E. Case Study 6: Mortgages and foreclosure (10 marks)
Read the case study below (from page 391 in your textbook). Once you have read the case study, read the judgement of Sterne v. Victoria & Grey Trust Co. summarized in the Case Law text box on page 384 of your textbook. (Note that there is a typo in the name cited in Willes. The correct name is Sterne, not Steine.).
Once you have completed the readings, complete the tasks below.
Case Study
Headrick owned a house and lot in a very desirable residential neighbourhood of a large city. In order to purchase a new luxury motor vehicle, new boat, and pay for a luxury vacation, he arranged for a mortgage on the house and lot for $330,000. The property at the time had an appraised value of $375,000. Once in funds, Headrick left on his vacation. While on vacation, he decided to extend his travels, even though his vacation time had ended. A month later, he returned home, only to find that he had been terminated by his employer. At this point in time he had spent all of his money on the automobile, boat and vacation, and was unable to make payments on the mortgage. Over the next number of months, Headrick searched for employment without success. He ignored letters from the mortgagee demanding payment, and eventually, the mortgagee decided to sell the property under its power of sale.
The mortgagee contacted an appraiser and requested an appraisal of the property at a fire sale price as it was anxious to get rid of the property. The appraiser gave an appraisal at $300,000, well below the value of the property if it was offered in a normal real estate listing. The mortgagee proceeded with the sale under the power of sale, and quickly sold the property at the appraised value of $300,000. The mortgagee then demanded the difference between the sale price and the amount of the mortgage, which was still at $330,000.
Headrick had protested the listing of the property in the power of sale advertisements at such a low price, and had advised the mortgagee that his friend Esson was prepared to purchase the property for $345,000, but his objections had been ignored by the mortgagee, who simply wanted to get rid of the property. He is now angry and upset that the mortgagee is demanding payment of the additional $30,000 from him. Advise Headrick.
Tasks
Compare the facts in Sterne with the Case Study facts. Set out similarities and differences. (3 marks)
Find a case that has considered Sterne and has dealt with the issue of the responsibility of a mortgagee to properly market property when the mortgagor is in default. How might it be relevant to any advice you give Headrick? (3 marks)
Relying upon your course materials, the above case law and any other useful and relevant information you may find, give a reasoned opinion about Headricks chances of not having to pay the $30,000 demanded by the mortgagee. (4 marks)
CHAPTER 13 Bestuuta tam 391 ndo- vion Some years after the golf course was developed the municipality installed new storm sewers in an area of the city and constructed them in such a way that, in a heavy rain, overflow from the sewers would drain into the stream. Shortly after the construction of the new sewers, several days of heavy rains resulted in a large quan- tity of water from the storm sewers being dis- charged into the stream. This, in turn, produced flooding of the stream and serious erosion of the banks of the stream where it passed through the golf course. Damage to the club property was esti- mated at S60,000 The golf club instituted legal proceedings against The municipality for the damage. Discuss the argu- ments that might be raised by each of the parties, and render a decision. ded welling the fire that me CASE 6 Hendrick owned a house and lot in a very desirable residential neighbourhood of a large city. In order to purchase a new luxury motor vehicle, new boat, and pay for a luxury vacation, he arranged for mon- gage on the house and lot for $130,000. The prop- erty at the time had an appraised value of $375,000. Once in funds, Headrick left on his vacation. While on vacation, he decided to extend his travels, even though his vacation time had ended. A month later, he returned home, only to find that he had been ter- minated by his employer. At this point in time he had spent all of his money on the automobile, boat, and vacation, and was unable to make payments on the mortgage. Over the next number of months, Headrick searched for employment without success. He ignored letters from the mortgages demanding payment, and eventually, the mortgagee decided to sell the property under its power of sale. The mortgagee contacted an appraiser and re- quested an appraisal of the property "at a fire sale price" as it was anxious to get rid of the property. The appraiser gave an appraisal at $300,000, well below the value of the property if it was offered in a normal real estate listing. The mortgagee proceeded with the sale under the power of sale, and quickly sold the property at the appraised value of $300,000. The mortgagee then demanded the difference between the sale price and the amount of the mort- gage, which was still at $330,000. Hendrick had protested the listing of the property in the power of sale advertisements at such a low price, and had advised the