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Bank of Nova Scotia v GLT Corporation Ltd

Id. vLex Justis VLEX-792617037

Link: https://justis.vlex.com/vid/bank-of-nova-scotia-792617037

Text

Supreme Court

Smith, J.

Common Law Side No. 795 of 1982

Bank of Nova Scotia

and
GLT Corporation Ltd.

Appearances:

Michael Barnett for the plaintiff.

Anthony McKinney for the defendants.

Mortgage - Plaintiff as mortgage of property which became the subject o f a declaration made
under the Property and Conveyancing (Condominium) Act, 1965 brought actions against the first
defendant as mortgagor of the said property seeking to recover the principal sum — The second
and third defendants guaranteed the repayment of the moneys secured on the mortgage —
Whether the second and third defendants had good defences under the Act.

Smith, J.

The plaintiff, as a mortgagee of property which ‘became the subject of a Declaration made under
the Law of and Conveyancing (Condominium) Act, 1965, (the Act) nought this action against the
First Defendant as mortgagor 4bf the said property seeking to recover the principal sum of
$62,854.74 and interest until payment in full. The mortgage was made on the 7th December,
1976. ;A further charge was made between the same parties on the 9th November, 1977.
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The Second and Third Defendants guaranteed the repayment of the moneys secured by the
mortgage and further charge.

The Statement of Claim, filed by the Plaintiff, set the particulars of the mortgage and further
charge and ified the property which was subject to the said encumbrances. The property was not
described in detail in plaintiff's Statement of Claim. To get a full description tone must go to the
mortgage itself to see exactly what mortgaged. In that document, the property is described he
following terms:

“ALL THAT piece parcel or lot of land situate at Treasure Cay on the Island of Great
Abaco and being in the said Subdivision and comprising Lot Number Sixteen (16) in
Block Number One Hundred and Sixty (160) of the said Subdivision which said piece
parcel or lot of land has such position boundaries share marks and dimensions as are
shown A on the said plan and filed in the Department of Lands and Surveys as
Number One hundred and Forty (140) Abaco.”

In their defences, the First and Second Defendants fitted the existence of the mortgage, further
charge and guarantees.

That land as is herein described in detail was the ject of a Declaration of Condominium dated the
3rd April, 1980. The Plaintiff did not recite this Declaration in its Statement of Claim but was a
party to it.

In the Declaration the property is described in the W owing manner

“The said property to be henceforth known as “SILVER SANDS CONDOMINIUM”

consists of ALL THAT piece parcel or lot of land situate at Treasure Cay on the Island
of Great Abaco one of the Islsnds in the said Commonwealth and being in
Subdivision A-2-A of Treasure Cay and comprising Lot Number Sixteen (16) in Block
Number One hundred and Sixty (160) of the said subdivision which said piece parcel
or lot of land has such position boundaries shape marks and dimensions as are
shown on a plan prepared by L.T.D. Surveying Limited and filed in the Crown Lands
Office Nassau, New Providence one of the Islands in the Commonwealth of The
Bahamas as “140” Abaco.”

The Defendants also admitted that the mortgage charge guarantees and Declaration of
Condominium were respect of the same property and in their defences the following:

“3. The security of the Mortgage and the il Further Charge is the freehold estate
in Lot 16 Block 160 of the A-2-A Sub division of Treasure Cay in the Island of
Abaco (hereinafter referred to as “the said hereditaments”) upon which the First
Defendant has constructed 14 Units the subject of a Declaration of
Condominium dated 3rd April, 1980, now of record in the Registry of Records in
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the City of Nassau in Volume 33279 at pages 307 to 339 (hereinafter referred to
as “the said Units”).”

The Defendants then also made the amazing statement defences:

“4. The Defendant says that the estate in the said Units together with the
undivided shares in the common! property held therewith created by virtue of the
said Declaration of Condominium are not part of the security of the Plaintiff
under the Mortgage or the Further Charge.”

The First Defendant put in a counterclaim against Plaintiff for various losses out of the same
matter stalling $2, 600, 000. 00. Under ordinary circumstances the statement in Paragraph 4 of
the defence, quoted above, would be taken to dean that the land described as being subject to
the mortgage end further chard did not include the land which was the subject if the Declaration.
That however would be nonsense when Paragraph 3 of the Defences quoted above is read.
Indeed, to follow the rules of pleading strictly, the Defendants are permitted to make conflicting
statements as appear in I paragraphs 3 and 4 of their defences. The Plaintiff replied to the
defences and came to Court and got an order:

“that the following point of law raised by the said pleadings in this action, that is to say
whether the estate in the units of the Declaration of Condominium dated the 3rd April,
1980, and the undivided shares in the cammori property held therewith created by the
said Declaration of Condominium are vested in the Plaintiff as Mortgagee under the
Indenture of Mortgage dated the 7th December, 1976 and the Indenture of Further
Charge dated 18th March, 198, the Plaintiff having joined with the First Defendant in
making the said Declaration of Condominium,”

I am not impressed that a point of law was raised pleadings. Ordinarily, pleadings state facts and
there is a direct reference to a particular principle common law or some statutory provision a
statement in ceding cannot be interpreted to be a statement of the law. tents of fact may be
pleaded which, if proven, could itute a principle of law; but a mere allegation of a fact sting it in a
defence does not make the allegation a ment or an averment of the principle of law.

