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(1)Where this subsection applies, an alienation by a debtor shall be challengeable by—
(a)any creditor who is a creditor by virtue of a debt incurred on or before the date of sequestration, or before the granting of the trust deed or the debtor’s death, as the case may be; or
(b)the permanent trustee, the trustee acting under the trust deed or the judicial factor, as the case may be.
(2)Subsection (1) above applies where—
(a)by the alienation, whether before or after the coming into force of this section, any of the debtor’s property has been transferred or any claim or right of the debtor has been discharged or renounced; and
(b)any of the following has occurred—
(i)his estate has been sequestrated (other than, in the case of a natural person, after his death); or
(ii)he has granted a trust deed which has become a protected trust deed; or
(iii)he has died and within 12 months after his death, his estate has been sequestrated; or
(iv)he has died and within the said 12 months, a judicial factor has been appointed under section 11A of the M1Judicial Factors (Scotland) Act 1889 to administer his estate and the estate was absolutely insolvent at the date of death; and
(c)the alienation took place on a relevant day.
(3)For the purposes of paragraph (c) of subsection (2) above, the day on which an alienation took place shall be the day on which the alienation became completely effectual; and in that paragraph “relevant day” means, if the alienation has the effect of favouring—
(a)a person who is an associate of the debtor, a day not earlier than 5 years before the date of sequestration, the granting of the trust deed or the debtor’s death, as the case may be; or
(b)any other person, a day not earlier than 2 years before the said date.
(4)On a challenge being brought under subsection (1) above, the court shall grant decree of reduction or for such restoration of property to the debtor’s estate or other redress as may be appropriate, but the court shall not grant such a decree if the person seeking to uphold the alienation establishes—
(a)that immediately, or at any other time, after the alienation the debtor’s assets were greater than his liabilities; or
(b)that the alienation was made for adequate consideration; or
(c)that the alienation—
(i)was a birthday, Christmas or other conventional gift; or
(ii)was a gift made, for a charitable purpose, to a person who is not an associate of the debtor,
which having regard to all the circumstances, it was reasonable for the debtor to make:
Provided that this subsection shall be without prejudice to any right or interest acquired in good faith and for value from or through the transferee in the alienation.
(5)In subsection (4) above, “charitable purpose” means any charitable, benevolent or philanthropic purpose whether or not it is charitable within the meaning of any rule of law.
(6)For the purposes of the foregoing provisions of this section, an alienation in implementation of a prior obligation shall be deemed to be one for which there was no consideration or no adequate consideration to the extent that the prior obligation was undertaken for no consideration or no adequate consideration.
(7)This section is without prejudice to the operation of section 2 of the M2Married Women’s Policies of Assurance (Scotland) Act 1880 (policy of assurance may be effected in trust for spouse, future spouse and children).
(8)A permanent trustee, the trustee acting under a protected trust deed and a judicial factor appointed under section 11A of the M3Judicial Factors (Scotland) Act 1889 shall have the same right as a creditor has under any rule of law to challenge an alienation of a debtor made for no consideration or for no adequate consideration.
(9)The permanent trustee shall insert in the sederunt book a copy of any decree under this section affecting the sequestrated estate.
Modifications etc. (not altering text)
C1S. 34 restricted by Drug Trafficking Offences Act 1986 (c. 32, SIF 39:1), s. 16(6)(a)
C2S. 34 excluded (25.4.1991) by Companies Act 1989 (c. 40, SIF 27), ss. 154, 155, 165(2)(a); S.I. 1991/878, art. 2,Sch.
C3S. 34 restricted (25.4.1991) by Companies Act 1989 (c. 40, SIF 27), s. 182(4), Sch. 22 para. 8(2)(a); S.I. 1991/878, art. 2,Sch.
