St. Catherine Co-Operative Credit Union Ltd v Herman Rhule
 JMCC Comm 12
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
CLAIM NO. 2016CD00253
Mr Dennis Richards and Mrs Shereen Richards instructed by Richards & Richards, Attorneys-at-Law for the Claimant
Mr Courtney Williams and Mr Jonathan Morgan instructed by DunnCox, Attorneys-at-Law and for the Defendant
Civil Procedure - Application for stay of proceedings — Principles to be applied Mortgage — Whether foreclosure proceedings can be reopened — Whether difference between value of foreclosed property and mortgage debt and/or special value of land to mortgagor sufficient factors
The Defendant granted the Claimant a mortgage over property being a parcel of land part of Garden Hill in the parish of St Catherine, currently registered at Volume 1500 Folio 726 (“the Property”) to secure a loan in the sum of $4,000,000.00. There was a default on the loan and on 6 th May 2015 the Claimant applied for an order for foreclosure which was granted by the Registrar of Titles on 3 rd September 2015 (the “Foreclosure Order”). On the 11 th July 2016 the Claimant was entered on the title of the Property as the registered proprietor. The Defendant has refused to comply with a notice to quit issued on behalf of the Claimant dated 14 th July 2016 and on 22 nd August 2016 the Claimant filed the fixed date claim form herein against the Defendant seeking and order of possession in respect of the Property.
The parties were encouraged to settle the matter and were given a number of opportunities to do so, including a referral to mediation, with no positive result. Consequently, the trial of the fixed date claim form was fixed for hearing on 9 th March 2018 at 10 am. On the morning of the 9 th March 2018 at 9.16 am, the Defendant filed a notice of application seeking to have proceedings in the claim herein stayed until the determination of (the “Separate Claim”). In the Separate Claim, the Defendant in the instant claim, Mr Rhule, is seeking orders that the Foreclosure Order be reopened and that the Property be sold in lieu of foreclosure.
It was accepted by Counsel on both sided that the Court has an inherent jurisdiction to stay proceedings generally and as far as may be necessary for the purposes of justice pursuant to section 48(e) of the Judicature (Supreme Court) Act and under the Court's general powers of management pursuant to Rule 26.1(2)(e) of the Civil Procedure Rules, 2002.
It was submitted by Counsel for Mr Rhule that a judge has judicial discretion to reopen a foreclosure order when the sums outstanding to the mortgagee is significantly less than the property value and where the property had a special value to the Mortgagor. Counsel relied on the following extract from Cheshire's Modern Law of Real Property, eleventh edition by E.H. Burn at page 659:
Revival of Equity of Redemption. But it must not be thought that a foreclosure absolute irrevocably passes the mortgagor's interest to the mortgagee, although it appears on the surface to do so, for there are certain circumstances in which the foreclosure may be re-opened and the equity of redemption revived. This re-opening takes place if the mortgagee, after obtaining an order absolute, proceeds to sue on the personal covenant; but in addition to this case the court has a discretion to re-open a foreclosure if such relief appears in the special circumstances of the case to be due to the mortgagor. Moreover, the foreclosure may be re-opened against one who has purchased the estate from the mortgagee. It is impossible to lay down a general rule as to when the relief will be granted, for everything turns upon the particular circumstances of each case.
In , JESSEL, M.R., enumerated those factors which might influence the court in re-opening the foreclosure: the promptness of the mortgagor's application, his failure to redeem being due to an accident which prevented him from raising the money, the difference between the value of the property and the loan, and any special value which it had to the parties. (cited without footnotes)
Counsel also relied on an extract from Commonwealth Caribbean Property Law by Gilbert Kodilinye, at page 239 as follows:
Re-opening of a foreclosure
An order of foreclosure absolute may be ‘reopened’ in certain circumstances: for instance where the mortgagee, after obtaining an order absolute, proceeds to bring an action on the personal convenant; where a mishap at the last moment prevents the mortgagor from repaying the debt; where there is a marked difference between the value of the property and the amount of the debt; and where the property is of special value to the mortgagor (for example, where it is an old family estate). (cited without footnotes)
Sale in lieu of foreclosure
The court has a statutory power to order a sale instead of foreclosure at the request of any person interested (for example, a later mortgagee or the mortgagor). The power is most likely to be used where the value of the property far exceeds the amount of the mortgage debt. In such a case, the court may order a judicial sale, the effect of which is that each mortgagee is paid what is due to him in order of priority and the balance is given to the mortgagor. (cited without footnotes)
Counsel submitted that in the circumstances of the claim herein, a just result would be obtained by the Court ordering a sale in lieu of foreclosure.
Counsel relied the judgment of 1887 Chancery (which was referred to in the previously mentioned extract from ) and in particular on the following observations of Jessel MR at page 173:
Then an element for consideration has always been the nature of the property as regards value. For instance, if an estate were worth £50,000, and had been foreclosed for a mortgage debt of £5000, the man who came to redeem that estate would have a longer time than where the estate was worth £5100, and he was foreclosed for £5000. But not only is there money value, but there may be other considerations. It may be an old family estate or a chattel, or picture, which possesses a special value for the mortgagor, but which possesses not the same value for other people; or it may be, as has happened in this instance, that the property, though a reversionary interest in the funds, is of special value to both the litigants: it may possess not merely a positive money value, but a...
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