Citibank, N.A. v Major et Al
| Jurisdiction | Bahamas |
| Judge | Ganpatsingh, J.A. |
| Judgment Date | 23 January 2001 |
| Neutral Citation | BS 2001 CA 1 |
| Docket Number | Civil Appeal No. 28 of 2996 |
| Court | Court of Appeal (Bahamas) |
| Date | 23 January 2001 |
Court of Appeal
Zacca, P.; Churaman, J.A.; Ganpatsingh, J.A.
Civil Appeal No. 28 of 2996
Mr. Feron Bethel for the appellant.
Mr. Maurice Glinton for the respondent.
Real property - Mortgages — Mortgagee's power of sale — Respondent sought damages for wrongful dismissal and an order restraining appellants from taking any steps to recover outstanding balance under a mortgage executed by him in their favour to secure loans for the purpose of acquiring a residence — Appellant bank sought order for delivery up of possession of mortgaged property — Respondent successfully sought order restraining appellants from doing any act in purported exercise of their power of sale or right of foreclosure over or in respect of the property — Whether attempt by appellant bank to exercise its remedies was unreasonable and unconscionable — Whether respondent had proved existence of a serious issue to be tried — Finding that trial judge proceeded on a misunderstanding of law and should have required that equity be done by respondent — Appeal allowed and order of trial judge set aside.
This is an appeal from an interlocutory order as of right, within the exception specified in paragraph (f) (ii) to section 10 of the Court of Appeal Act. It raises fundamental issues of principle pertaining to the exercise of judicial discretion, assuming there is jurisdiction, granting injunctive relief against a mortgagee, to restrain the power of sale, exercisable in terms of the mortgage deed, within the body of equitable principles established to do justice in preserving or protecting in a mortgage action the mortgagor's equity of redemption, notwithstanding the latter is in default of his obligations under the deed of mortgage, without prejudicing the security of the mortgagee on the property charged.
The interlocutory order of Longley, J. dated the 19th of July 1996 granting such an injunction, was conditional on the common law action for wrongful dismissal filed by the mortgagor against the mortgagee being set down for hearing within 90 days of the order. This appeal was filed on the 1st of August, 1996 and that perhaps explains why the appellant Bank had taken no proceedings in the court below, to have the order granted in favour of the respondent set aside, since the judge was no longer seized of the matter, the order being the subject of an appeal. We allowed the appeal on the 24th of January last, and now put our reasons in writing.
The appellant is a bank carrying on business in the Bahamas. The respondent entered into their service in November of 1969 and at the time of termination of his employment occupied the position of Vice President and Country Business Manager. That was the highest office in the Bank in the local jurisdiction. Under his conditions of service, apart from a base salary, he enjoyed a number of impressive perquisites, consistent with his eminent rank. His employment ceased in May of 1993 when he was procured by his employer to sign a letter of resignation, following an internal investigation into irregularities at the Bank, the particulars of which it is unnecessary to rehearse. In a writ filed on the 29th of July 1993, he sought damages for wrongful dismissal and an order to restrain the appellants, from taking any steps to recover the outstanding balance under a mortgage which he had executed in their favour, to secure several loans for the purpose of acquiring a residence. The respondent it should be noted, at the time of filing the writ, was not in default of his obligations under the mortgage. The writ however in its terms, signaled an intention that the respondent would no longer meet those commitments, in that he did not on the evidence relied on, assert any reasonable prospect of his being able to pay off the mortgagee in full on a claim to redeem.
In a letter dated the 29 September 1989 setting out conditions for staff mortgages to which the respondent had agreed, it was provided that in the event of termination the respondent would not be entitled to a release of the security, unless all the amounts outstanding were paid in full. The initial amount borrowed in October of 1989 was $256,000 at a concessional rate of interest. A further sum of $244,000 was loaned in July of 1990, when a deed of variation and further charge was executed. By an indenture of further charge dated the 29th of November 1991 a final loan of $150,000 was taken. The principal amount advanced therefore totalled $650,000. On the 1st May 1995, two years along, following his resignation, $629,620 of principal and $103,125.83 of interest were outstanding. There has been no change in the position, interest accruing due, onto the date of the order made on the 19th July 1996 granting the injunctive relief prayed for.
