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Court’s discretion in mortgage possession proceedings

Ms Sally Keeble

Mr Mark Todd

NC7

To move the following Clause:—

‘In the Housing Act 1980 (c.51), after section 89 insert—

“89A	Court’s discretion in mortgage possession proceedings

(1)	This section applies where, in possession proceedings brought by a

mortgagee under a mortgage agreement (whether or not regulated by any

enactment), it appears to the court that the property is occupied by a

person or persons whose occupation derives from an interest or licence

created by the mortgagor under that agreement (whether or not such

interest or licence was created in breach of the terms of that agreement).

(2)	Where subsection (1) applies, the court may postpone the date of

possession, or stay or suspend execution of the order, for such period or

periods as the court thinks just, not exceeding three months in total.

(3)	On any such postponement, stay or suspension as is referred to in

subsection (1), the court may, unless it considers that to do so would

cause hardship to the occupier or would otherwise be unreasonable,

impose such conditions as it thinks fit with regard to the payment by the

occupier of sums for the use and occupation of the premises (not

exceeding the amount of the rent or other contractual payment which the

occupier was liable to pay under his agreement with the mortgagor).

(4)	Rules of court shall provide for appropriate notices to be served on the

residential occupier of any premises prior to the commencement and in

the course of possession proceedings brought by a mortgagee of those

premises; and shall provide for the occupier to be heard by the court,

whether by being joined as a party to the proceedings or otherwise.

(5)	In fixing the period of any such postponement, stay or suspension as is

referred to in subsection (2) and in deciding whether to impose conditions

under subsection (3), the court shall have regard to all the circumstances,

including—

(a)	the terms, and in particular the duration, of the agreement

between the occupier and the mortgagor;

(b)	the interests of any children or other vulnerable members of the

occupiers household;

(c)	the fact (if applicable) that the occupier’s agreement with the

mortgagor has been terminated prematurely;

(d)	the availability of suitable alternative accommodation;

(e)	whether the tenancy or licence between the mortgagor and the

occupier was created in breach of the terms of the mortgage

agreement, and whether the occupier was aware that his

occupation constituted such a breach;

(f)	whether the mortgagee knew, or ought to have known, that the

premises were to be let or licensed by the mortgagor, in the

course of business or otherwise;

(g)	any prejudice which would be caused to the mortgagee by the

deferment of possession or execution; and

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(h)	any hardship which would be caused to the occupier by a

decision not to defer possession or execution.

(6)	For the avoidance of doubt, nothing in this section affects the right of a

person whose interest in the property pre-dates, or otherwise ranks in

preference to, the interests of the mortgagee.’”.

Reform of the law of mortgages

Dr John Pugh

Mr Colin Breed

NC14

To move the following Clause:—

‘For section 36 of the Administration of Justice Act 1970 substitute—

“36	Actions by mortgagees for possession

(1)	All mortgages securing a loan of money or other form of credit on

residential premises shall be enforceable only upon the mortgagee

obtaining an order of the court.

(2)	A power of sale which becomes exercisable by a mortgagee of residential

premises, whether under the mortgage agreement or by virtue of sections

101 to 103 of the Law of Property Act 1925, shall be exercised only

following an order for possession granted by the court.

(3)	Where a mortgagee under a mortgage of residential premises brings an

action in which he claims possession, the court may exercise any of the

powers in subsection (4) if it appears to the court that it is reasonable in

all the circumstances to do so.

(4)	In a possession claim of the kind specified in subsection (3) the court

may, if it considers it just to do so—

(a)	adjourn the proceedings;

(b)	make the operation of any term of the order conditional on the

doing of specified acts by any party to the proceedings;

(c)	suspend the operation of any term of the order; or

(d)	at any time before execution of a judgment or order, postpone the

date of possession, or stay or suspend execution of the judgment

or order, for such period or periods as the court thinks reasonable

or until such time as the court subsequently directs.

(5)	For the avoidance of doubt, the court’s powers under subsection (4) exist

in relation to any mortgage or charge under which a loan of any kind is

secured upon residential property, irrespective of the purpose for which

the loan was taken out or of the relative priority of the loan or of

regulation by any other enactment.

(6)	On making an order under subsection (4), the court shall impose such

conditions with regard to payment by the mortgagor of any sum secured

by the mortgage or the remedying of any default as the court thinks fit.

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(7)	Notwithstanding the terms of any agreement, a mortgagee of residential

premises shall be entitled to charge to the mortgagor the costs of and

ancillary to proceedings for possession or for recovery of any sums due

under the mortgage only if, and to the extent that, the court makes an

order for costs in his favour.