C4S. 34 restricted by Criminal Justice Act 1988 (c. 33, SIF 39:1), ss. 85(6)(a), 123, Sch. 8 para. 16
C5S. 34 amended by Criminal Justice Act 1988 (c. 33, SIF 39:1), ss. 85(6)(b), 123, Sch. 8 para. 16
C6S. 34 restricted (3.2.1995) by 1994 c. 37, ss. 33(6)(a), 69(2) (with s. 66(2))
S. 34 restricted (1.4.1996) by 1995 c. 43, ss. 44(1), 50(2), Sch. 2 para. 1(5)
C7S. 34 restricted (24.3.2003) by Proceeds of Crime Act 2002 (c. 29), ss. 422(2), 458(1); S.I. 2003/333, art. 2(1), Sch. (subject to transitional provisions and savings in arts. 3-14) (as amended by S.I. 2003/531, art. 2)
C8S. 34 restricted (11.12.1999) by S.I. 1999/2979, reg. 17(2)(a)
Marginal Citations
(1)This section applies where—
(a)a court has made an order, whether before or after the coming into force of this section, under section 5 of the M4Divorce (Scotland) Act 1976 or section 8(2) of the M5Family Law (Scotland) Act 1985, for the payment by a debtor of a capital sum or under the said section 8(2) for the transfer of property by him;
(b)on the date of the making of the order the debtor was absolutely insolvent or was rendered so by implementation of the order; and
(c)within 5 years after the making of the order—
(i)the debtor’s estate has been sequestrated other than after his death; or
(ii)he has granted a trust deed which has (whether or not within the 5 years) become a protected trust deed; or
(iii)he has died and, within 12 months after his death, his estate has been sequestrated; or
(iv)he has died and, within the said 12 months, a judicial factor has been appointed under section 11A of the Judicial Factors (Scotland) Act 1889 to administer his estate.
(2)Where this section applies, the court, on an application brought by the permanent trustee, the trustee acting under the trust deed or the judicial factor, may make an order for recall of the order made under the said section 5 or 8(2) and for the repayment to the applicant of the whole or part of any sum already paid, or as the case may be for the return to the applicant of all or part of any property already transferred, under that order, or, where such property has been sold, for payment to the applicant of all or part of the proceeds of sale:
Provided that before making an order under this subsection the court shall have regard to all the circumstances including, without prejudice to the generality of this proviso, the financial, and other, circumstances (in so far as made known to the court) of the person against whom the order would be made.
(3)Where an application is brought under this section in a case where the debtor’s estate has been sequestrated, the permanent trustee shall insert a copy of the decree of recall in the sederunt book.
(1)Subject to subsection (2) below, subsection (4) below applies to a transaction entered into by a debtor, whether before or after the coming into force of this section, which has the effect of creating a preference in favour of a creditor to the prejudice of the general body of creditors, being a preference created not earlier than 6 months before—
(a)the date of sequestration of the debtor’s estate (if, in the case of a natural person, a date within his lifetime); or
(b)the granting by him of a trust deed which has become a protected trust deed; or
(c)his death where, within 12 months after his death—
(i)his estate has been sequestrated, or
(ii)a judicial factor has been appointed under section 11A of the M6Judicial Factors (Scotland) Act 1889 to administer his estate and his estate was absolutely insolvent at the date of death.
(2)Subsection (4) below shall not apply to any of the following transactions—
(a)a transaction in the ordinary course of trade or business;
(b)a payment in cash for a debt which when it was paid had become payable unless the transaction was collusive with the purpose of prejudicing the general body of creditors;
(c)a transaction whereby the parties thereto undertake reciprocal obligations (whether the performance by the parties of their respective obligations occurs at the same time or at different times) unless the transaction was collusive as aforesaid;
(d)the granting of a mandate by a debtor authorising an arrestee to pay over the arrested funds or part thereof to the arrester where—
(i)there has been a decree for payment or a warrant for summary diligence; and
(ii)the decree or warrant has been preceded by an arrestment on the dependence of the action or followed by an arrestment in execution.
(3)For the purposes of subsection (1) above, the day on which a preference was created shall be the day on which the preference became completely effectual.
(4)A transaction to which this subsection applies shall be challengeable by—
(a)any creditor who is a creditor by virtue of a debt incurred on or before the date of sequestration, the granting of the protected trust deed or the debtor’s death, as the case may be; or
(b)the permanent trustee, the trustee acting under the protected trust deed, or the judicial factor, as the case may be.