At this point in the narrative it may be pertinent to put the matter in perspective by referring to the evidence on record which established as of December 1991, the credit service ability of the respondent as assessed by the Bank with respect to the loans granted. This embraced his income derived from other businesses, by way of a holding company called Jadon, seemingly owning six villas and a building, in which a business, Floral Fantasia was carried on, the total assets being valued at $618,000. This latter business had a net income of $30,000 annually, and this fact led the judge to observe that, the mortgagor did have income, perhaps not to the level immediately prior to termination, and had made no effort to make payment on the arrears of either principal or interest. Equity he tangentially reasoned aids the vigilant not the indolent.
I pause here as well, to comment on the other and perhaps related circumstances referred to in the pleadings which were those befitting the office of Vice President and Country Business Manager, for in order, perhaps, to promote the image of the Bank in the Bahamas, the respondent needed to acquire a substantial residence. The mortgage rate subsidy, allowances and perquisites, were therefore absolutely necessary to maintain the obligation under the mortgage, otherwise he would be put to extreme mental distress and economic embarrassment. These circumstances, which I hasten to mention, did not arise out of or result from any operative provision in the contract of service, of which the employer took advantage, could not give rise to a special relationship beyond that of mortgagor/mortgagee.
These complaints in my view, were nothing more than a cri de coeur and an appeal to hardship for which there is no jurisdiction in the court to interfere: See Robertson v. Cilia [1956] 3 All E.R. 651. The respondent therefore had to show as a matter of law, that his rights whether legal or equitable, were being improperly threatened. And the mere use of the words, ‘harsh or oppressive or unconscionable’ could not operate without more as a basis for intervention. A similar plea failed in the case of Development Consultant Ltd. v. Lion Breweries Ltd (1981) 2NZLR 258 in which there was a claim that the terms of the mortgage had been informally varied and that it would be harsh and oppressive for the mortgagee to insist on it rights. Not surprisingly this claim faltered on the issue of a serious question to be tried.
On the 2nd of May 1995 the Bank moved the court by way of originating summons, for an order for delivery up of possession of the mortgaged property, presumably with a view to exercising its power of sale pursuant to its accrued right under the mortgage, the respondent having failed to make any payments in accordance with its terms, since May of 1993, despite service of a demand notice in writing for payment dated the 11th February 1994. We were told at the hearing of the appeal that the amount outstanding was now nearly double the principle advanced.
The respondent by interlocutory summons in his own action No. 807 of 1993 for wrongful dismissal, sought an order restraining the appellants from doing any act in purported exercise of their power of sale or right of foreclosure over or in respect of the property. The basic and in my view barren complaint was, that the attempt by the appellant to exercise its remedies under the mortgage was not only unreasonable but unconscionable, having regard to the circumstances in which he and his wife came to be indebted by way of the mortgage and personal loans, and it would be oppressive and an improper use of the mortgagee's power and right to take possession.
The summonses came on for hearing before Longley, J. and arguably were taken together. By order dated the 19th of July 1996 the Bank was rightly given possession of the premises. The position at law is that where under a legal mortgage being an installment mortgage, the whole mortgage money becomes payable by reason of the default of the mortgagor and the legal mortgagee is entitled to possession of the mortgaged property, the court has no jurisdiction to refuse to make an order for possession or to adjourn the summons, either on terms or not on terms as to keeping up payments or paying arrears, if the mortgagee does not agree to that course; but this does not exclude power to direct an adjournment for a short time to enable the mortgagor to pay off the mortgagee in full or otherwise satisfy the mortgagee if there is a reasonable prospect of the mortgagor being able to do so: See Birmingham Citizens Permanent Building Society v. Caunt [1962] 1 All E.R. 163, in which Russell, J. at p.172 stated the position thus:–
“There was, however, no principle on which equity had ever attempted or could ever rightly attempt to interfere with the security as a security or to destroy or suspend or nullify any rights of the mortgagee which were part and parcel of that security. The whole purpose of equity was, by insisting that the transaction was a security for...
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