(8)	The remedy of foreclosure shall no longer apply to mortgages of

residential premises.

(9)	In this section “residential premises” mean any premises comprising or

containing a dwelling.

(10)	Nothing in this section affects the power of the court to make a time order

or other orders under sections 129 to 140B of the Consumer Credit Act

1974 in relation to agreements regulated by that Act.”’.

Court’s discretion in mortgage possession proceedings brought by a bank

Ms Sally Keeble

Mr Mark Todd

NC15

To move the following Clause:—

‘In the Housing Act 1980 (c. 51), after section 89 insert—

“89A	Court’s discretion in mortgage possession proceedings brought by a

bank

(1)	This section applies where, in possession proceedings brought by a

mortgagee under a mortgage agreement (whether or not regulated by any

enactment)—

(a)	it appears to the court that the property is occupied by a person

or persons whose occupation derives from an interest or licence

created by the mortgagor under that agreement (whether or not

such interest or licence was created in breach of the terms of that

agreement), and

(b)	the mortgagee is a bank within the meaning of section 2 of the

Banking Act 2008.

(2)	Where subsection (1) applies, the court may postpone the date of

possession, or stay or suspend execution of the order, for such period or

periods as the court thinks just, not exceeding three months in total.

(3)	On any such postponement, stay or suspension as is referred to in

subsection (1), the court may, unless it considers that to do so would

cause hardship to the occupier or would otherwise be unreasonable,

impose such conditions as it thinks fit with regard to the payment by the

occupier of sums for the use and occupation of the premises (not

exceeding the amount of the rent or other contractual payment which the

occupier was liable to pay under his agreement with the mortgagor).

(4)	Rules of court shall provide for appropriate notices to be served on the

residential occupier of any premises prior to the commencement and in

the course of possession proceedings brought by a mortgagee of those

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premises; and shall provide for the occupier to be heard by the court,

whether by being joined as a party to the proceedings or otherwise.

(5)	In fixing the period of any such postponement, stay or suspension as is

referred to in subsection (2) and in deciding whether to impose conditions

under subsection (3), the court shall have regard to all the circumstances,

including—

(a)	the terms, and in particular the duration, of the agreement

between the occupier and mortgagor;

(b)	the interests of any children or other vulnerable members of the

occupier’s household;

(c)	the fact (if applicable) that the occupier’s agreement with the

mortgagor has been terminated prematurely;

(d)	the availability of suitable alternative accommodation;

(e)	whether the tenancy or licence between the mortgagor and the

occupier was created in breach of the terms of the mortgage

agreement, and whether the occupier was aware that his

occupation constituted such a breach;

(f)	whether the mortgagee knew, or ought to have known, that the

premises were to be let or licensed by the mortgagor, in the

course of business or otherwise;

(g)	any prejudice which would be caused to the mortgagee by the

deferment of possession or execution; and

(h)	any hardship which would be caused to the occupier by a

decision not to defer possession or execution.

(6)	For the avoidance of doubt, nothing in this section affects the right of a

person whose interest in the property pre-dates, or otherwise ranks in

preference to, the interests of the mortgagee.”’.

Mortgage possession proceedings brought by a bank

Dr John Pugh

Mr Colin Breed

NC16

To move the following Clause:—

‘At the beginning of Part 4 of the Administration of Justice Act 1970 insert—

“35A	Mortgage possession proceedings

(1)	Section 35B applies in the case of any mortgage possession proceedings

brought by a bank (within the meaning of section 2 of the Banking Act

2008).

(2)	Section 36 applies in the case of any other such proceedings.

35B	Mortgage possession proceedings brought by a bank

(1)	All mortgages securing a loan of money or other form of credit on

residential premises shall be enforceable only upon the mortgagee

obtaining an order of the court.

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(2)	A power of sale which becomes exercisable by a mortgagee of residential

premises, whether under the mortgage agreement or by virtue of sections

101 to 103 of the Law of Property Act 1925, shall be exercised only

following an order for possession granted by the court.

(3)	Where a mortgagee under a mortgage of residential premises brings an

action in which he claims possession, the court may exercise any of the

powers in subsection (4) if it appears to the court that it is reasonable in

all the circumstances to do so.