(5)On a challenge being brought under subsection (4) above, the court, if satisfied that the transaction challenged is a transaction to which this section applies, shall grant decree of reduction or for such restoration of property to the debtor’s estate or other redress as may be appropriate:
Provided that this subsection shall be without prejudice to any right or interest acquired in good faith and for value from or through the creditor in whose favour the preference was created.
(6)A permanent trustee, the trustee acting under a protected trust deed and a judicial factor appointed under section 11A of the M7Judicial Factors (Scotland) Act 1889 shall have the same right as a creditor has under any rule of law to challenge a preference created by a debtor.
(7)The permanent trustee shall insert in the sederunt book a copy of any decree under this section affecting the sequestrated estate.
Modifications etc. (not altering text)
C9S. 36 restricted (24.3.2003) by Proceeds of Crime Act 2002 (c. 29), ss. 422(2), 458(1); S.I. 2003/333, art. 2(1), Sch. (subject to transitional provisions and savings in arts. 3-14) (as amended by S.I. 2003/531, art. 2)
C10S. 36 restricted by Drug Trafficking Offences Act 1986 (c. 32, SIF 39:1), s. 16(6)(a)
C11S. 36 excluded (25.4.1991) by Companies Act 1989 (c. 40, SIF 27), ss. 154, 155, 165(2)(a); S.I. 1991/878, art. 2,Sch.
C12S. 36 restricted (25.4.1991) by Companies Act 1989 (c. 40, SIF 27), ss. 182(4), Sch. 22 para. 8(2)(a); S.I. 1991/878, art. 2,Sch.
C13S. 36 restricted by Criminal Justice Act 1988 (c. 33, SIF 39:1), ss. 85(6)(a), 123, Sch. 8 para. 16
C14S. 36 amended by Criminal Justice Act 1988 (c. 33, SIF 39:1), ss. 85(6)(b), 123, Sch. 8 para. 16
C15S. 36 restricted (3.2.1995) by 1994 c. 37, ss. 33(6)(a), 69(2) (with s. 66(2))
S. 36 restricted (1.4.1996) by 1995 c. 43, ss. 44(1), 50(2), Sch. 2 para. 1(5)(a)(b)
S. 36 restricted (11.12.1999) by S.I. 1999/2979, reg. 17(2)(a)
C16S. 36 applied (with modifications) (4.4.2006) by The Cross-Border Insolvency Regulations 2006 (S.I. 2006/1030), reg. 2(1), Sch. 1 Article 23 paras. 1-3 (subject to paras. 6, 9)
Marginal Citations
(1)Where a debtor’s estate has been sequestrated and—
(a)he has during the relevant period made contributions as a member of an occupational pension scheme; or
(b)contributions have during the relevant period been made to such a scheme on his behalf;
the permanent trustee may apply to the court for an order under this section.
(2)If, on an application for an order under this section, the court is satisfied that the making of any of the contributions (“the excessive contributions”) has unfairly prejudiced the debtor’s creditors, the court may make such order as it thinks fit for restoring the position to what it would have been if the excessive contributions had not been made.
(3)The court shall, in determining whether it is satisfied under subsection (2) above, consider in particular—
(a)whether any of the contributions were made by or on behalf of the debtor for the purpose of putting assets beyond the reach of his creditors or any of them;
(b)whether the total amount of contributions made by or on behalf of the debtor (including contributions made to any other occupational pension scheme) during the relevant period was excessive in view of the debtor’s circumstances at the time when they were made; and
(c)whether the level of benefits under the scheme, together with benefits under any other occupational pension scheme, to which the debtor is entitled, or is likely to become entitled, is excessive in all the circumstances of the case.]
