Finance Corporation of Bahamas Ltd v Johnson and Burrows

• Jurisdiction: Bahamas
• Judge: Hilton J.
• Judgment Date: 05 August 2016
• Court: Supreme Court (Bahamas)
• Docket Number: CLE/GEN/01797/2015
• Date: 05 August 2016

Supreme Court

Hilton, J. (Ag.)

CLE/GEN/01797/2015

Finance Corporation of Bahamas Limited

and

Johnson and Burrows

Appearances:

Lashay Thompson for the plaintiff

Thomas Evans Q.C. with Gladstone Brown for the defendants

Cases Mentioned:

Citibank, N.A. v. Paul Major et al CA Commonwealth of The Bahamas Civil Side No. 28 of 1996

Legislation:

Sections 21 and 22 of the Law of Property Act, Chapter 138 of the Statute Laws of the Bahamas

Real Property - Mortgage — Vacant possession and judgment for sums outstanding under mortgage — Whether the Bank was entitled to vacant possession of the mortgaged property and entitled to exercise the power of sale with respect to the mortgaged property — Mortgage was restructured by the agreement between the parties and as such the default was cured — Bank without written choice changed the monthly payment arrangements — Bank was not entitled to vacant possession as the restructured mortgage agreement without written notice of at least one month to the defendants — Bank was not entitled to increase in the payments without notice — Increase in the payments caused the default by the defendants — Excess in payments should be reversed along with the applicable interest charges and late fees — Validity of the Mortgage transaction was not impugned — Relief could be sought by the Bank in subsequent action in the event of any future breaches once proper notice was given — Originating summons dismissed with costs.

Hilton J. (ACTG.)

1 This is a mortgage action by the plaintiff for vacant possession and judgement for sums outstanding under the mortgage.

2 The plaintiff commenced this action by Orginating Summons dated 11th November 2015 seeking the following relief:

• 1. That it may be determined whether in the circumstances and upon the true construction of Paragraphs 5 (b) (iii) and 5 (b) (v) of the Indenture of Mortgage made the 31st day August, A.D., 2005 between the plaintiff and the defendants and recorded in the Registry of Records in the City of Nassau in the Island of New Providence in the said Commonwealth in Book 10546 at pages 173 to 181 in relation to ALL THAT piece parcel or lot of land situate and being a portion of Lot No. 11 in the revised plan of a Subdivision known “St. Andrews” Situate on the Eastern Side of Village road on the Eastern District of the said island of New Providence which said piece parcel or portion of land has such position boundaries shape marks and dimensions as are shown on the diagram or plan attached to an Indenture of Conveyance dated the 24th day of February, A.D. 2003 and made between Mervin W. Burrows and Rosita Louise Burrows of the one part and Citibank N.A. of the second part and the Borrowers of the third part which is recorded in Book 8630 at pages 84 to 93 in the Registry of Records in the City of Nassau (hereinafter called the “Mortgaged Property”) and in the events which have transpired, whether the plaintiff is entitled to the following relief:

  • a) a Declaration that the plaintiff is entitled to possession of the Mortgage Property; and

  • b) a Declaration that the plaintiff is entitled to exercise the power of sale with respect to the Mortgaged property.

• 2. An Order directing the defendant to deliver possession of the Mortgaged Property to the plaintiff within Twenty-eight (28) days of the Order.

• 3. Judgement for the sums outstanding under the said Indenture of Mortgage.

• 4. That the Court order further or other relief as deemed expedient.

• 5. That the Provisions may be made for the costs of this application.

3 The Originating Summons is supported by the affidavits of D' Andrea Summer Dated 29th December 2015 and 20th May 2016.

4 The defendants opposed the action and, though not filing a summons of Defence, filed an Affidavit dated 12th April 2016 claiming that they were not in breach of the Mortgage payments and that the plaintiff had, without their knowledge, increased the monthly payments and should not be allowed to proceed with their Originating Summons for vacant possession and judgement.

FACTUAL HISTORY

5 The defendants are customers of the plaintiff bank. By a Mortgage dated 31st August 2005 the defendants took out a loan facility with the plaintiff with respect to real property situate at lot No. 11 in a Subdivision known as “St. Andrews” on the Eastern side of Village Road in the amount of B $178,930.00. The Mortgage term was 25 years (300 months) at an initial interest rate of 8% per annum repayable in monthly instalments of B$1,381.12.

6 In breach of the conditions of the Mortgage the defendant failed to repay the loan to the plaintiff in the agreed terms and fell into arrears under the Mortgage sometime prior to 2011.

7 The defendants were notified of their breach under the Mortgage by letter dated 20th January 2011 advising that should payment of the debt not be satisfied within 14 days legal proceedings may be commenced against them to recover the loan without further notice.

8 By a subsequent letter from the plaintiff to the defendants dated 28 ^th June 2011 the plaintiff notified the defendants that it was seeking to exercise its Power of Sale with respect to the Mortgaged Property and informed the defendants that the Mortgaged property was to be advertised for sale.

9 Based upon the above facts and the particulars of arrears outlined in the Affidavit of D'Andrea Summer dated 29th December 2015 the plaintiff filed the Originating Summons dated 11th November 2015 the subject of these proceedings.

10 In response to the Originating Summons the defendant entered appearances and filed an Affidavit dated 12th April 2016 indicating that the Mortgage Loan was restructured and a new commitment Letter executed by the plaintiff and defendants on 13th October 2011 extending the term of the loan to 30 years repayable in monthly instalments of $1,626.54 to be paid by way of salary deduction and allowing for the homeowners insurance to be paid by the defendants.

11 The new commitment letter arranging the restructuring of the loan also specified that the plaintiff reserved the right to cancel the arrangement upon giving at least one (1) months prior written notice and contained the following acknowledgements:

Additionally by paragraph 2 of the Restructure letter the Mortgagee could only cancel or change the new arrangement upon giving at least one (1) months written notice to the defendants.

• A. This Commitment Letter sets forth the entire Arrangements and supercedes any and all prior oral or written agreements or understandings between you and FINCO concerning the subject matter of this Commitment Letter.

• B. This Commitment Letter may not be altered, amended or modified, except by a further written document signed by you and FINCO.

• C. You fully understand your right to review all aspects of this Commitment Letter with an attorney of your choice, that you have carefully read and fully understand all the terms of this Commitment Letter and that you are freely, knowingly and voluntarily entering into this Arrangement.

• D. This Commitment Letter shall be a legally binding and enforceable agreement between the parties, governing this Arrangement to regularize the existing delinquent facility Loan Number 1091960 & 1092719.

• E. This Arrangement shall come into effect immediately upon your signing this Commitment Letter.

12 Clauses 4 and 5 of the defendants' Affidavit also contained the following averments:

• “4. We Made the payments that were required under this Supplemental Commitments Letter by salary deduction arranged with our employer, but on or about February 3rd (2014) we received a statement in the mail which showed that we were charged a late fee for several months because the sum of $1,809.33 was being deducted from our account as monthly instalments instead of the sum agreed. A copy of the statement is now produced and shown to us marked “Exhibit 2”.

• 5. We wrote to the...