Home Owner and Debtor Protection (Scotland) Bill: Stage 3
The next item of business is stage 3 of the Home Owner and Debtor Protection (Scotland) Bill. In dealing with amendments, members should have the bill as amended at stage 2, which is SP Bill 32A; the marshalled list of amendments, which is SP Bill 32-ML; and the groupings, which I, as Presiding Officer, have agreed. The division bell will sound and proceedings will be suspended for five minutes before the first division this morning. The period of voting for the first division will be 30 seconds. Thereafter, I will allow a voting period of one minute for the first division after a debate. All other divisions will be 30 seconds.
Section 2—Court applications by creditor for remedies on default
Group 1 is entitled "Disposal by court on security holder's application". Amendment 2, in the name of Mary Mulligan, is grouped with amendment 3.
At stage 2, I lodged two amendments that sought to introduce reasonableness tests at sections 2 and 3 of the bill. The aim was to require the court to take into account whatever is reasonable in all the circumstances of a case before making its determination. As members of the Local Government and Communities Committee will remember, one of my stage 2 amendments was agreed to and the other was rejected. Unfortunately, as a result, the court will now be asked to consider slightly different issues, potentially with different powers and discretions, depending on whether a repossession application is made under the Heritable Securities (Scotland) Act 1894, to which my reasonableness amendment at stage 2 applies, or the Conveyancing and Feudal Reform (Scotland) Act 1970, to which it does not.
I am sure that we all agree that consistency between those two acts is vital so that the same protections, responsibilities and powers apply to the court, borrowers and lenders regardless of the act under which an action is taken. It was not the intention of any committee member to end up with significant differences between the tests in the two acts. I therefore seek to rectify the situation through amendments 2 and 3, which will ensure the necessary consistency in the courts' consideration of creditors' applications for repossession. It is vital that the requirement and discretion for the court to do what it thinks is reasonable in the circumstances should apply to actions for repossession under the 1894 and 1970 acts.
Amendments 2 and 3 build on my stage 2 amendments, which were based on proposals by the Scottish Association of Law Centres, with which the Government and I have had further discussions. Amendments 2 and 3 will make it explicit that the court has discretionary power to make any order that it sees fit, including a continuation order, provided that it is satisfied that the lender has complied with the pre-action requirements, and it is reasonable in the circumstances of the case to do so. For example, the amendments will remove any doubt about whether the court has the power to delay repossession in cases in which the defender does not dispute that the lender has complied with the pre-action requirements, but simply seeks more time to find alternative accommodation. I acknowledge that the Government wishes to achieve that, too.
Amendments 2 and 3 provide a good balance in that they will further protect the interests of the debtor without compromising the rights of the lender. I acknowledge that the Government expressed concerns at stage 2 about the potential impact of my amendments on court costs and the programming of other court business if sheriffs felt obliged to adjourn every undefended case to seek further information. Although I understand that the Government does not consider that that is likely to happen in practice, my amendments go some way towards addressing those concerns while ensuring that sheriffs are required to consider what is reasonable in the circumstances and that they retain the discretion to adjourn hearings in order to secure further information if they judge that to be necessary.
Ministers will no doubt respond to the amendments during the debate, but I understand that they share my view on the need to ensure consistency between the 1894 and 1970 acts, and that they support my objective, which is to achieve the best possible protection for those who are at risk of repossession, while balancing the overall impact on court time and other court business. I believe that my amendments will achieve that balance and I therefore hope that members will support them.
I move amendment 2.
We have worked closely with Mary Mulligan on her amendments 2 and 3 since stage 2. I hope that the Parliament will unite behind them. As she said, the amendments build on her stage 2 amendment that required sheriffs to consider the reasonableness of applications. The effect of these stage 3 amendments will be to ensure consistency between the 1894 and 1970 acts and the bill, and to ensure that the legislation is workable in practice.
I fully accept the need for amendments 2 and 3 and consider that they will reduce the risk that a court would feel obliged unnecessarily to continue every undefended case to another hearing—which was our primary concern at stage 2—while allowing sheriffs to adjourn cases to seek further information if they believe that that is necessary.
We still have concerns about the potential impact on other court business, so we will monitor that carefully during the implementation period. However, I welcome amendments 2 and 3, which will ensure consistency between the two relevant acts and the bill when it becomes an act. The proposed wording is an improvement on what was envisaged either by the Government or by Mary Mulligan at stage 2. I am therefore happy to support amendments 2 and 3, in the usual consensual manner.
I am happy that we have such consensus so early in the morning. I welcome the minister's comments.
Amendment 2 agreed to.
Section 3—Court powers in action for possession of residential property
Amendment 3 moved—[Mary Mulligan]—and agreed to.
Section 11—Power in relation to debtor's family home
Group 2 is on family homes included in trust deeds. Amendment 1, in the name of the minister, is the only amendment in the group.
Amendment 1 is a technical one that will make a minor clarification for the operation of the amended section 40 of the Bankruptcy (Scotland) Act 1985 in relation to trust deeds. Section 11 of the bill will amend section 40 of the 1985 act so that its protections, which currently apply to sequestrations, are extended to apply to trust deeds. Section 11 ensures that a trustee under a trust deed must, when wishing to sell the family home, seek the relevant consent or authority of the sheriff, just as a trustee in sequestration must do so. The section will also ensure that the sheriff must take into account the same factors with trust deeds as he must in sequestrations.
The term "family home" is defined in section 40(4) of the 1985 act as meaning property in which there was an interest at a defined "relevant date". Amendment 1 adapts the "relevant date" definition to include reference to trust deeds. Without the amendment, the definition of "relevant date" in the 1985 act would make no reference to trust deeds. The amendment avoids any uncertainty by clarifying in the 1985 act that, for the purposes of trust deeds under section 40, a debtor's family home is a home in which he had an interest the day before his trust deed was granted.
I move amendment 1.
Amendment 1 agreed to.
That ends consideration of amendments.