IN THE SUPREME COURT OF BELIZE, A



IN THE SUPREME COURT OF BELIZE, A.D. 2004

ACTION NO. 421

WARREN COYE Plaintiff

BETWEEN AND

CELENE CLELAND GOMEZ Defendant

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BEFORE the Honourable Abdulai Conteh, Chief Justice.

Mr. Edwin Flowers S.C. for the Plaintiff/Claimant.

Mr. Michael Peyrefitte for the Defendant.

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JUDGMENT

1. In this action, the claimant is claiming one half of the mortgage due and owing on a property, which was jointly in his name and that of the defendant. They were husband and wife; subsequently there was a petition for divorce which was granted.

2. An application was made to the Court to have the property situated at 22 Newtown Barracks, Belize City, sold. It was in their joint names. By a Consent Order, pursuant to a settlement between the parties, it was ordered that the freehold property be sold and that the net proceeds of sale be divided equally between the plaintiff and the defendant. The property in question itself was acquired by a loan advanced by the Holy Redeemer Credit Union sometime in 1993. At the initial stage, the loan was secured by the plaintiff’s father’s guarantee by way of a Certificate of Deposit he had at the said Credit Union and a loan note that when the plaintiff received the title to the property to be purchased with the loan amount, the title deed thereto will be deposited with the Credit Union. This was eventually done sometime in 1998 when the title deed was put in the names of both the claimant and the defendant.

3. In these proceedings before me, the defendant has starkly denied that there was any mortgage on the property. From the evidence before me however, I fail to see how it could be said there was no mortgage on the property, either equitable or legal. It is in law clear that an equitable mortgage is created by delivery to the lender of the title deed relating to the borrower’s land, provided it is intended to treat the land as security. On the evidence before me in this case, in 1993, when the loan was first taken out and secured by the guarantee of the plaintiff’s father’s Certificate of Deposit, it was clearly understood by the loan note, that on receiving title the claimant would deposit the title deed to the property with the Credit Union; and this was duly done in 1998 when title was granted to the property. However, the title deed was in the names of both the claimant and the defendant.

4. Mr. Peyrefitte for the defendant, has argued that because the defendant’s name was on the title deed and she did not consent by way of a written agreement to have the title deed deposited with the Credit Union, there was therefore no mortgage on the property. I am unable to accept this argument for on the old authority of Russel v Russel (1783) 1 Bro. C.C. 269, a deposit of title deed with a lender creates an equitable mortgage where it is intended to treat the property as security. From the testimony of Mr. Francis Usher, I am satisfied that the delivery of the title deed to the Holy Redeemer Credit Union by the claimant, was intended to secure the loan advanced to purchase the property, it therefore operated to create a mortgage on the property. It may or may not be that the defendant did not consent to this but this, in my view, does not make the deposit of the title deed any the less a mortgage. In any event, she had the benefit of a share of the proceeds of the sale of the property for which in 1993 the money was advanced to the claimant to buy it, with the understanding that when title to it was acquired it would be deposited to secure the loan advanced for its purchase. Also, the defendant in her witness statement did not deny the loan by Holy Redeemer Credit Union to purchase the property. She however, adverted that the responsibility for the loan was that of the claimant.

5. Moreover, the Consent Order in this matter which has given rise to the present proceedings, speaks of the division of net proceeds of sale of the property to be divided equally between the plaintiff and the defendant – see in particular para. 3 of the Consent Order dated 13th February 2002. Nothing turns, in my view, on the point that that Order spoke of the division of the cost of the appraisal of the property to be borne equally by the parties. Net proceeds in my view, would mean after any lawful and outstanding obligations due and owing on the property have been satisfied. See the decision of the Privy Council in the case of Watson v Haggitt and others (1926) A.C. 127.

6. Also, it is not easy to understand how the division of net proceeds can be equal if one of the parties only is left saddled with the burden of paying off encumbrances on a property whose net proceeds of sale are to be equally divided. Absent a clear agreement to this effect, I am of the considered view that both sides are to bear the costs of settling the encumbrances before splitting the net proceeds of sale. To allow the defendant to keep her share of the proceeds of sale, without any contribution towards meeting the mortgage on the property, is to have her derive a windfall not intended by the parties nor warranted by the facts of this case.

7. I am therefore of the considered view that, on the evidence in this case, the division of the proceeds of sale should have taken into account the mortgage that was due on the property.

8. I therefore accordingly enter judgment for the claimant to one half of the mortgage due on the property in the amount of $37,875.00, with interest at 12 percent per annum from the date of this action, until payment. I also award cost in this action to the claimant in the sum of $5,000.00.

A. O. CONTEH

Chief Justice

DATED: 6th December 2005.

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