I can see that the Plaintiff became startled that Defendants would make such a statement as a
fact; and it have considered that there must have been an intention he Defendants to suggest that
there was some provision ;the law which ordained that when a Declaration of Condominium is
made to relate to mortgaged property the mortgage (and in this case a further charge) becomes
worthless! indeed, that is the way the Plaintiff approached the court in seeking to argue the
“preliminary point of law”.

Counsel for the Plaintiff asked the Court:

“whether the estate in the units of the Declaration of Condominium dated the 3rd April,
1980 and the undivided shares in the common property held therewith created by the
said Declaration of Condominium are vested in the Plaintiff has Mortgagee under the
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said Declaration of Condominium are vested in the Plaintiff has Mortgagee under the
Indenture of Mortgage dated the 7th December, 1976 and the Indenture of Further
Charge dated 18th March, 1982, the Plaintiff having joined with the First Defendant in
making the said Declaration of Condominium.” No cases were cited as authority for
any submissions made by Counsel. The Defendants sought to turn this fanciful and
ve development into reality by their Counsel actually ng that “As for section 4 of the
Act, once owners cause the declaration to be made and recorded, that effectively
causes a new estate to spring up. The declarant becomes seised o£ that estate and
the mortgage that was in existence between the Plaintiff and Defendant did not come
along with the units that were created.”

The gist of the submission escapes me completely in tin to section 4 of the Act. I need not set out
what that n says but there is nothing in it to lead one to the sion counsel would have one make.
Other submissions were essentially to bolster up this first bold one.

It might have been that the Court should have dismissed tter of the preliminary point summarily
on the ground that was no point of law to be decided on what had been pleaded. j' better,
however, that I should save some time by stating the law is in the circumstances which occurred
in this case that the parties may rethink their positions. If the matter is continued it should do so
on a rational basis and not on oiful propositions of law Up until the coming into operation of the
Law of Property Conveyancing (Condominium) Act, 1965, there was no provision our law for the
horizontal division-up of the fee simple ate in land. In other words, the fee simple estate in a part
a second or other storey of a building could not be in a tally different ownership than that of the
ground floor of the me building. The Act was passed to make provision for the anership in fee
simple of units in multi-unit buildings thus roviding for horizontal division of a fee simple. The Act
describes a unit as follows:

““Unit” means a part of the property to which a Declaration relates intended for any
type of independent use and which includes one or more floors or parts thereof in a
building and which has direct access to a street or to common property leading to a
street and may include any appurtenance such as a balcony, terrace or patio or any
other structure such as a garage, store or parking place which may be situated in
some other part of the property.” fiction 2 provides that:

“2. This Act shall apply only to property as hereinafter defined which is
expressly made subject to the provisions of this Act by a Declaration in the
manner hereinafter provided.”

There is no provision in the Act by which the estates ests in land are automatically to become
void or on the making of a “Declaration” and no such thing intended. I do not know that such - a
thought would r a businessman's mind to cause him seriously to that by the making of a
Declaration under the Act a would be over-reached and totally removed as an once on the
property it originally, and before the tion, encumbered. Even if there could have been that if
interpretation of anything in the Act I should not any businessman to seek to evade in this way
the lent of moneys he borrowed from the bank!

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The Act, however, provides otherwise. In section 6, is the following:

“6. (1) Upon the lodgement for recording of a Declaration under the provisions of
section 4 of this Act the property to which the Declaration relates shall
thereupon be deemed to be divided in such number of separate parcels of land
(in this Act defined as “units”) each having such limits and boundaries as are
described in the Declaration and such parts of the property not included within
the limits and boundaries of units shall be deemed to be common property for
the purposes of this Act which shall be held in undivided shares by all the unit
owners in accordance with section 7(1) of this Act.

(2) At the time of the execution of the first conveyance of each unit every
mortgage or charge affecting such unit shall be paid and satisfied or the unit
being conveyed shall be released from such mortgage or charge by an
instrument duly executed and lodged for record in the Registry. Any such
conveyance executed in contravention of the provisions of this subsection shall
be void and of no effect.

(3) Subject to the provisions of this Act each unit together with the undivided
share in the common property held therewith shall for all purposes constitute an
estate in real property which, subject to the provisions of this Act, may devolve
or be conveyed, leased mortgaged or otherwise dealt with in the same manner
and form as land.

(4) When recorded a Declaration shall be binding on all owners of units in the
building to which a Declaration relates and shall constitute constructive notice
to subsequent purchasers and all other persons.”

It can clearly be seen therefore that nothing of the at counsel for the Defendants sought to raise
and 1 for the Plaintiff took seriously, is provided for in t nor intended to be. The provisions are
clearly to ntrary.

What appears in the pleadings do not bear the interpretation that there was a point of law taken
when the dants stated that:

“the estate in the said Units together with the undivided shares in the common
property held therewith created by virtue of the said Declaration of Condominium are
not part of the security of the Plaintiff under the Mortgage or the Further Charge.”

Indeed, it ought not to have been pleaded in light the paragraph pleaded immediately above it.
Thus, I find anoint of law on which to rule and would strike out this rending paragraph.

If however, there was some serious thought given to e suggestion that the mortgage and further
charge in this tter were rendered worthless by the Declaration, I would ate that the Declaration
did not have any such effect and he position of the Plaintiff in relation to the recovery of ‘ts loan to
the First Defendant was the same the day after he Declaration took effect as it was on the day
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the First Defendant was the same the day after he Declaration took effect as it was on the day
before the declaration became effective.

I make no order as to costs.

Dated the day of June, 1986.

Neville, R.N. J.

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