E&C Well Drilling Services Ltd v Hayward

• Jurisdiction: Bermuda
• Judgment Date: 13 January 2011
• Date: 13 January 2011
• Docket Number: Civil Jurisdiction 2010 No. 315
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Civil Jurisdiction 2010 No. 315

BETWEEN:

E&C Well Drilling Services Ltd

Plaintiff

and

Vera Marie Hayward

Defendant

Mr J Pachai for the Plaintiff

Mr M Diel for the Defendant

Abstract:

Enforcement of mortgage - Company has no power to hold land and no ministerial consent - Whether mortgage unlawful

JUDGMENT of Ground, CJ

Introduction

1. This action is brought to enforce a mortgage. This ruling is given in respect of a legal point raised by the Defendant in opposition to that enforcement. Technically, I think that it has to be regarded as given on the adjourned hearing of the Originating Summons itself, because there was no order for the trial of a preliminary issue. The consequence of that is that it is the only point raised by the defendant in these proceedings, she having filed no evidence.

2. The point is a short but fundamental one. The Plaintiff is a local company within the meaning of that expression as defined in the Companies Act 19811 ('the Act'). Such entities are prohibited from holding land unless they have a land holding power in their Memorandum of Association and the specific consent of the relevant Minister. This company had no express land-holding power and no such ministerial consent. Mr. Diel, for the defendant, therefore argues that the mortgage was and is unlawful and unenforceable.

3. The relevant facts appear from the plaintiff's affidavit in support of the Originating Summons. By a mortgage deed of 14th November 2003 a residential unit at 5 Rose Gardens in Warwick, known as "Prosperity", was charged by the defendant, Ms. Hayward, in favour of the plaintiff to secure a debt $150,000. The loan was repayable on demand, subject to a proviso in schedule 8 that if Ms. Hayward paid interest and observed the covenants it would not be called for five years. The deed does not contain a provision as to when interest should be paid. There is the following in the fifth schedule:

"Monthly Days

The 14th day of each month commencing on the 14th day of December, 2003"

The obvious assumption is that that was the day intended for the payment of interest, but there is no operative provision in the body of the deed which refers to the fifth schedule, or expressly requires the regular payment of interest on that date.

4. The property itself is a leasehold2, and the lessor therefore joined in the mortgage deed. The plaintiff says that Ms. Hayward is substantially in default, and by notice of 27th July 2010 it demanded repayment in full. The Originating Summons of 23rd September 2010 claims payment of the principal plus interest in the total sum of $222,850; an order for sale; delivery up of possession and costs.

5. I am told by Mr. Diel that the defendant is an elderly lady who borrowed the money to make an investment, but that the capital was subsequently lost or taken by her investment advisor, who is himself now impecunious. She has no money to repay the loan and is legally aided. It appears that the mortgaged property is her only home. Apart from that I know nothing about the making of the loan, or how this lender came to be involved, beyond the fact that the defendant only received in hand $113,079.19 from the proceeds of the loan. That is set out in the demand letter of 27th July 2010, which appears at exhibit ER 2 to the plaintiff's affidavit. At the hearing the plaintiff also produced a copy of the cheque paid to the defendant in that amount, although it was not formally in evidence. Of the balance $14,000 appears to have gone to a real estate firm, and it may be that the rest went on legal fees.

6. The way this comes before the Court requires some comment. The first hearing of the Originating Summons was fixed by notice for 4th November 2010. RSC Ord. 28, r. 4(2) provides that -

"(2) Unless on the first hearing of an originating summons the Court disposes of the summons altogether or makes an order under rule 8, the Court shall give such directions as to the further conduct of the proceedings as it thinks best adapted to secure the just, expeditious and economical...