MORTGAGE RELIEF

Evening Post, Volume CXVI, Issue 144, 15 December 1933, Page 7

MORTGAGE RELIEF

SOME AMENDMENTS

y THE POOLING SCHEME

BILL INTRODUCED

Important amendments to the mortgagors ' relief legislation are contained in fh^ Mortgagors' and Tenants' Relief Bill, introduced into the House of Bepresentativ'es yesterday. ' The Bill was referred to the Statutes Revision Committee. The Court is given power to deal effectively with stock mortgages in cases in which the parties cannot arrive at a mutual agreement. In cases in which the parties are unable to agree, the Court may compel them to enter into a pooling scheme. Upon service on the stock mortgagee of a copy of the mortgagors' application for relief in respect of the land mortgage the stock mortgagee shall rule off his account with the mortgagor (referred to as the No. 1 account) and shall forthwith open a new account (known as the No. 2 account), and thereafter, all moneys received by the stock mortgagee on ■ account'of the mortgagor shall be credited, to the No. 2 account and held in trust for disposal, subject' to any agreement that may bo made between the parties. PRIORITY PAYMENTS. The following are to be first charges on- the No. 2 account in priority to other payments: (a) current advances made by, the stock mortgagee with interest thereon at current rates for farming, or living expenses and for the purchase of stock, etc.; (b) current interest on the No. 1 account at a rate to be , agreed upon by the parties or fixed by the- Court. The balance in the No. 2 account, (after payment* of the above charges) is to be applied after payment of ,any rates and taxes owing in such manner as the Court thinks fit towards payment of principal and/or interest owing to the land mortgagee and the stock mortgagee and of any other debts whether secured or unsecured. In explaining this point to the House, the Minister of Justice (the Hon. J. G. Cobbe) said it was beyond dispute that the stock mortgagee Was entitled, before any other disbursements were made, to recoup himself out of the proceeds for the current year for any advances made by him during the year and for a reasonable rate of interest thereon^ It was considered that the stock mortgagee was entitled, before anything else was paid to the land mortgagee, to current interest at a reasonable rate on the ,No. 1 account or on the value of the stock, whichever was the less. The stock and cliatt'ew on the farm were the "sinews of war," and the argument had been advanced that if the stock mortgagee sold up under his mortgage, the mortgagor would have to "stock up" afresh, for which he would be obliged to pay the ruling rate of interest. Further, while the land mortgagee had a practically indestructible security, the stock mortgagee 's security was not of such, a secure nature, and he ran the risk of losses due to drought, diseases of stock, and.other causes. For those reasons it seemed only just and equitable that the stock mortgagee should have a prior right to current interest on the value of his security, - Provision is made in the clause for the application of the proceeds of a previous year's farming operations received during the current pooling year, and provision is also made for the value of any proceeds of the current year's farming operations which have notubeen disposed ■o"f:at-thfriend"off'the pooling year to be taken into account in arriving at the distributable balance in the No. 2 account. ' Provision is also made-for an adjustment with regard to any diminution or increase in stock during the currency of, the pooling year. Another clause in the Bill provides for the . suspension of the personal covenant under mortgages on property owned b^ religious, charitable, or educational bodies. LIMITATION" ON CREDITORS. A limitation is placed on the rights of creditors while an application for relief is pending or an order for relief or a pooling scheme 'is in operation. They are debarred from (a) issuing or proceeding with any process of execution in pursuance of any judgment, decree, or order of any Court; (b) issuing or proceeding with a summons under the Imprisonment for Debt Limitation Act, except in cases in which fraud is alleged against the judgment debtor; (c) seizing or selling any property by way of distress for rent; (d) exercising any power of sale, rescission, or entry: into possession conferred by the Bating Act or any other Act or by any mortgage or other security executed either before or after the passing of the Act; (c) exercising any power of re-entry or retaking possession of chattels .conferred by any lease or bailment, or any power of determining any lease or bailment; (f) filing or proceeding with a bankruptcy petition or a winding-up petition against the mortgagor or lessee. Power is given to the Court to discharge or vary orders for relief, on. the application of a person who was party to the proceedings or interested in the property. Relief may be granted voluntarilyby any mortgagee or lessor.