ADJUSTMENT COURT

Hawke's Bay Tribune, Volume XXI, Issue 305, 9 December 1931, Page 7

ADJUSTMENT COURT

SITTING IN NAPIER TO-DAY'S PROCEEDINGS. REDUCTION OF MORTGAGE SOUGHT. The Hawke’s Bay Adjustment Court continued its sittings in Napier to-day. On the Bench were His Honour the Chief Justice, Sir Michael Myers, Mr H. D. Vickery, and Mr L. O. H. Tnpp. An application was made to the Court for the reduction of the mortgage on a house and property which was extensively damaged by the earthquake. This was opposed by counsel representing the mortgagee. it was stated that the brick dwelling was reduced to ruins, and was estimated to be worth not more than about £5O. “Do you want the property back?” asked His Honour to counsel. “No, sir. What we would like to see is the Rehabilitation Committee doing its duty and make a sufficient grant to enable the applicant to rebuild his house,” said counsel. It was stated that the applicant purchased the section for £275 and erected a house for £l4OO, for which he borrowed £lOOO. while his own personal loss was £4OO. His Honour stated that the Rehabilitation Committee’s offer of a grant of £3OO was not meant to be a gift to the mortgagee. Counsel considered that the Rehabilitation Committee’s suggestion of giving a grant and a loan on condition that the mortgage was reduced was a fallacy. Counsel appreciated the fact that he had to agree to a reduction of the mortgage, but that he should not be asked to bear a greater portion of the loss than the applicant. His Honour: You have got to look at the practical side of the position. The Rehabilitation Committee also has to consider the mortgagee. Counsel (smiling): We have yet to learn that they do that. His Honour: That is not from the want of desire. Counsel: In all fairness the applicant should not be placed in a better position than he was before the earthquake. His Honour: Applicant is only getting a house for £7OO, instead of for £l4OO. Counsel t For which the mortgagee paid for. His Honour: It is no pleasure to the Court to reduce mortgages, and we do so only when we see that it will be of benefit to both parties. Counsel: I appreciate that, but I don’t want you to make too big a cut. Counsel then outlined certain details concerning the mortgage, which was trust money. His Honour said that under the circumstances it was a case that should be placed before the Rehabilitation Committoe. Counsel: We think that it is only a waste of time. Would the Court make such a recommendation? His Honour suggested that an application be made on the recommendation of the Court, in which the circumstances should be pointed out. A GUARANTOR’S ASSISTANCE. “You would be drying up the wells of good nature if such an order was made,” said His Honour in commenting on an application for relief in a case where a guarantor had given assistance without getting even a shilling out of it. “If the guarantor was doing it as purely a business matter, the position would be different,” continued His Honour, “but when he is doing it just to help, surely he should not be called upon to suffer loss first. I could not imagine anyone being helped like that throwing his loss on to the Good Samaritan.” Counsel: The circumstances were extraordinary, and we have an extraordinary Court to deal with it. His Honour: Why should the applicant get relief from a guarantor who has assisted without consideration whatever ? Counsel: Unless we get some relief from the Court the offer from the Rehabilitation Committee cannot be accepted. Whatever happens the guarantor stands to lose something. He understood that the bank and the first mortgagee were not prepared to write off anything, seeing that the guarantor was a man of means. “I am not going to be a party to involving a compulsory loss on a person who was a mere guarantor and whe stood to make nothing. It would be vnreasonable,” said His Honour. Counsel for first mortgagee: He i« still very substantial. His Honour: He has suffered through the earthquake. Counsel: We all have. Continuing, counsel stated that as the guarantor was a man of substance and the property was of value, the first mortgagee objected to any re missions. Counsel for the bank stated that the guarantor had secured himself because he took a thi-d mortgage so that he might be protected from any claims arising out of the guarantee. Counsel for another interested party who relied on the guarantee, stated that the property in question, before the earthquake, had been used only as a back-yard and a back entrance. It had since been built upon, and being in the centre of the present business centre, it had appreciated in value with the result that he saw no reason why they should suffer any loss. The application was finally stood down pending a conference betweet the Court and the Rehabilitation Cominittee. INTERESTING APPLICATION. An interesting application was made in which it was stated that the bank refused to accept the position as second mortgagee in the case when the Rehabilitation Committee made an offer to advance a loan. The Court was asked to order that the bank be restrained from calling up any existing overdraft. A witness from the bank stated that the relief asked for was contrary to banking practice. His Honour: I am afraid that some of the orders made by this Court will be contrary to banking practice. His Honour pointed out that the applicant had ample’security. The bank witness stated that the bank had a strong objection to the State Advances superceding the bank in regard to the mortgage. The bank, he said, could not take a mortgage for any length of time. His Honour: Who said so? Witness: It is always payable on demand. His Honour: But we never had an earthquake like this before. If a start

is not made with building, the town will take a long time to become rehabilitated. Counsel: Applicant is not getting out of his liability to the bank. His Honour: Would the bank be prepared to find the £2lOO to enable the applicant to build and so become the first mortgagee? Witness: I don’t know. His Honour: What is he to do? He has been a good client of the bank Witness: That is so. His Honour: The building would improve the security of the bank. If the bank would lend the £2lOO it could become the first mortgagee. Something has got to be done. The man is solvent, and the bank has plenty of security. The matter was stood over to ascertain if the head office of the bank would be prepared to lend the sum of £2lOO to enable the applicant to rebuild. “BRISTLING WITH DIFFICULTIES” “There are a lot of applications on our list that are bristling with difficulties,” remarked His Honour when another application was called. Continuing, His Honour said that the Court, m its endeavour to do justice, was ignoring the principles of law and equity as little as possible. The Court was desirous of having all the assistance that counsel could give. Where counsel could formulate schemes much help would be given to the Court. Further, His Honour said that the Court was desirous of avoiding any delays, and was particularly wanting to assist the people in the stricken areas in the work of getting on with their buildings. A leading counsel in agreeing that help could bo given by the formulating of schemes, said that no set principles could be applied, and that each case would have to be dealt with on its merits. “No decision is likely to please all parties,” he said. His Honour (smiling): I am pleased that there are no appeals from our decisions. At a later stage in the proceedings His Honour said to counsel: “Can you make any suggestions?” Counsel: The Court is looked upon as being the perfection of human wisdom. “You have been able to settle this,” said His Honour when a further application was called. “Not definitely,” replied counsel. “Well, we will settle it for you,” said His Honour. In the next case called, counsel announced that an agreement had been practically arrived at, in which the Public Trustee, as mortgagee, had been most helpful. “It is very refreshing to know that such an attitude has been taken up by a Government Department,” said His Honour.