CLAUSE 7.—(Mortgagees). (Hansard, 8 May 1941)

§ The Attorney-General
I beg to move, in page 9, line 10, to leave out "shall," and to insert "may."
It has been pointed out that the Clause seems to assume that in all cases the mortgagee would want to value because he would want to prove the balance of the debt, but that there may be cases where the mortgagee wishes simply to rest on his securities. In those cases, if there had to be a valuation that would simply mean incurring unnecessary costs, and a difficulty might arise at a later stage for purposes of discharge.

§ Mr. Woodburn
I beg to move, in page 9, line 46, to leave out Subsection (4).
This Sub-section seems to introduce a far too rigid restriction upon the discretion of the court or of the adjustments officer. It says: The court shall not reduce the rate of interest under the last foregoing Sub-section, unless the annual amount payable by way of interest at the existing rate exceeds the net annual profits…. There may be circumstances, which can-not be foreseen in the Bill, which might require that that rate of interest should be reduced, to leave a margin.

§ The Attorney-General
I am afraid that we cannot accept this Amendment. Thisis rather similar to the point that we discussed just now of the reduction of rent and to the point we discussed of the reduction of hire purchase. It must be appreciated that in this class of case the mortgagee is being deprived of his normal contractual rights, and the question is how far it is legitimate to go in that direction in these circumstances. The court has the power to reduce the rate of interest if the annual amount payable at the existing rate exceeds the net annual value of the mortgaged property. I think that it would be going beyond what was right to say that interest should be reduced in such circumstances. This is very like the other point. We want the Bill to be fair as between all those who are interested. I think that the present power to reduce interest is right and that the net annual value is a fair condition.

§ Mr. Woodburn
It does seem that under this legislation—and it carries our minds back to the War Damage Bill—that the whole of the benefits have always to be on the side of the mortgagee rather than giving any relief to the mortgagor. An insurance company insuring goods is let out of its liability if the damage is the result of an act of God or an act of war; the person who insures does not get the full benefit of his contract if it is an act of God or an act of war.

§ Mr. Denman (Leeds, Central)
It is not in the contract.

§ Mr. Woodburn
Exactly. When these contracts that we are discussing now were made no one anticipated that there would be an act of war and liabilities would occur such as have occurred. Both the War Damage Act and this Bill are introduced in order, as the Attorney-General said, to be fair to both parties. It appears to me to be reasonable that, if there is to be fairness to both parties, both parties must bear some of the loss. There is just a suggestion that on every occasion the mortgagee must be protected up to the hilt, and no margin is left for the mortgagor. The Attorney-General recalled the point that I made with regard to the War Damage Act that in the case of a person whose house has been destroyed and who is not going to get the cost of works payment, all the value might go to the mortgagee, and that the 1026 mortgagor, although he might have put all his savings into the part-payment of the house, would get nothing. I would ask the Attorney-General to leave some discretion to the court to deal in a fair way with all parties.

§ The Attorney-General
I beg to move, in page 10, to leave out lines 1 and 2, and to insert: value of the mortgaged property at the date o£ the order. This Amendment and a later one, to Clause 10, which comes next on the Paper, have to be read with the definition of "net annual value" which is inserted by a later Amendment. The point is an extremely simple one and obviously commends itself to everybody. It is to make it clear that, if the annual value changes —it might go up or down—then application can be made to adjust the amount in respect of any change in annual value.