SALE BY MORTGAGE.

Hawera Star, Volume XLVI, 6 May 1926, Page 10

SALE BY MORTGAGE.

BANK OF AUSTRALASIA V. SCOTT

ACT PASSED FOR PROTECTION OF MORTGAGORS.

Mr Justice Reed’s reserved judgment in the- case of the Bank of Australasia v. Daniel Evans Scott and others, heard at the last sitting of the Supreme Court at New Plymouth, has delivered. The case was one in which, the bank, as mortgagee of certain lands owned bv the defendant (the mortgage being guaranteed bv-one Joll), sought relief from the effect of what was alleged to be an error contained in the app ication to the Registrar to conduct the sale 011 behalf of the bank as mortgagee. The bank claimed that it had made an error in fixing its estimate ol of value of the laud, having unintentionally fixed such estimated value at £6750 in of £5750. On February 9, 1925. Scott owed the bank, upon the security of the mortgage, a sum of £8154 12s JOd. and payment- was demanded. Three days later the batik app'ied to the registrar to execute its right of sale, and in tli e application it was stated that the land was valued at £3750. Notice was sent to Scott’s solicitors in which the reserve put upon the farm was stated to be £6750. On March 20. tin- property was submitted to auction and bought on liolialt of the bank at £52 per acre, or a total of £4989 Is 6d. The defendant Scott thereupon Fanned that the bank was bound by its estimate of value £6750, and must give uredit for that amount, the balance owing to th e bank in that ease being about £I4OO. An attempt was made to induce Scott to sign a transfer to Cunningham. Cunningham was a prospective buyer of the property at a price not exceeding £55 per acre, and there had been an understanding that lie would attend the sale and bid up to that amount. But he did not bid at tlie sale. The solicitor for the bank attended and bid up to £52, and “to his astonishment.” as he said, the property was knocked down to him. Cunningham eventually purchased the property at £55, the bank sol’ing under its power of sale and ignoring the purchase through the Registrar. The bank claimed that it was entitled to credit Scott' only with an amount representing £55 per acre, and after issuing a summons for tlie correction of the alleged mistake, which was struck out, issued a,writ claiming it had made a mistake, and praying for relief. In the statement of o'aim it was stated that the plaintiff bank estimated the value of the farm at £5756 12s 6d, and instrutced the solicitor to insert the round sum of £5750 as the estimated value of the. property, and it was alleged that the insertion of £6570 was the result of a clerical error, and it was from the effect of this that they sought relief. On the other hand, tlie defendant claimed the right to credit in the account with the batik for the amount which the bank had inserted in its estimate, namely, £6750. After (reviewing the evidence, the learned Judg© said he could not find anything to suggest that a clerical error was made in putting in the original figures in the document. He was satisfied no mistake had been made, and that the amount stated was deliberately nut in the document. The mistake, if what was really an error of judgment can he so called, was in buying the property on behalf of the bank. No evidence in support of the statement-, contained in tlie statement of claim, that the hank had instructed the insertion of a particular figure was offered.

In conclusion, on the facts relating to the alleged mistake, his Honour says: “In older to succ?ed on the ground of mistake, where the who’e <4 the evidence of mistake must come from on e side, such evidence must be clear, cogent, and convincing. Not only is there no such evidence, but. on the contrary, the evidence satisfies m.e there was no mistake. The insertion of the figures £6750 was done deliberately and intentionally by the bank agents.” The next point dealt with in the judgment was on the submission that under tb e Land Transfer Act the bank was not bound to give credit to tlio mortgagee for the amount of the estimated value until it accepts a transf v. and as no transfer wou’d now be demanded or given, it would not be required to give credit at any time. After a reference to the law on the subject, tbe judge said that if such was tlio case mortgagors would be deprived of the protection: which the I.egislatuire by its enactments intended to confer. The sections of the Property Law Act and Land Transfer Act relating to sales of mortgages were enacted for the benefit and protection of mortgagors, and to remedy a. mischief that had hitherto existed. It was also further submitted that to hold the bank to the purchase, with its resultant consequences, wou’-cl be so inequitable that the court would not assist in maintaining It. On this point His Honour said that on the facts in the cases cited, the application of tile principle was not open t-o question, but “it is a principle that cannot be lightly applied. It woo’d he verydangerous. and I think not in ■ accordance with the exercise of a sound judicial discretion for the court- to attempt to interfere in a case such as the present.” The judge refers to the conduct of the sale, and points out that the amount fixed b.v the estimate was not unreasonable and that Scott was entitled to rc’y upon it as being correct. That at the sale the bank commenced bidding at .£4O per acre, which closed everyone’s mouth, and although there was another bidder, the bank persisted, and bought at £52. Cunningham did not bid; if lie came into the bidding he might force the price up. This is one of the very things the amendment if the law was intended to prevent. If in the present case, as alleged by the hank, the estimate was excessive, the effect upon prospective purchases would be that tliev would abstain from bidding and permit the hank, to obtain it at its own figure. It wou’d, in fact, stiffio b'dding. In such circumstances not only could it not be said that it is inequitable that the. bank should be bound by jts estimate, but it is. clear that it would he highly inequitable, so far as the mortgagor js concerned, if the bank were permitted to ’imit its credit to the mortgagor to the amount received from Cunningham. In conclusion, Ills Honour said: The plaintiff bank, having failed to show any good ground for relief, judgment must be .far the defendants. Costs were allowed Scott on the highest scale as on a judgment for £1473. The other defendants were allowed the same costs, his Honour remarking that they had good and honest reasons for serving in defence. At the hearing Mr T. C. A. His'op, of 'Wellington, appeared for the plaintiff bank. Mr E. M. Beechoy for tho defendant Scott, and Mr F. C. Sjpratt for the defendants, the trustees of B. L. .Toll.