Lacuna Obligatus

When a lacuna in the law obliges a public authority to do something unjust we can either watch all lemmingesque while citizens fall into that chasm or we can do something about it. Scotland’s legal aid system is failing vulnerable people facing repossession and homelessness. And this at a time when mortgage repossessions have soared by 92%. The diagnosis isn’t good.

You’re a single person or member of a family who has fallen on hard times: ill-health, the death of a loved one, or job lost in the recession. Household income becomes jobseekers’ allowance or income support and multiple debts appear along with mortgage arrears and mental health problems. Not only can this happen to anyone, it is happening to anyone. People from all walks of life are now facing repossession.

Less than 20% of UK households with mortgages have mortgage indemnity insurance and let’s not talk about the mis-selling and inadequacies of many of these policies. When the initial writ for repossession drops through the door protection is available by applying to the court for an order under the Mortgage Rights (Scotland) Act 2001. In most cases that will require a lot of court and legal work, but many people facing repossession are eligible for civil legal aid with a ‘nil’ financial contribution.

A ‘nil’ financial contribution is essential because how can anyone pay for legal aid when they are living on £60 per week, with debts coming out of their ears? Their lender will slap on ‘arrears charges’ equivalent to a whole week’s income just because they are in mortgage arrears each month – charges which I think are unfair and unlawful.

I’ve been working with Glasgow MP, Mohammad Sarwar, who will introduce a Bill in the House of Commons in April to argue that such charges (including bank and administration charges) should be proportionate and that new UK consumer protection is needed: see http://www.govanlc.com/excessive_charges.htm

Meantime people in Scotland living on or below the breadline and facing repossession are told by the Scottish Legal Aid Board if they manage to avoid homelessness they must pay their own legal aid bill. If not they may be subject to diligence or have their house forcibly sold. Why is this?

Section 17(2B) of the Legal Aid (Scotland) Act 1986 provides that where property is preserved in proceedings the Board’s tab must be paid out of that ‘property’. To be fair the Board believe they have no choice in this. Their opinion is if an assisted person avoids repossession and their house increases in value by 1 or more percent whilst in receipt of legal aid there has been a ‘preservation of property’ and section 17 kicks in.

How does a family with young kids living on less than £120 per week or a single person living on £60 per week pay a legal aid bill of £1,000? Clearly no-one can pay for legal aid when they are living on breadline benefits so the Board is now talking about clients granting a second mortgage in favour of them; with the client being responsible for setting this up.

In any other debt or eviction proceedings dismissed with the help of a solicitor there would be no argument about preservation of property. But because a mortgage debt is secured on a person’s home we get into a hypothetical discussion about fictional equity which is unrealisable. The reality is someone has got legal help because they were poor and in dire need; they have been told they have a nil contribution because they are poor; yet they are then treated as if they are wealthy.

The treatment of such vulnerable citizens is wholly inequitable and if you consider that regulation 33 of the Civil Legal Aid (Scotland) Regulations 2002 (the 2002 Regulations) exempts various categories of money and property from the ‘preservation of property’ rule – for example money payable under an Employment Appeal Tribunal order, actions for aliment, maintenance, or property preserved in divorce proceedings – you have to ask yourself why are people facing homelessness with no income excluded from free legal help?

The only answer I can find is this is a lacuna in the law. It is certainly not an intended policy initiative. Until December 3, 2001 most people in Scotland could not even oppose repossession proceedings. So if truth be told no-one has really thought about this. Well that is not quite true. I’ve been banging on about this publicly since January 2008, and well before then in correspondence.

While calls broadcast via TV and radio waves may have been picked up in the nearby Andromeda galaxy they have yet to attract the attention of Scotland’s Cabinet Secretary for Justice. To be fair Kenny has been busy with his plans to free criminals sentenced to less than 6 months. Tough community sentences require a lot of pizza, beer and Sky telly subscriptions to organise.

However, if Kenny gets a minute maybe he could turn his attention to decent hardworking families who have fallen on hard times and are threatened with homelessness? Could he please consider amending regulation 33 of the 2002 Regulations? It could be done within a matter of weeks and if he’s too busy, I’ve written the amendment just in case:

In regulation 33 of the Civil Legal Aid (Scotland) Regulations 2002 (2002/494) insert the following:

< (bb) in respect of the value of any property recovered or preserved from an application under the Mortgage Rights (Scotland) Act 2001 (asp 11); >