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Public Bill Committee Proceedings: 18th November 2008      

49

 

Banking Bill, continued

 
 

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

 

(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

 

Not selected  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.


 
 

Public Bill Committee Proceedings: 18th November 2008      

50

 

Banking Bill, continued

 
 

(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.”’.

 


 

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

 

Ms Sally Keeble

 

Mr Mark Todd

 

Withdrawn  NC15

 

To move the following Clause:—


 
 

Public Bill Committee Proceedings: 18th November 2008      

51

 

Banking Bill, continued

 
 

‘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

 

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.


 
 

Public Bill Committee Proceedings: 18th November 2008      

52

 

Banking Bill, continued

 
 

(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

 

Not called  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.

 

(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.


 
 

Public Bill Committee Proceedings: 18th November 2008      

53

 

Banking Bill, continued

 
 

(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.”’.

 


 

Duty of rescued bank to have regard to statements of Government policy

 

Dr John Pugh

 

Mr Colin Breed

 

Withdrawn  NC20

 

To move the following Clause:—

 

‘(1)    

This section applies in respect of any bank or other financial institution which is

 

a “rescued bank” within the meaning of subsection (2).

 

(2)    

A bank or other financial institution is a rescued bank if—

 

(a)    

an order under section 3 (transfer of securities issued by an authorised

 

UK deposit-taker) or section 6 (transfer of property, rights and liabilities

 

of an authorised UK deposit-taker) of the Banking (Special Provisions)

 

Act 2008 has been made in relation to it, or

 

(b)    

it has taken part in the bank recapitalisation fund announced by the

 

Chancellor of the Exchequer on 8 October 2008, or

 

(c)    

it is subject to any of the stabilisation options provided for in sections 10

 

to 12 of this Act.

 

(3)    

A rescued bank must have regard to any statement of Government policy which

 

may be designated by the Treasury for the purposes of this section.

 

(4)    

A statement may be designated for the purposes of this section whether it was

 

made before or after the passing of this Act.’.

 



 
 

Public Bill Committee Proceedings: 18th November 2008      

54

 

Banking Bill, continued

 
 

Ian Pearson

 

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

 

proceedings of the Committee. 

 

                                                               Agreed to

 

 

Bill, as amended, to be reported.

 


 
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