(4)	In a possession claim of the kind specified in subsection (3) the court

may, if it considers it just to do so—

(a)	adjourn the proceedings;

(b)	make the operation of any term of the order conditional on the

doing of specified acts by any party to the proceedings;

(c)	suspend the operation of any term of the order; or

(d)	at any time before execution of a judgment or order, postpone the

date of possession, or stay or suspend execution of the judgment

or order, for such period or periods as the court thinks reasonable

or until such time as the court subsequently directs.

(5)	For the avoidance of doubt, the court’s powers under subsection (4) exist

in relation to any mortgage or charge under which a loan of any kind is

secured upon residential property, irrespective of the purpose for which

the loan was taken out or of the relative priority of the loan or of

regulation by any other enactment.

(6)	On making an order under subsection (4), the court shall impose such

conditions with regard to payment by the mortgagor of any sum secured

by the mortgage or the remedying of any default as the court thinks fit.

(7)	Notwithstanding the terms of any agreement, a mortgagee of residential

premises shall be entitled to charge to the mortgagor the costs of and

ancillary to proceedings for possession or for recovery of any sums due

under the mortgage only if, and to the extent that, the court makes an

order for costs in his favour.

(8)	The remedy of foreclosure shall no longer apply to mortgages of

residential premises.

(9)	In this section “residential premises” mean any premises comprising or

containing a dwelling.

(10)	Nothing in this section affects the power of the court to make a time order

or other orders under sections 129 to 140B of the Consumer Credit Act

1974 in relation to agreements regulated by that Act.”’.

Ian Pearson

That certain written evidence already reported to the House be appended to the

proceedings of the Committee.

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Order of the House [14th OCTOBER 2008]

That the following provisions shall apply to the Banking Bill:

Committal

1.	The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2.	Proceedings in the Public Bill Committee shall (so far as not previously

concluded) be brought to a conclusion on Tuesday 18th November 2008.

3.	The Public Bill Committee shall have leave to sit twice on the first day on

which it meets.

Consideration and Third Reading

4.	Proceedings on consideration shall (so far as not previously concluded) be

brought to a conclusion one hour before the moment of interruption on the

day on which those proceedings are commenced.

5.	Proceedings on Third Reading shall (so far as not previously concluded) be

brought to a conclusion at the moment of interruption on that day.

6.	Standing Order No. 83B (Programming committees) shall not apply to

proceedings on consideration and Third Reading.

Other proceedings

7.	Any other proceedings on the Bill (including any proceedings on

consideration of Lords Amendments or on any further messages from the

Lords) may be programmed.

Order of the Committee [21st October 2008]

That—

(1)	the Committee shall (in addition to its first meeting at 10.30 a.m. on Tuesday

21st October) meet—

(a)	at 4.30 p.m. on Tuesday 21st October;

(b)	at 9.00 a.m. and 1.00 p.m. on Thursday 23rd October;

(c)	at 10.30 a.m. and 4.30 p.m. on Tuesday 28th October;

(d)	at 9.00 a.m. and 1.00 p.m. on Thursday 30th October;

(e)	at 10.30 a.m. and 4.30 p.m. on Tuesday 4th November;

(f)	at 9.00 a.m. and 1.00 p.m. on Thursday 6th November;

(g)	at 10.30 a.m. and 4.30 p.m. on Tuesday 11th November;

(h)	at 9.00 a.m. and 1.00 p.m. on Thursday 13th November;

(i)	at 10.30 a.m. and 4.30 p.m. on Tuesday 18th November;

(2)	the Committee shall hear oral evidence in accordance with the following

Table:

TABLE

	Date	Time	Witness
	Tuesday 21st October	Until no later than 12 noon	HM Treasury
	Tuesday 21st October	Until no later than 1.00 p.m.	Bank of England; Financial
			Services Authority; Financial
			Services Compensation Scheme
	Tuesday 21st October	Until no later than 5.45 p.m.	British Bankers’ Association;
			Building Societies Association;
			London Investment Banking
			Association
	Tuesday 21st October	Until no later than 7.00 p.m.	Association of British Insurers;
			Investment Management
			Association; Citizens Advice
			Bureau; Which?

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(3)	proceedings on consideration of the Bill in Committee shall be taken in the

following order: Clauses 155 and 156; Clauses 158 to 233; Clauses 1 to 76;

Clause 157; Clauses 77 to 154; Clauses 234 to 240; new Clauses; new

Schedules; remaining proceedings on the Bill;

(4)	the proceedings shall (so far as not previously concluded) be brought to a

conclusion at 7.00 p.m. on Tuesday 18th November.

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Revised 6 November 2008