MORTGAGEES’ POWERS.

Taranaki Daily News, 19 December 1924, Page 8

MORTGAGEES’ POWERS.

RESTRICTIONS UNDER ACT. CLOSE SEASON FOR MORTGAGORS. SUPREME COURT DECISION. Until March 31 next there is a “close season” for mortgagors; their mortgagees cannot take action against them to sell them up or to recover the principal sums under their mortgages. (Such is the effect of the Mortgages Final Extension Act, 1924, as interpreted in the Supreme Court at New Plymouth yesterday. The decision Is the first since the Act was passed last session.

The question of the interpretation of the Act was brought before the Court by Mr. C. H. Croker, who asked Mr. Justice MacGregor, on behalf of two mortgagees, for leave to exercise their powers under the mortgages they held. In opposition to the granting of the leave, Messrs. L. M. Moss, F. C. Spratt, F. E. Wilson and H. R. Billing appeared on behalf of mortgagors and other mortgagees interested. Briefly stated, the submission of the opposing counsel was that sub-section 3 of section 10 of the new Act prevented mortgagees from taking any steps under their mortgages, except actions to recover interest, until March 31, 1925, and even then the mortgagee must give three months’ notice of his intention. The only cases under which leave to take action could be given under the Sections mentioned were cases where £he mortgagee has had to protect his security and expend money by reason of the mortgagor’s default, but such permission would be with reference only to the covenants thus broken.

His Honour held that sub-section 3 of section 10 did not authorise the court to give leave to sue for principal monies or to sell up the . properties, and he therefore dismissed the applications.

The Act was freely commented on during the hearing of the applications. Mr. Justice. MacGregor said the Act was full oF anomalies and inquired who drafted it. It practically made a “close season” for mortgagors until March 31.

Mr. Spratt, in addressing the court in support of the opposing submissions, expressed the opinion that the Act was iniquitous, but nevertheless it was the law.

It was stated that one of the effects of the Act is that a mortgagee, the fourth, for instance, may have an order over the mortgagor’s milk cheques and an assignment over his stock and chattels, and he may thus draw the whole of the proceeds of the farm, to the detriment of the other mortgagees. They may sue for interest, but unless the mortgagor has other assets upon which execution can be levied, the judgment Would be a barren one devoid of all tangible results.

A DUNEDIN CASE. JUDGE RESERVES DECISION. By Telegraph—Press Association. Dunedin, Last Night. The first application under the Mortgages Final Extension Act, 1924, for orders granting leave to a mortgagee to exercise his powers of sale came before Mr. Justice Sim this morning. The judge reserved his decision, stating that he did not think he had jurisdiction. Mr. Macalister, for the applicant*, contended that the Act was badly drawn, the Legislature having obscured its intention. The construction of the Act at present declared a “close season” for mortgagors for nine months. He hoped the court would strive against an interpretation leading to such a result.