FARM MORTGAGES

Press, Volume LXXI, Issue 21436, 30 March 1935, Page 12

FARM MORTGAGES

j & ! THE COURT OF REVIEW j PROPOSALS IN NEW BILL ! j EXAMINED j (SPECIALLY WRITTEN JOB IDE TRESS.i | [By "X."] | ! VII. The controversy which is raging upon the merits and demerits of the Rural Mortgagors; Final Adjustment Bill overlooks the utter impracticability of the measure. Under the previous mortgage relief acts a great number of commissions, working at high pressure, have just been able t,o deal with the applications made. The work to be thrown on the commissions by the act now in contemplation will be tremendously increased; nevertheless they might by strenuous effort discharge their task. But the Court of Review which is proposed to be set up cannot have the least prospect of performing its functions expeditiously enough to prevent a state of paralysis and ultimate chaos in regard to the affairs c: all farmer mortgagors who become governed by its provisions. At the very outset. the question, "Who is a farmer mortgagor?" raises a problem the settlement of which will take some time. For the commission to determine this point in the many doubtful cases which there will be will involve a comprehensive examination of the mortgagor's position and circur..stances and much time must inevitably be taken up in deciding what is merely a preliminary question. To carry into effect the subsequent provisions of the act appeai-s neither desirable nor practicable The public should have its attention forcefully drawn to the complicated provisions of the bill. Upon the filing of a notice the commission must promote a meeting of creditors. Where, as often will be the case, Ihe mortgagor's creditors are j numerous and possibly scattered, : many hours will be occupied by such j meetings. In view of the fact that | the bill encourages a mortgagor to ; Jock for the extinction of some portion of his capital liabilities and that his creditors, or at any rate those holding securities, will resist any pruning of their capital, it is unlikely that a voluntary adjustment will be brough'. about in many cases. There must then, in the great majority of eases, be a stay order; and the unfortunate mortgagor will from then on become a mere working dummy. A trustee to act as his agent takes the real control and in all those cases where the mortgagor is secured to a stock firm or bank, that institution will be the trustee. The mortgagor thenceforward lias no right to receive any moneys of any sort that are payable to him or any movable property of any kind; he is. in fact, in a state of suspended bankruptcy. He would be unable to receive payment for a day's work done for a neighbour; he i would be unable to receive pigment from the .local storekeeper for a dozen eggs or a pound of butter: he would be no more than a robot fed and clothed and operated by his trustee. In this plight he is expected to work for a period of five years, after which the value of the farm is to be determined mainly by the results of the five year period. It is clearly in the interests of the mortgagor who hopes to secure an equity at the expense of his creditors that the value which shall be adopted by thr Court of Review at the end of the period shall be as low a possible. It is difficult to see what more effective stimulus could be applied to induce the mortgagor to make as poor a showing as possible during the five year period. So that even the Legislature is now considering prompting a "go slow" policy. Functions of Court

The functions of the Court of Review are to act as an appellant tribunal from the mortgage commisi sions and also to lay down principles ''or the guidance of the commissions and to issue general directions to be observed by them. This is so iormidable a task that it is at least doubtful whether any one Court of Review could discharge these duties for the whole of New Zealand with reasonable expedition; but in reto its most important function of fixing the value of the mortgagors' farm lands at the end of the five year period, the utter impracticability of its being able to discharge its duties is obvious, though perhaps at present to not more than a few outside the ranks of practising solicitors or others who have been engaged in mortgage adjustments. But that this is so can easily be demonstrated.

The mortgage commissions have been able to deal with about four cases a day when no special difficulties were present. It is certain that the Court of Review could not deal with one case a day. Mortgagees have accepted without very protracted contest remissions of interest which the commissions have made: but when it comes to a question of pruning the capital sum secured, to make a present to the mortgagor, it is certain that most if not all mortgagees will contest any reduction strenuously and unremittingly. Where the funds secured by the mortgage are trust funds the trustees would clearly be under a duty so to do.

Very considerable sums will be involved and in many cases the hearing before the Court of Review on the question of value will run into several days. When one considers that the Court of Review could sit at most about 200 days per annum the hopelessness of expecting it to discharge the task entrusted to it is surely apparent. It is obvious that more than one Court of Review cannot be provided, as it would be impossible to have uniformity if there were more than one. It i# equally obvious that one Court of Review can only hope to dispose of a mere fraction of the cases submitted to it.

It would be well if the time being taken up at present in discussing the propriety or justice or expediency of the measure were directed instead to a consideration of whether there is the least possibility of the bill, if it becomes law, effecting anything else than a general state of paralysis of all those who become subject to its provisions.