Opposition Amendment to Homeowner & Debtor Protection (Scotland) Bill
22nd January 2010
Despite representations made by the Scottish Association of Law Centres and Renfrewshire Law Centre, the government has decided not to amend the new bill to re-introduce a reasonableness test for homeowners facing repossession by their mortgage lenders.
However, the Labour opposition party has taken up SALC's case and agreed to propose an amendment that would include such a test. Mary Mulligan MSP, Labour Housing Spokesperson, will submit the amendment today.
SALC and RLC support the bill in principle, but believe its current drafting would be inadequate to guarantee homeowners the kind of protection they need.
The bill proposes amending the Conveyancing & Feudal Reform (Scotland) Act 1970 by introducing a procedure whereby mortgage repossession cases must call in open court before a sheriff, who would decide on whether or not to grant decree.
Section 2(5) of the Bill proposes amending s.24 of the 1970 Act so it says:-
- "The court may grant an application under subsection (1B) above only if it is satisfied that the creditor has complied with subsection (1C) above." [i.e. the pre-action protocol]
SALC proposes further amendment so the new provision would read:-
- "The court may grant an application under subsection (1B) above only if it is satisfied that the creditor has complied with subsection (1C) above and that it is reasonable to do so in all the circumstances." [SALC amendment underlined]
In response to this proposal the government made a counter-proposal so the new provision would include a test based on what the sheriff "thinks fit".
A "sheriff thinks fit test" would potentially give sheriffs carte blanche to do whatever they personally prefer, without requiring to have any regard to established principles of jurisprudence and equity.
Reasonableness, on the other hand, has been a test in one form or another for eviction in landlord/tenant cases for many years, and was introduced as a test for mortgage cases by the Mortgage Rights (Scotland) Act 2001. A large body of caselaw has grown up around the test, and it protects tenants' and homeowners' interests by guiding the sheriff's exercise of his/her discretion.
If reasonableness were to be removed from mortgage cases, it would represent a setback for homeowners at a time when they are most vulnerable in the face of recession. It would also put them in a less favourable position than tenants, which raises concerns about this bill's compatibility with human rights law. Different sheriffs apply the "thinks fit" test differently, thus providing a recipe for judicial lottery and wholesale legal uncertainty and inconsistency - without recourse to appeal. Some sheriffs would perhaps even approach such cases like a kind of tick-box exercise. In other words, if banks could prove they had done everything required of them by the pre-action protocol, then they would win their decree.
The right to respect for one's home is enshrined in human rights law, as is the right to a fair trial. Accordingly, eviction and repossession cases are too important to abandon the safety net of reasonableness.