Member Article

On the eve of an auction inexercise of the Bank’s power under its Charge (security instrument similar to amortgage), to sell real property in order to recover a debt, the debtor made anex parte application for injunctive relief to stop the sale. The court notedthere was good sense in the established rule that mortgagees would not berestrained by a debtor from exercising their power of sale, unless the entiresum owed to the mortgagee is paid into court. To do otherwise would be togreatly diminish the benefit of having security for a debt and would have “nosmall impact on the commercial lending industry as a whole.” In reviewing anumber of authorities on the case, including the Jamaican Court of Appeal caseofMosquito Cove Ltd v Mutual Security Bank Limited [2010] J.M.C.A.Civ 32,thecourt accepted that the rule was further governed by “the special rules thathave been developed over many years to protect a mortgagee” by affording himthe “equivalent safeguard” that an order of payment into court provides. Therule is only departed from in exceptional cases which might possibly includethe existence of a fiduciary relationship or forgery.

In the absence of suchexceptional circumstances, there was no justification for granting aninjunction without requiring that the undisputed sum, or the sum that themortgagee claimed was owed, be paid into court. An injunction was thereforegranted on the basis of full paymentofthe sum owedintocourtwithin 72 hours, failing which the injunction would be automaticallydischarged. In the event, the sum was not paid and the injunction wasdischarged. The Bank is now free to exercise its power of sale under its Chargeand to apply the proceeds towards satisfaction of its debt.

[i]BVIHCV 2013/128