Attorney-at-law Derrick Sylvester has won an important case for a New Hampshire, St. George resident against a major commercial bank on the island.
High court judge Justice Raulston Glasgow ruled for Sylvester’s client, Erron Williams who was taken to court by RBTT Bank Grenada Limited, formerly known as the Grenada Bank of Commerce Limited after he defaulted on mortgage payment.
The bank took possession of the property and allegedly sold it for less than the market price.
Justice Glasgow ordered the bank to pay Williams the sum of $105,260.00 in special damages, with Interest at the rate of 3% per annum from the date of service of the claim to the date of trial, as well as Interest at a rate of 6% per annum from the date of judgment to the date of payment.
The case was a claim for monies due and owing pursuant to a mortgage between the claimant, RBTT Bank Grenada Limited, formerly known as the Grenada Bank of Commerce Limited (the bank) and the defendant, Erron Williams.
On 11th May, 2011, Williams executed a mortgage in favour of the bank in the sum of $120,000.00 together with interest at the rate of 10.5% per annum.
Williams’ property is situated at Annandale in the parish of Saint George and was used as security for the mortgage.
Williams defaulted in his repayment obligations under the mortgage and the bank exercised its power of sale under the mortgage and sold the property on 12th May 2017 for the purchase price of $49,000.00.
The bank contends that notwithstanding the sale of the property, the proceeds of sale were insufficient to satisfy the debt and claimed that Mr. Williams still owed the sum of $87,210.31 to the bank.
By letter dated 23rd August 2017, the bank informed Mr. Williams that it was seeking payment of the balance of $87,210.31 failing which it would commence legal proceedings against him to recover the sum.
The bank told the court that Williams has failed, refused and/or neglected to make payment towards the outstanding debt and claimed in court for relief against Williams in the sum of $99,104.27 together with costs.
As a public service, THE NEW TODAY reproduces in full the counterclaim made by the New Hampshire resident against the bank and the arguments put forward by both sides.
On 11th October 2019 Mr. Williams filed a defence and counterclaim in response to the claim wherein he states that:-
(1) On 28th July 2000, he agreed to buy the property for the purchase price of $60,000.00. Thereafter, he secured a mortgage with the bank in the sum of $40,000.00 to assist with the purchase of the property.
(2) The property was valued by Kenrick Gabriel & Associates Ltd. on 13th April 2011 in the sum of $152,460.00 with a forced sale value of $137,214.00.
(3) Subsequent to the Kenrick Gabriel & Associates Ltd valuation, he obtained a further mortgage from the bank in the sum of $120,000.00 with interest at a rate of 10.5% per annum. The property was again used as security for the mortgage.
(4) The bank exercised its power of sale by selling the property for the price of $49,000.00 without regard to the 2011 valuation of $152,460.00 conducted by Kenrick Gabriel & Associates Ltd.
(5) He does not deny his inability to service the mortgage, but he pleads that the bank sold the property at an undervalued price.
(6) He alleges that the bank’s actions were negligent, inequitable and done in bad faith. Further, he complains that the bank accepted the lowest possible price and that it failed to properly advertise the sale of the property.
(7) The bank failed to properly advertise and/or seek the market value for the property which would have appreciated since 2011 which was the date of the last valuation.
(8) The bank failed to consider his interest throughout the proceeds of the sale of the property;
(9) Having regard to the above, Mr. Williams counterclaims for special damages in the sum of $105,260.00 (being the difference between the market value of the property at $152,460.00 less the sale price of $49,000.00); general damages for negligence/breach of statutory duty/breach of contract/ breach of trust and or breach of equitable duty; and declaratory orders, interest and costs.
 The parties have agreed that the court is to determine the following issues:
(1) Whether the bank, in exercising its power of sale, did all that was reasonably sufficient to procure the best price reasonably obtainable and is entitled to the recover the remaining sum owed to it.
(2) If the first issue is answered in the negative, then whether Mr. Williams is entitled to recover the sum of $105,260.00, among other relief claimed in his counterclaim.
Discussion and Analysis
Submissions on the applicable law Claimant’s submissions
 Counsel for the bank, Ms. Maurissa Johnson, submits that the duty of a mortgagee in relation to the exercise of its power of sale is to take reasonable precaution to obtain the true market value of the mortgaged property. Ms. Johnson relies on the case of Cuckmere Brick Co. Ltd. and Another v Mutual Finance Ltd1 to support her submission.
 Additionally, Ms. Johnson submits that the sale under the exercise of a power of sale must be a genuine sale by the mortgagee to an independent purchaser at an honest price. The duty as Ms. Johnson puts it, is that the mortgagee must act in good faith and take reasonable precautions to obtain a proper price. The mortgagor has no redress even though more might have been obtained if the sale had been postponed as stated by Lord Cross in Cuckmere.
