LAW REPORTS.

Dominion, Volume 4, Issue 1086, 27 March 1911, Page 3

LAW REPORTS.

SUPREME COURT. THE FRAMING OF MORTGAGES. INTEHESTIKG POINT. An interesting point in regard to a mortgage deal was decided by the Chief Justice (Sir Kobert Stout) on Saturday morning in the, care ltobert Hunt v. Wobert Archibald Hearn. This was a claim for.tho recovery of ,£IOOO principal said to bo duo under a mortgage made by the defendant in favour of plaintiff. The affirmative defence raised was that plaintiff could not sue as he had not given defendant notice under the statute, 'i'he point of a question of law raised in the pleadings was: Whether the plaintiff (by reason of his acceptance from defendant of interest moneys under the memorandum and deed of mortgage after March IC, 19,18) was precluded from calling up the principal on December 16, 1010, the date of tho expiration of the mortgage, without giving defendant three months' notice of his intention to tlo so.

His Honour, in the course of his decision, stated that what had happened was that defendant had paid the stipulated interest right up till December 16, 1910. Ho had been asked to pay the principal on that date, and had requested three months' notice, relying upon tho provisions of Section C 8 of the Property Law Act. Interest was tendered by defendant after December 10, 1910, but it was not received. The question had consequently been raised whether he was entitled to have three months' notice by virtue of the statute, or whether ho \yas bound to pay tho principal now, being bound' to pay upon December IC, 1908. Defendant had contended: (1) That the term of the mortgage was to March. IG, 190S; (2) that default was made in not paying the principal on that date. His Honour did iut consider these contentions valid. No demand had been made on March IC, 1908, and, reading the whole document, he could not conceivo how it could be said that there had been a default in payment. The foundation of tho proviso in Section G8 of the Property Law Act was that there had been default in payment of the principal sum. There was no failure here, because (1) the money had not been demanded, and could not have been demanded; (2) the mortgagee could not pay it before December 16, 1910, unless it was demanded from him.

Reading the whole document together, his Honour held that it was clear that ivhat was meaut was a loan of tho money for two years. It seemed to he absurd to frame mortgages in the way in which this ono had been framed. Formerly there may have been reason for the course adopted in this case, but, in the faceof the provisions of the Property Law Act, no benefit was gained by the mortgagee or tho mortgagor.. It was a useless form which had simpiy been followed because it had been used in England. The form used in the southern parts of' New Zealand was far more consistent with our law and with common sense. It mado provision for a definite day of payment of the mortgage, and that tho interest was to he paid at certaiu times. If there was a breach in payment of the interest the mortgage money might be called up. This gave all necessary security, both to the mortgagee and the mortgagor. His Honour added that he must read the form of mortgage to mean that it was a mortgage i'or a specific term, and that the money became due (interest having been paid) on December 16, 1910, and that the mortgagor could not demand the three months' notice mentioned in Section 68 of the Property Law Act. The answer to the question raised was "No." The plaintiff was not precluded from de-. mantling his moneys. Costs amounting to£o ss. were allowed.

Mr. A. Gray appeared for plaintiff at tho hearing and Mr. O. Bcere for defendant.