Temple Mortgage Fund Ltd v Rigby McKenzie
| Jurisdiction | Turks and Caicos Islands |
| Judge | Ground, C.J. |
| Judgment Date | 20 May 2003 |
| Date | 20 May 2003 |
| Court | Supreme Court (Turks and Caicos) |
| Docket Number | CL 2/03 |
Supreme Court
Ground, C.J.
CL 2/03
Mr. Stephen Wilson for the plaintiff
Mr. Ariel Misick QC for the defendant.
Property Law - Application for orders concerning the sale of the property — Mortgage — Application to make the sale by private treaty — Whether the power of sale had arisen under the terms of the charge when read together with the Registered Land Ordinance.
Civil practice and procedure - Whether the Notice of Hearing was bad to the extent that it sought to expand the relief specified in the Originating summons.
The plaintiff is in the business of. inter alio. lending money on mortgage. The defendant is a borrower from the plaintiff. who charged certain property to secure her indebtedness. The defendant has now defaulted and the plaintiff seeks to enforce the charge. In order to do so it has applied to this Court. by Originating Summons. for various orders concerning the sale of the property.
The property is a hotel building oft Airport Road in Providenciales. It comprises a ground and 2 upper floors. The upper (3 rd) floor is incomplete. and there is a valuation before me putting the cost of completion at US $230.000 [This is a valuation by BCQS of November 2002. Although it was obtained by the plaintiff it is not accepted by them and was put in by the defendant.]. The remainder of the premises is complete. and it comprises 20 rooms with ensuite bath. It has now been let to Government for a term of 7 years at a monthly rental of S10.000 (5500 per room) for use as police accommodation. By the lease the term is to commence on April 2003. The defendant has agreed to make over $9.000 of the monthly rental to the plaintiff. but at the date of hearing nothing had been paid. the defendant saving that she has not yet received the money from government.
The sum now charged was borrowed in 3 [ranches. and there is an original charge and two subsequent variations. The eventual principal was $690.000. By the terms of the final variation the defendant was to make blended payments of principal and interest following, lull draw-down of the facility in the amount of $8.735 per month [The blended payment was composed of interest on the principal at 13% compounded monthly, and principal repayments amortised over 15 years.]. Full draw down occurred in May 2000. The defendant paid the full monthly payment for June, July and August. but then began to fall into arrears. and on 17th June 2002 the plaintiff made demand for payment. I deal with the terms of that demand in paragraph 19 below
Despite the demand the defendant did not pay off the arrears, and indeed the arrears continued to mount. There were only two payments thereafter, totalling $7.500. which were attributed to earlier arrears. There have been no payments at all since 19th August 2002 and as at the date of the proceedings (17th January 2003) the amount due with accumulated interest. was $864.852.42. By the date of hearing that had increased to $906.485.70.
Following the demand. an auction was set for 15 th November 2002. The defendant makes various complaints about the conduct of the auction. none of which I find to be made out. The highest bid at the auction was $900.000. It was made by the defendant herself. in a self-confessed attempt to stop the proceedings and without any real intention of paying that sum. The next highest bid was $800.000. Although the plaintiff was minded to accept that. the defendant's attorney argued that that was not open to them, but in any event the plaintiff eventually negotiated a sale by private treaty in the sum of $949.000. The plaintiff then offered to cap the defendant's indebtedness at $849.000 if she would acquiesce in this sale (leaving her $100.000 clear), but she refused. alleging that it would be a sale at a substantial undervalue.
The plaintiff now. therefore. seeks the leave of the Court to make that sale by private treaty. This is required because the Registered Land Ordinance (“the RLO”) mandates sale by auction. but provides that that may he varied by the charge. However, any such variation may only be acted upon with the leave of the Court: see RLO. s. 77.
The defendant opposes the grant of leave. arguing:
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(i) as a preliminary point, that the Notice of Hearing is bad to the extent it seeks to expand the relief specified in the Originating summons:
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(ii) that the plaintiff' has failed to comply with s. 64(2) of the RLO:
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(iii) that the notice served on 17th June 2002 was not sufficient For the purposes of s. 72 of the RLO: and
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(iv) that the plaintiff has failed to have regard to the defendant's interests.