Textual Amendments
F1S. 36A and sidenote inserted (6.4.1996 for specified purposes and otherwiseprosp.) by 1995 c. 26, s. 95(2); S.I. 1996/778, art. 2(5)(a), Sch. Pt. V
(1)Without prejudice to the generality of subsection (2) of section 36A of this Act, an order under that section may include provision—
(a)requiring the trustees or managers of the scheme to pay an amount to the permanent trustee;
(b)reducing the amount of any benefit to which the debtor (or his spouse, widow, widower or dependant) is entitled, or to which he has an accrued right, under the scheme;
(c)reducing the amount of any benefit to which, by virtue of any assignation, commutation or surrender of the debtor’s entitlement (or that of his spouse, widow, widower or dependant) or accrued right under the scheme, another person is entitled or has an accrued right;
(d)otherwise adjusting the liabilities of the scheme in respect of any such person as is mentioned in paragraph (b) or (c) above.
(2)The maximum amount by which an order under section 36A of this Act may require the assets of an occupational pension scheme to be reduced is the lesser of—
(a)the amount of the excessive contributions; and
(b)the value (determined in the prescribed manner) of the assets of the scheme which represent contributions made by or on behalf of the debtor.
(3)Subject to subsections (4) and (5) below, an order under section 36A of this Act must reduce the amount of the liabilities of the scheme by an amount equal to the amount of the reduction made in the value of the assets of the scheme.
(4)Subsection (3) above does not apply where the debtor’s entitlement or accrued right to benefits under the scheme which he acquired by virtue of the excessive contributions (his “excessive entitlement”) has been forfeited.
(5)Where part of the debtor’s excessive entitlement has been forfeited, the amount of the reduction in the liabilities of the scheme required by subsection (3) above is the value of the remaining part of his excessive entitlement.
(6)An order under section 36A of this Act in respect of an occupational pension scheme shall be binding on the trustees or managers of the scheme.
(7)The court may, on the application of any person having an interest, review, rescind or vary an order under section 36A of this Act.]
Textual Amendments
F2S. 36B inserted (6.4.1996 for specified purposes and otherwiseprosp.) by 1995 c. 26, s. 95(2); S.I. 1996/778, art. 2(5)(c), Sch. Pt. V
(1)Nothing in—
(a)any provision of section 159 of the Pension Schemes Act 1993 or 91 of the Pensions Act 1995 (which prevent assignation, or orders being made restraining a person from receiving anything which he is prevented from assigning, and make provision in relation to a person’s pension on sequestration);
(b)any provision of any enactment (whether passed or made before or after the passing of the Pensions Act 1995) corresponding to any of the provisions mentioned in paragraph (a) above; or
(c)any provision of the scheme in question corresponding to any of those provisions,
applies to a court exercising its powers under section 36A of this Act.
(2)Where any sum is required by an order under section 36A of this Act to be paid to the permanent trustee, that sum shall be comprised in the debtor’s estate.
(3)Where contributions have been made during the relevant period to any occupational pension scheme and the entitlement or accrued right to benefits acquired thereby has been transferred to a second or subsequent occupational pension scheme (“the transferee scheme”), sections 36A and 36B of this Act and this section shall apply as though the contributions had been made to the transferee scheme.
(4)For the purposes of this section and sections 36A and 36B of this Act—
(a)contributions are made during the relevant period if they are made at any time during the period of 5 years ending with the date of sequestration; and
(b)the accrued rights of a debtor under an occupational pension scheme at any time are the rights which have accrued to or in respect of him at that time to future benefits under the scheme.
(5)In this section and sections 36A and 36B of this Act—
“occupational pension scheme” has the meaning given by section 1 of the Pension Schemes Act 1993; and
“trustees or managers”, in relation to an occupational pension scheme, means—
in the case of a scheme established under a trust, the trustees of the scheme; and
in any other case, the managers of the scheme.]
Textual Amendments
F3S. 36C inserted (6.4.1996 for specified purposes and otherwiseprosp.) by 1995 c. 26, s. 95(2); S.I. 1996/778, art. 2(5)(a), Sch. Pt. V
Yn ddilys o 26/03/2002
(1)For the purposes of section 34 of this Act, a pension-sharing transaction shall be taken—
(a)to be a transaction, entered into by the transferor with the transferee, by which the appropriate amount is transferred by the transferor to the transferee; and
(b)to be capable of being an alienation challengeable under that section only so far as it is a transfer of so much of the appropriate amount as is recoverable.
