Cayman National Bank Ltd v Smith

• Jurisdiction: Cayman Islands
• Judge: (Malone, C.J.)
• Judgment Date: 24 December 1992
• Court: Grand Court (Cayman Islands)
• Date: 24 December 1992

Grand Court

(Malone, C.J.)

CAYMAN NATIONAL BANK LIMITED

and

SMITH and PIERSON

J. Stafford and T. Shea for the plaintiff;

O. Merren for the first defendant;

The second defendant did not appear and was not represented.

Legislation construed:

Grand Court Law (Law 8 of 1975), s.18:

‘In every civil case or matter law and equity shall be administered concurrently. The Court in the exercise of the jurisdiction vested in

it shall have power to grant and shall grant, either absolutely or on such reasonable conditions as shall seem just, all such remedies whatsoever as any of the parties thereto may appear to be entitled to in respect of any and every legal or equitable claim or defence properly brought forward by them respectively in such cause or matter so that so far as possible all matters in controversy between the said parties respectively may be completely and finally determined. . . .’

Registered Land Law (Revised) (Law 21 of 1971), s.75(1): The relevant terms of this sub-section are set out at page 238, lines 35–38.

s.77: The relevant terms of this section are set out at page 238, lines 20–26.

Land Law-charges-power of sale-mode of exercise-application for sale by private treaty-chargee permitted by Registered Land Law (Revised), s.77 to vary charge and sell by private treaty instead of by public auction as permitted by s.75(1)-court empowered by s.77 and by Grand Court Law, s.18 to impose conditions when granting order

Land Law-charges-power of sale-mode of exercise-chargee has same duty under Registered Land Law (Revised), s.75(1) to act in good faith and consider mortgagor”s interest in sale by public auction and sale by private treaty-does not have same discretion to fix conditions of private sale since court may impose conditions considered just by s.77

The plaintiff sought leave to sell a charged property by private treaty.

The defendants owed the plaintiff $173,996 under a charge on their home. Demand for payment was first made by the plaintiff in March 1985. From August 1st, 1990, the debt started to attract interest at the rate of 0.0375% per day and the plaintiff proposed to sell the property to satisfy the debt.

The property was a large residence in need of repair and refurbishing, situated on recovered swamp land and isolated from its nearest neighbours by swamp on either side. Valuations of the property ranged from $180,000 to $554,000; it had twice been offered for sale by public auction after having been advertised in the usual manner but had failed to attract a bid approaching the reserve price of $300,000. Consequently, the plaintiff made attempts to ascertain a reasonable price for a sale by private treaty as there was known to be a potential buyer with an interest in purchasing the property at the reduced price of $205,000. The first defendant, who was not legally represented in his negotiations with

the plaintiff, opposed any sale of the property by private treaty. The plaintiff, in accordance with the requirements of the Registered Land Law (Revised), s.77 sought the leave of the court to sell privately.

The plaintiff submitted, inter alia, that (a) the procedure for such an application was governed by ss. 75 and 77 of the Registered Land Law (Revised). Whereas s.75(1) expressly referred to sale by public auction, s.77 allowed a chargee to make a variation in the charge to allow sale by private treaty and by the proviso to that section all the court was empowered to do was to grant the leave or refuse it without power to impose conditions; (b) moreover, since s.75(1) conferred a very wide discretion on a chargee exercising ‘his power of sale’ subject only to his duty to act in good faith and have regard to the interests of the chargor, it followed that the chargee must enjoy the very same discretion whether he chose to sell by public auction or by private treaty. This being the true construction of ss. 75(1) and 77, the plaintiff was entitled to determine the minimum price at which the property should be sold; (c) it was unlikely that it would be able to sell at the reserve price of $300,000 since this was an overvaluation of a run-down property in the middle of swamp, based on attributes which the property did not have-there was no planning permission for the conversion of the property into apartments and landscaping of the surrounding swamp could only take place at considerable expense to the buyer; and (d) there was a potential buyer interested in purchasing the property for $205,000 and since this appeared to be a reasonable price, it would be unreasonable to expect the plaintiff to forgo this opportunity of recovering its debt.

The first defendant submitted, inter alia, that (a) whether ss. 75 and 77 conferred a discretionary power on the court to impose conditions on a sale by private treaty was irrelevant, as the court was given a general jurisdiction by s.18 of the Grand Court Law to attach to any orders it was empowered to make such conditions as it considered just; (b) the court should refuse leave to sell privately because (i) the property was an unusual property in an unusual location with potential for development as a strata building of three or more apartments enhanced by fish ponds; (ii) to attract a price commensurate with its true value, it needed extensive advertisement of a particular kind; (iii) the plaintiff”s advertisements of the property for sale by public auction and subsequently had been...