As appears from the title to the action. the Originating Summons is headed:
“In the matter of sections 72. 75 and 77 of the Registered Land Ordinance.”
It sought the following specific relief. namely that:
“The plaintiff have leave to sell the land comprised in parcel number 60602/84 (-the Property-) by private treaty pursuant to the contract for sale dated 191h November 2002 (as amended) and made between the plaintiff on the one part and Post Properties Ltd.. of the other part. (“the Sale Contract”) whereby the plaintiff has agreed to sell and Post Properties Ltd. agreed to purchase the Property for the consideration of US$949.000.”
The summons was in the “expedited” form. That form is not properly available for this type of proceeding but the case is now beyond that. The summons specified 24th January 2003 as the date for the hearing. However, it was stood out by consent to 31 st January. and on that date it was adjourned generally with a liberty to restore. This course seems to have been adopted because of the pending government lease and the hope that that would facilitate re-financing. That hope was not realised. and on 26 February the plaintiff issued a notice of appointment to hear the summons under Ord. 28. r. 3. In that notice of appointment to hear the plaintiff added a claim for further relief. being:
“An order pursuant to section 77 of the Registered Land Ordinance permitting Temple Mortgage Fund Ltd. to exercise its power of sale and/or right to appoint a receiver in accordance with clauses 5(a) and 5(b) of the Charge which clauses amend sections 72 and 75 of the said Ordinance.”
Clause 5(a) of the Charge amends s. 72 to shorten the period of default required before notice may be given. from one month to 7 days. It also shortens the period of notice required from 3 months to 7 days. Clause 5(b) permits, sale by “private contract upon such terms and for such consideration and security (if any) as the charge may think fit”
The defendant takes a preliminary point on the additional relief claimed in the notice of appointment to hear the summons. arguing that it is not permissible to enlarge the relief sought in this way, The plaintiff relies on Ord, 28. r. 3(4). which provides:
“If the hearing of an Originating Summons . . is adjourned and an party to the proceedings desires to apply at the resumed hearing for any order or direction not previously asked for he must not less than 7 days before the resumed hearing of the summons serve on every other party a notice specifying those orders and directions.”
That is a corollary of the provisions governing the setting down of the Summons for a first hearing, which is governed by Ord 28 r. 3(3). which requires the plaintiff to serve a notice of the day fixed for the hearing of the Originating Summons [That was not in fact done here as the plaintiff had used the expedited form, which allows the date to be included in the Originating Summons itself.]. Rule 3(3) governs the contents of such notice, and says:
“Where notice in Form No. 12 in Appendix A is served in accordance with paragraph (). such notice shall specify what orders or directions the party serving the notice intends to seek at the hearing:”
The plaintiff contends that those provisions allow him to add further relief not claimed in the original Originating Summons. In my. judgment any additional orders or directions sought must be contained within the cause of action or claim for relief made in the Originating Summons. Otherwise. the notice of hearing could amend the Originating Summons without leave having been sought. But leave is required to amend an Oriinatim.2, Summons: see Ord. 20, r. 7. To the extent. therefore. that a notice of hearing purports to go beyond the original relief sought. it is strictly had.
Does the additional relief claimed go beyond that sought in the Originating Summons? In my view it does not. In particular I note that the Summons was headed in the matter of each of the relevant sections — namely s. 72 (notice). s. 75 (manner of exercising power of sale). and s. 77 (variation in the charge). I therefore consider the relief now claimed to have been encompassed in the original form of the Summons. In coming to that conclusion I am guided by Paradise Manor Ltd. (in liquidation) Becker and Becker v. Bank of Nova Scotia [1985] CLLR 437 CA. A similar issue arose there. and the Court of Appeal of the Cayman Islands upheld the judge's ruling that the extended relief was within an application for sale by private treaty: see Zacca Pat p. 450. 11. 18 31. The instant case is. however. stronger as all the relevant sections were listed in the Summons.
The real issue is whether a power of sale had arisen under the terms of the charge. when read together with the RLO. I will deal first with the terms of the Charge and the demand. and then with the law.
‘There was an original Charge and then two variations to increase the sum secured and lengthen the repayment date. In each case the Charge or variation has a schedule...
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