(2)For the purposes of section 35 of this Act, a pension-sharing transaction shall be taken—
(a)to be a pension sharing order made by the court under section 8(2) of the Family Law (Scotland) Act 1985; and
(b)to be an order capable of being recalled under that section only so far as it is a payment or transfer of so much of the appropriate amount as is recoverable.
(3)For the purposes of section 36 of this Act, a pension-sharing transaction shall be taken—
(a)to be something (namely a transfer of the appropriate amount to the transferee) done by the transferor; and
(b)to be capable of being an unfair preference given to the transferee only so far as it is a transfer of so much of the appropriate amount as is recoverable.
(4)Where—
(a)an alienation is challenged under section 34;
(b)an application is made under section 35 for the recall of an order made in divorce proceedings; or
(c)a transaction is challenged under section 36,
if any question arises as to whether, or the extent to which, the appropriate amount in the case of a pension-sharing transaction is recoverable, the question shall be determined in accordance with subsections (5) to (9).
(5)The court shall first determine the extent (if any) to which the transferor’s rights under the shared arrangement at the time of the transaction appear to have been (whether directly or indirectly) the fruits of contributions (“personal contributions”)—
(a)which the transferor has at any time made on his own behalf, or
(b)which have at any time been made on the transferor’s behalf,
to the shared arrangement or any other pension arrangement.
(6)Where it appears that those rights were to any extent the fruits of personal contributions, the court shall then determine the extent (if any) to which those rights appear to have been the fruits of personal contributions whose making has unfairly prejudiced the transferor’s creditors (“the unfair contributions”).
(7)If it appears to the court that the extent to which those rights were the fruits of the unfair contributions is such that the transfer of the appropriate amount could have been made out of rights under the shared arrangement which were not the fruits of the unfair contributions, then the appropriate amount is not recoverable.
(8)If it appears to the court that the transfer could not have been wholly so made, then the appropriate amount is recoverable to the extent to which it appears to the court that the transfer could not have been so made.
(9)In making the determination mentioned in subsection (6) the court shall consider in particular—
(a)whether any of the personal contributions were made for the purpose of putting assets beyond the reach of the transferor’s creditors or any of them; and
(b)whether the total amount of any personal contributions represented, at the time the pension sharing arrangement was made, by rights under pension arrangements is an amount which is excessive in view of the transferor’s circumstances when those contributions were made.
(10)In this section and sections 36E and 36F—
“appropriate amount”, in relation to a pension-sharing transaction, means the appropriate amount in relation to that transaction for the purposes of section 29(1) of the Welfare Reform and Pensions Act 1999 (creation of pension credits and debits);
“pension-sharing transaction” means an order or provision falling within section 28(1) of the Welfare Reform and Pensions Act 1999 (orders and agreements which activate pension-sharing);
“”, in relation to a pension-sharing transaction, means the pension arrangement to which the transaction relates;
“transferee”, in relation to a pension-sharing transaction, means the person for whose benefit the transaction is made;
“transferor”, in relation to a pension-sharing transaction, means the person to whose rights the transaction relates.]
Textual Amendments
F4S. 36D inserted (26.3.2002 for certain purposes and otherwise 6.4.2002) by 1999 c. 30, ss. 84(1), 89(1), Sch. 12 Pt. II para. 69; S.I 2002/818 {art. 3(b)}
Yn ddilys o 26/03/2002
(1)In this section and section 36F of this Act, “recovery order” means—
(a)a decree granted under section 34(4) of this Act;
(b)an order made under section 35(2) of this Act;
(c)a decree granted under section 36(5) of this Act,
in any proceedings to which section 36D of this Act applies.
(2)Without prejudice to the generality of section 34(4), 35(2) or 36(5) a recovery order may include provision—
(a)requiring the person responsible for a pension arrangement in which the transferee has acquired rights derived directly or indirectly from the pension-sharing transaction to pay an amount to the permanent trustee,
(b)adjusting the liabilities of the pension arrangement in respect of the transferee,
(c)adjusting any liabilities of the pension arrangement in respect of any other person that derive, directly or indirectly, from rights of the transferee under the arrangement,
(d)for the recovery by the person responsible for the pension arrangement (whether by deduction from any amount which that person is ordered to pay or otherwise) of costs incurred by that person in complying in the debtor’s case with any requirement under section 36F(1) or in giving effect to the order.
