Hayward v E & C Well Drilling Services Ltd

• Jurisdiction: Bermuda
• Judgment Date: 17 June 2011
• Docket Number: Civil Appeal 2011 No. 1
• Date: 17 June 2011
• Court: Court of Appeal (Bermuda)

In The Court of Appeal for Bermuda

Before: Zacca, P; Ward, JA; Auld, JA

Civil Appeal 2011 No. 1

BETWEEN:

Vera Marie Hayward

Appellant

and

E & C Well Drilling Services Limited

Respondent

Mr M Diel for the Appellant

Mr J Pachai for the Respondent

Abstract:

Enforcement of payment of debt - Mortgage - Construction

JUDGMENT of Auld, JA

Introduction

1. This is an appeal by Vera Marie Hayward against orders of the Chief Justice on 13th January 2011 to enforce payment of a debt owed by her to E & C Well Drilling Services Ltd (the Company") and secured by a deed of mortgage on her home held under long lease, in favour of the Company.

2. The Chief Justice so ordered on his determination of two over-lapping issues raised by Mrs Hayward in response to the Company's originating summons against her to recover the money owed and/or to enable it to enforce payment by sale and the grant of possession for that purpose. The issues were:

i. whether the Company, "a local company" within the meaning of that expression in section 2(1) of the Companies Act ("the Act") and without express landholding power or ministerial consent for it, was prohibited by section 120(1) of and paragraphs 12 and 13 of the First Schedule to the Act as they stood at the date of the mortgage deed, from acquiring or holding land in Bermuda in the absence of such power or consent; and, if so,

ii. whether provisions in the mortgage Deed purporting to render the Company a landholder by assignment of the lease rendered it unlawful and, therefore, ineffective as a means of enforcing either the debt or the mortgage security.

The relevant facts and law

3. Clause 1 of the mortgage deed provided:

"… in consideration of the … principal sum … paid by the Mortgagee to the Mortgagor… the Mortgagor as Beneficial Owner Hereby Assigns unto the Mortgagee All … the mortgaged lands … To Hold the mortgaged lands hereby assigned…. Unto the Mortgagee for all the residue now unexpired of the term of years granted by the … Lease Subject to the proviso for redemption … And In Any Such Case [i.e. redemption by the Mortgagor] the mortgaged lands shall at any time thereafter at the request and cost of the Mortgagor be re-assigned to the Mortgagor or as the Mortgagor shall direct."

Clause 2(a) required Mrs Hayward to repay the principal debt and interest on it, according to its terms.

Clause 3 provided that the Company could, without the consent of Mrs Hayward, sell the mortgaged property in the event of her "failure to comply with all or any of the terms and conditions contained in" the Mortgage Deed.

4. As the Chief Justice correctly ruled, Bermudian law as to ownership of property under mortgage is still governed by English law as it stood before the wide-ranging reforms

of the Law of Property Act 1925, namely that on execution of a mortgage deed a mortgagee acquires ownership from the mortgagor of the property and holds it subject to a proviso for redemption on satisfaction of the debt. So here the Company acquired legal title to Mrs Hayward's leasehold interest by way of assignment on the execution of the mortgage Deed - on the face of it contrary to section 120 of the Companies Act, as it then stood.

5. However, the Chief Justice ruled, by reference to an authoritative resum� of the English law of property in Megarry & Wade, Law of Property (3rd ed.), at 882, on which the Company relied, that such acquisition of...