 Further, Ms. Johnson explains that the test to be applied by the court is whether the bank did all that was reasonably sufficient to procure the best price reasonably obtainable. In considering whether the mortgagee has fallen short of that duty, the facts must be looked at broadly and the mortgagee should not be adjudged to be in default unless he is plainly on the wrong side of the line.
 Counsel for Mr. Williams, Mr. Derick Sylvester, submits that the duty of a mortgagee in the exercise of its power of sale has long been settled by the court in Cuckmere Brick Co. Ltd. and Another v Mutual Finance Ltd. Mr. Sylvester refers to page 966 of the judgment where Salmon LJ explained that a mortgagee under its power of sale is only a trustee of the proceeds of sale and not of the power of sale. Further, the mortgagee must not act contrary to his interest in the sale.
 Moreover, the mortgagee must take care to ensure that he obtains the true market value of the mortgaged property at the time of the sale. Salmon LJ’s exposition at pages 965-967 of Cuckmere Brick Co. Ltd, is recited by counsel
At pages 965-966:
“It is well settled that a mortgagee is not a trustee of the power of sale for the mortgagor. Once the power has accrued, the mortgagee is entitled to exercise it for his own purposes whenever he chooses to do so. It matters not that the moment may be unpropitious and that by waiting a higher price could be obtained. He has the right to realise his security by turning it into money when he likes. Nor, in my view, is there anything to prevent a mortgagee from accepting the best bid he can get at an auction, even though the auction is badly attended and the bidding exceptionally low. Providing none of those adverse factors is due to any fault of the mortgagee, he can do as he likes. If the mortgagee’s interests, as he sees them, conflict with those of the mortgagor, the mortgagee can give preference to his own interests, which of course he could not do were he a trustee of the power of sale for the mortgagor.”
And at page 767:
“There are some dicta which suggest that unless a mortgagee acts in bad faith he is safe. His only obligation to the mortgagor is not to cheat him. There are other dicta which suggest that in addition to the duty of acting in good faith, the mortgagee is under a duty to take reasonable care to obtain whatever is the true market value of the mortgaged property at the moment he chooses to sell it: compare, for example, Kennedy v. de Trafford  1 Ch. 762;  A.C. 180 with Tomlin v. Luce (1889) 43 Ch.D. 191, 194.
The proposition that the mortgagee owes both duties, in my judgment, represents the true view of the law.”
 Mr. Sylvester points out that while the mortgagee enjoys some degree of latitude in the sale of the property, the mortgagee is under a duty to act reasonably in obtaining the best price for the mortgaged property. This position he says was adopted in our jurisdiction in the recent decision of Grenada Development Bank v Dexter Chance. Mr. Williams, accepts that, the law is clear that, even though the sale of the mortgaged property results in a disadvantageous outcome for the mortgagor in relation to the difference between the market value and the sale price, this is not proof of negligence on the part of the mortgagee. This position was recently restated by our Court of Appeal in Caribbean Banking Corporation v Alpheus Jacobs5. However, Mr. Sylvester submits that where the stated market value is so low it may lend itself to some evidence of fraud. In Warner v Jacob6, Kay J at page 224 of the judgment stated:
“…a mortgagee is strictly speaking not a trustee of the power of sale. It is a power given to him for his own benefit, to enable him the better to realize his debt. If he exercises it bonâ fide for that purpose, without corruption or collusion with the purchaser, the Court will not interfere even though the sale be very disadvantageous, unless indeed the price is so low as in itself to be evidence of fraud.”
 Additionally, Mr. Sylvester argues whether or not a mortgagee has discharged its duty to secure the best price for the mortgaged property is a matter of fact to be determined upon consideration of all the circumstances of the case. In considering a potential breach of this duty, Mr. Sylvester urges that the reasonableness of the steps that have been taken by the mortgagee to obtain the best price for the property must be considered in the round7. Mr. Sylvester also commended the court to the Privy Council decision of Templeman J in Tse Kwong Lam v Wong Chit Sen and others.
 Mr. Sylvester presents the case of The Bank of Nova Scotia v Lind Lou-Liburd et al9 as an instance where the issue of whether the mortgagee took reasonable care to obtain the true market of the mortgaged property upon sale was considered. In that case, the property in dispute case was valued on four occasions between October 2011 and October 2014 with each successive valuation decreasing the market value of the property by 15 percent. Mr. Sylvester commends the court to paragraph 4 of the decision of Ventose J in Lind-Lou-Lubird, where the court found that the valuations did not indicate or “explain the reduction in value during the three-year period”. In the premises, it is Mr. Williams’ contention that the bank has breached its duty owed to him as mortgagor to obtain the true market value of the property.
(TO BE CONTINUED)