(1) In respect of every loan or portion of a loan paid out towards the cost of planting trees or tending trees on the loan area, the Minister may, in pursuance of any relevant arrangement forming part of the conditions under which the loan has been granted, pay, or (in the case of an applicant that is a local authority) require the applicant to pay annually, to an insurance office approved by the Minister (which insurance office is hereinafter referred to as the insurer) a premium sufficient to obtain for and in the name of Her Majesty the Queen an indemnity in respect of the trees, logs, timber products, and fences grown, produced, or erected pursuant to the plan of operations, all as situated on or relating to and whilst contained in the loan area (hereinafter called the risk), covering the total indebtedness of the owner from time to time in connection with each agreement in respect of each payment so made, including capitalised interest thereon (if any). Any such payment shall be deemed to include such other loan money as may be apportioned by the chief executive of Agriculture and Forestry, being loan money paid out from time to time in respect of any other work specified in the plan of operations or in respect of repayment insurance premiums.
(2) Every such indemnity shall, as far as can be obtained, provide to the effect that in the event of the total or partial loss, destruction, injury, or damage of or to all or any portion of the risk by fire (other than through the wilful act of the owner) the insurer will, on proof thereof, pay to the Minister on behalf of Her Majesty the Queen a sum (not exceeding per hectare in respect of trees the total indebtedness per hectare for the time being under the relevant agreement, as ascertained in accordance with subclause (1)) equal to the amount of the loss, as that amount is estimated by the Minister and the insurer, or, in the event of their failure to agree on that estimation, by arbitration.
(3) On receipt of the sum payable to him by the insurer under subclause (2), the Minister shall cancel the liability of the owner under the agreement to the extent of that sum, by applying that sum firstly in payment of interest accrued and other money due but not yet paid or added to the principal sum and secondly in repayment of principal; and the Minister and the owner may thereupon enter into a further agreement in respect of such new loan as the Minister may be willing to make to the owner in respect of the same or any other loan area.
(4) Subject to the provisions of subclause (5), the sum to be stated in the agreement relating to any loan as being the original principal amount of the loan shall be so calculated as to state and include the total amount of the repayment insurance premium relating to the period of the cover in respect of that loan, so that all provisions of the agreement relating to the charging, payment, and compounding of principal and interest shall apply to that premium, but not the provisions thereof relating to remission.
(5) Where the owner elects or is required to pay in cash to the Minister all or any part of the repayment insurance premium due in respect of his loan, the principal sum referred to in subclause (4) shall abate accordingly.
(6) Subject to the provisions of subclause (10),—
(a) in every case to which paragraph (b) does not apply, the applicant shall, on taking up the loan or the portion thereof referred to in subclause (1), contribute to or be debited by the Minister by way of repayment insurance premium a sum per acre calculated in accordance with the rate for a debt period insured of 10 years as stated in Schedule 3:
(b) where as a condition of a proposed loan the Minister requires any applicant, or where the applicant elects, to provide for repayment insurance for a debt period insured of 20 years, the applicant shall contribute to or be debited by the Minister by way of the repayment insurance premium required under paragraph (a) a sum per acre calculated in accordance with the rate for such debt period as is stated in Schedule 3.
(7) An owner who has obtained a loan or loans on the terms set out in the notice published in the Gazette on 21 February 1963 at page 243, or in the notice published in the Gazette on 20 May 1965 at page 794, may in the form of election set out in Schedule 4 at any time before 30 June 1967 elect in writing, subject to the consent of the Minister, to vary the terms on which he obtained the loan or loans to such extent as is necessary to obtain, instead of any previous insurance, the benefit of the insurance provisions of this regulation, and shall in the election covenant that in consideration of the consent of the Minister the owner will execute in substitution for the existing agreement in respect of the loan or loans an appropriate agreement complying in all respects with these regulations.
(8) For the purposes of subclauses (4) and (5), any sum at any time paid in cash to or debited by the Minister in respect of an owner pursuant to subclause (7) for insurance purposes shall be deemed to have been paid or debited as a contribution in respect of a repayment insurance premium under this regulation, but shall, for every year or part of a year elapsing between the date of the loan in respect of which the Minister received the sum and the date on which the election to vary terms became operative, abate by one-tenth in the case of an insurance originally for a period of 10 years.
(9) The Minister may, in any case of election pursuant to subclause (7),—
(10) Special arrangements modifying the periods of time and rates of premium set out in this regulation may be approved by the Minister in the case of long rotation species of trees.
(11) Notwithstanding the foregoing provisions of this regulation, any local authority that agrees to pay and pays interest on any loan under these regulations at a rate 0.5% above the rate prescribed in Schedule 1 shall not be required to comply with those foregoing provisions and shall be indemnified pursuant to subclause (12).
(12) Every such indemnity given under subclause (11) shall provide that, in the event of the total or partial loss, destruction, injury, or damage of or to all or any portion of the trees, logs, timber products, and fences grown, produced, or erected pursuant to the plan of operations, all as situated on or relating to and while contained in the loan area (other than through the wilful act of the owner), the Minister shall remit an amount of the principal and interest of the loan (not exceeding per hectare in respect of trees the total indebtedness per hectare for the time being under the relevant agreement, as ascertained in accordance with subclause (1)) equal to the amount of the loss, as estimated by the Minister.
Regulation 9(1): amended, on 1 March 1998, pursuant to section 5(1)(b) of the Ministries of Agriculture and Forestry (Restructuring) Act 1997 (1997 No 100).
Regulation 9(2): amended, on 1 November 1974, by regulation 2(h) of the Forestry Encouragement Loans Regulations 1967, Amendment No 2 (SR 1974/260).
Regulation 9(11): inserted, on 1 January 1978, by regulation 5 of the Forestry Encouragement Loans Regulations 1967, Amendment No 3 (SR 1977/320).
Regulation 9(12): inserted, on 1 January 1978, by regulation 5 of the Forestry Encouragement Loans Regulations 1967, Amendment No 3 (SR 1977/320).
Regulation 9(12): amended, on 12 January 1989, by regulation 2 of the Forestry Encouragement Loans Regulations 1967, Amendment No 5 (SR 1988/314).