THE MORATORIUM

Hokitika Guardian, 16 January 1925, Page 1

THE MORATORIUM

EFFECT OF RECENT LEGISLATION. AUCKLAND, January 14, The limitations imposed on holders of mortgages affected by the moratorium were emphasosed by Air Justice Herdman in a judgment delivered today. “The effect of the passing of the -Mortgages Final Extension Act, 1924, is to deprive a mortgagee who holds a mortgage which is subject to the provisions of that legislation of the most effective remedy that lie had against a defaulting mortgagor, during the period commencing upon October 21, 192-1. a,ml ending on March 31, 1925.” said his Honor. Before the passing of the legislation a mortgagee could obtain some relief in a proper case by making application to the court for leave to demand payment of the principal moneys secured by mortgage, or 1.0 oxcri-sie hi, pni'ci of sale. Tint

light now lias been taken away from him for 1 lie period moiil ioiic'd, ’I lie mortgagee is now almost impotent. All that is left to him in the way of security is the right to commence- an action for breach of certain, subordinate covenants other than the covenant to repay principal moneys. If the court’s leave is obtained, a right, which is of little nr no value if the mortgagor disappears or is insolvent. “The extent to which a mortgagee’s rights have been affected can be illustrated by reference to well-known conditions obtaining in some parts of New Zealand to-day,” bis Honor continued. “Al the present time in certain districts farms have been abandoned by mortgagors whose financial position has become hopeless, fences are getting into disrepair, buildings are depreciating. noxious weeds are springing up and rabbits are on the increase. In

these cri iimstances the mortgagee cannot within the time limited by .statute demand payment of the principal sum, nor can he call it Up, neither can ho during the suspensory period exercise any power of sale or enter into possession. His remedy i.s, with leave of thi> court, io sue the erring mortgagor, if jii.s whereabouts can he discovered, for breach of covenant other tluyi the covenant in pay the principal sum seemed. lie lia.s apparently one other right left. Tie may sue for interest without getting leave of the court.”

Subsequently 3iis Honor remarked that the mortgages extension legislation i.s special legislation passed to meet difficult and unusual local conditions. The ordinary rights of one of the parties to a commercial contract have been arbitrarily modified, while the other party to the <on tract has been given advantages which he never expected. In such a case the legislation should he interpreted with the greatest strictness and no right should he taken away unless it is perfectly plain that the legislation intended to destroy it.