AUCTIONEERS' CHARGES.

Auckland Star, Volume LIX, Issue 222, 19 September 1928, Page 11

AUCTIONEERS' CHARGES.

SALE AS SECOND MORTGAGEE COMMISSION ON GROSS VALUE HELD TO BE REASONABLE. That the customary commission charged by auctioneers when effecting' sales for second mortgagees through the registrar of the Supreme Court is not unreasonable, was the decision given Mr. Justice Reed in the Supreme Court this morning in a reserved judgment. The action was one for the taking of accounts between a mortgagor, Alfred Ernest Bagnall (Mr. McVeagh) and a second mortgagee, Hubert Thomas Clements (Mr. Richmond and Mr. Hall). The transaction, which gave rise to the dispute, was the sale of Bagnall's Building, in Anzac Avenue, by T. Mandeno Jackson, for £28,000. The only point in dispute was that of i what commission was properly allowable to an auctioneer upon a sale by a second mortgagee, through the registrar of a property subject to a first mortgage. Should the commission be calculated upon the gross value of the property, or .only upon the equity of redemption? The property was sold for £28,000. The first mortgage was £20,000, and the second £5600, leaving £2400 as the equity. The auctioneers deducted £700 as commission at the rate of 2 J per cent on £28,000. The plaintiff contended that the charge was excessive, and that commission should be calculated on £2400, the price realised for the equity.

"I am satisfied on •jjhe evidence that it is customary and usual for auctioneers to charge on the gross value of the property when selling subject to a mortgage," said his Honor, "and I think this applied to sales through the registrar, subject to one or two exceptional cases. The evidence is supported by judicial decision. lii those circumstances I do not think I am entitled to disregard the general practice, because in an individual case it works badly. I must therefore hold that the charge is not unreasonable. I do not feel called upon to say that either the registrar or the mortgagee should in these cases bargain with the auctioneer, for the reason that it would throw upon the registrar a burden which the statute does not impose, and, as regards the mortgagee, a similar case to this is so unlikely to occur, mortgagees in general would be so considerably hampered in enforcing their right to sell through the registrar, and the number of« persons likely to be benefited comparatively so small that it would not be justified."

His Honor added that he must not be taken as expressing disapproval of the decision of the Court of Appeal quoted by Mr. McVeagh. The, circumstances in that case were entirely different, as it concerned a mortgagee selling under his own power. In such a case the equity might be of considerable value, and the remuneration to the auctioneer, calculated as commission on*the equity, might be quite adequate. The probability of a substantial equity on a sale through the registrar was almost nil. An order for the taking .of accounts was made and his Honor expressed the opinion that costs should not be allowed.