MORTGAGEE’S RIGHTS

Dominion, Volume 31, Issue 71, 17 December 1937, Page 15

MORTGAGEE’S RIGHTS

Dispute Over Estimating Land Value CITY PROPERTY INVOLVED

The power of a mortgagee in respect of a sale of land was the subject of a reserved decision which was given by the Chief Justice (Sir Michael Myers) in the Supreme Court at Wellington yesterday. Plaintiff was the Wellington City Council and defendant the Government Insurance Commissioner. The judgment, referring to the facts, stated that the commissioner, on behalf of the Crown as mortgagee of certain land in Wellington, had applied to the Registrar of the Supreme Court to conduct a sale of the land under the provisions of the Land Transfer Aet, 1910. The commissioner, in his application to the registrar, had stated that he estimated the value of the land at £12,000. Apart from special rates due to the corporation, the moneys secured by the mortgage to the Crown were a first charge upon the land. There was then a sum of approximately £1450 due to the corporation for general rates in respect of the land, and that sum constituted a second charge. The corporation was professedly _of opinion that the sum of £12.000 at which the commissioner estimated the value was less than the reasonable value of the land, and contended that the mortgagee was required by the statute to estimate the land at its reasonable value. The commissioner, on the other hand, _ contended that the amount of the estimate might be anv sum that the mortgagee thought fit. 'What the court was asked to do was to decide which of those contentions was right. “In my view,” said his Honour, what the legislature has done is to leave the estimate of value for the purposes of the sale to the discretion of the mortgagee; and it seems to Die that that is not only intelligible and intelligent but is perfectly just. On the other hand, to place the mortgagee under control in the fixation of the estimate—at all events where there is no suggestion that he is not acting in- good faith —might well be unjust to him and involve him in increased loss. "In the case where there are mortgages or charges subsequent to the first mortgage a subsequent incumbrancer would not object (as the plaintiff here does? to the estimate being lower than his own idea of the value because it would give him the better opportunity of protecting himself at the sale. The position is then that, from the point of view of both the mortgagor and of subsequent incumbrancers, there would seem to be nothing unjust or unfair in leaving the estimate of value under Section 110 to the mortgagee’s own discretion. The plaintiff's grievance here, if any, arises from the circumstances (a) that the Crown is the mortgagee, and (b) that a municipal corporation has not the same power to protect itself at a sale as a private person or an ordinary commercial corporation would have. “I do not propose to-answer the questions in the summons categorically,” added his Honour. “I prefer to answer them by repeating what I have already said - namely, that the value to be estimated under Section 110 is a matter for the discretion of the mortgagee. _ Whether in any special circumstances indicating bad faith, dishonesty, or oppression, the court may interfere I prefer for my part to leave open until the question expressly arises for determination.” At the hearing the city solicitor, Mr. J. O’Shea, with him Mr. J. R. Marshall, appeared for plaintiff, and Mr. R. E. Harding for defendant.