mortgagee that his friend Esson was prepared to purchase the property for $345.000, but his objections had been ignored by the mortgagee, who simply wanted to get rid of the property. He is now angry and upset that the mortgagee is demanding payment of the additional S30,000 from him. Advise Headrick. y the co- fest CASE 5 Iron Mining Corporation held the mineral rights to a arge area of land in a municipality where the sur- it rights were owned for the most part by cottage certy owners. In fact, Iron Mining Corporation the mineral rights to all of the land around a where 30 surface rights land owners had built R expensive cottages. Several years after the tges had been built, a geologist at Iron Mining ration examined some recent mineral surveys area, and decided that the area warranted fur- vestigation. He accordingly sent out a drilling drill some core samples "to see what was le land by the lake." The drilling crew the le, and made an effort to find a cot- present, but because it was early April Ganers were at their cottages. The w the proceeded to drill a large number in the yards of the cottages. While little emained of their drilling work, the cottage torn up by the heavy machinery and the cottage owners arrived in May to lages, they discovered the extensive e former manicured lawns, ornamen- Applied to see had gva v chase be und have o temaga on restaurant Twts was to otamine pomena, a gardens Advise the parties CHAPTER 13 Bestuuta tam 391 ndo- vion Some years after the golf course was developed the municipality installed new storm sewers in an area of the city and constructed them in such a way that, in a heavy rain, overflow from the sewers would drain into the stream. Shortly after the construction of the new sewers, several days of heavy rains resulted in a large quan- tity of water from the storm sewers being dis- charged into the stream. This, in turn, produced flooding of the stream and serious erosion of the banks of the stream where it passed through the golf course. Damage to the club property was esti- mated at S60,000 The golf club instituted legal proceedings against The municipality for the damage. Discuss the argu- ments that might be raised by each of the parties, and render a decision. ded welling the fire that me CASE 6 Hendrick owned a house and lot in a very desirable residential neighbourhood of a large city. In order to purchase a new luxury motor vehicle, new boat, and pay for a luxury vacation, he arranged for mon- gage on the house and lot for $130,000. The prop- erty at the time had an appraised value of $375,000. Once in funds, Headrick left on his vacation. While on vacation, he decided to extend his travels, even though his vacation time had ended. A month later, he returned home, only to find that he had been ter- minated by his employer. At this point in time he had spent all of his money on the automobile, boat, and vacation, and was unable to make payments on the mortgage. Over the next number of months, Headrick searched for employment without success. He ignored letters from the mortgages demanding payment, and eventually, the mortgagee decided to sell the property under its power of sale. The mortgagee contacted an appraiser and re- quested an appraisal of the property "at a fire sale price" as it was anxious to get rid of the property. The appraiser gave an appraisal at $300,000, well below the value of the property if it was offered in a normal real estate listing. The mortgagee proceeded with the sale under the power of sale, and quickly sold the property at the appraised value of $300,000. The mortgagee then demanded the difference between the sale price and the amount of the mort- gage, which was still at $330,000. Hendrick had protested the listing of the property in the power of sale advertisements at such a low price, and had advised the mortgagee that his friend Esson was prepared to purchase the property for $345.000, but his objections had been ignored by the mortgagee, who simply wanted to get rid of the property. He is now angry and upset that the mortgagee is demanding payment of the additional S30,000 from him. Advise Headrick. y the co- fest CASE 5 Iron Mining Corporation held the mineral rights to a arge area of land in a municipality where the sur- it rights were owned for the most part by cottage certy owners. In fact, Iron Mining Corporation the mineral rights to all of the land around a where 30 surface rights land owners had built R expensive cottages. Several years after the tges had been built, a geologist at Iron Mining ration examined some recent mineral surveys area, and decided that the area warranted fur- vestigation. He accordingly sent out a drilling drill some core samples "to see what was le land by the lake." The drilling crew the le, and made an effort to find a cot- present, but because it was early April Ganers were at their cottages. The w the proceeded to drill a large number in the yards of the cottages. While little emained of their drilling work, the cottage torn up by the heavy machinery and the cottage owners arrived in May to lages, they discovered the extensive e former manicured lawns, ornamen- Applied to see had gva v chase be und have o temaga on restaurant Twts was to otamine pomena, a gardens Advise the parties
