in the House of Lords on 21 October 2014. A briefing paper has been provided that sets out the relevant aspects of the bill and comments on their effects. Does the committee agree to report to the lead committee that it is content with the proposed delegated powers conferred on Scottish Ministers in the bill and with the procedure to which they will be subject? Thank you. At that point we have mentioned Agender Item 9 and I move the meeting into private.