(3)In subsection (2), references to adjusting the liabilities of a pension arrangement in respect of a person include (in particular) reducing the amount of any benefit or future benefit to which that person is entitled under the arrangement.
(4)The maximum amount which the person responsible for an arrangement may be required to pay by a recovery order is the smallest of—
(a)so much of the appropriate amount as, in accordance with section 36D of this Act, is recoverable,
(b)so much (if any) of the amount of the unfair contributions (within the meaning given by section 36D(6)) as is not recoverable by way of an order under section 36A of this Act containing provision such as is mentioned in section 36B(1)(a), and
(c)the value of the debtor’s rights under the arrangement acquired by the transferee as a consequence of the transfer of the appropriate amount.
(5)A recovery order which requires the person responsible for an arrangement to pay an amount (“the restoration amount”) to the permanent trustee must provide for the liabilities of the arrangement to be correspondingly reduced.
(6)For the purposes of subsection (5), liabilities are correspondingly reduced if the difference between—
(a)the amount of the liabilities immediately before the reduction, and
(b)the amount of the liabilities immediately after the reduction,
is equal to the restoration amount.
(7)A recovery order in respect of an arrangement—
(a)shall be binding on the person responsible for the arrangement, and
(b)overrides provisions of the arrangement to the extent that they conflict with the provisions of the order.]
Textual Amendments
F5S. 36E inserted (26.3.2002 for certain purposes and otherwise 6.4.2002) by 1999 c. 30, ss. 84(1), 89(1), Sch. 12 Pt. II para. 69; S.I 2002/818, {art. 3(b)}
Yn ddilys o 26/03/2002
(1)The person responsible for a pension arrangement under which the transferee has, at any time, acquired rights by virtue of the transfer of the appropriate amount shall, on the permanent trustee making a written request, provide the trustee with such information about the arrangement and the rights under it of the transferor and transferee as the permanent trustee may reasonably require for, or in connection with, the making of an application for a recovery order.
(2)Nothing in—
(a)any provision of section 159 of the M8Pension Schemes Act 1993 or section 91 of the M9Pensions Act 1995 (which prevent assignation and the making of orders which restrain a person from receiving anything which he is prevented from assigning),
(b)any provision of any enactment (whether passed or made before or after the passing of the Welfare Reform and Pensions Act 1999) corresponding to any of the provisions mentioned in paragraph (a), or
(c)any provision of the arrangement in question corresponding to any of those provisions,
applies to a court exercising its power to make a recovery order.
(3)Regulations may, for the purposes of the recovery provisions, make provision about the calculation and verification of—
(a)any such value as is mentioned in section 36E(4)(c);
(b)any such amounts as are mentioned in section 36E(6)(a) and (b).
(4)The power conferred by subsection (3) includes power to provide for calculation or verification—
(a)in such manner as may, in the particular case, be approved by a prescribed person; or
(b)in accordance with guidance—
(i)from time to time prepared by a prescribed person, and
(ii)approved by the Secretary of State.
(5)References in the recovery provisions to the person responsible for a pension arrangement are to—
(a)the trustees, managers or provider of the arrangement, or
(b)the person having functions in relation to the arrangement corresponding to those of a trustee, manager or provider.
(6)In this section—
“prescribed” means prescribed by regulations;
“the recovery provisions” means this section and sections 34, 35, 36 and 36E of this Act;
“regulations” means regulations made by the Secretary of State.
(7)Regulations under the recovery provisions may—
(a)make different provision for different cases;
(b)contain such incidental, supplemental and transitional provisions as appear to the Secretary of State necessary or expedient.
(8)Regulations under the recovery provisions shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.]
Textual Amendments
F6S. 36F inserted (26.3.2002 for certain purposes and otherwise 6.4.2002) by 1999 c. 30, ss. 84(1), 89(1), Sch. 12 Pt. II para. 69; S.I 2002/818 {art. 3(b)}
Marginal Citations