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In a letter to one of our readers, Samsune Taylor, attorney general Huw Shepheard has defended the government’s position in relation to the land on Joe Grant’s Cay that is purportedly subject to a mortgage and has been placed on the market for sale in order to repay the debt.

According to Shepheard, the TCI court found that the transfer of Joe Grant’s Cay to the developer was tainted by corruption and set the transfer aside. The land therefore reverted to the Crown.

However, the developer had borrowed money using part of the land as security, and thus part of the land returned to the government was subject to a mortgage.

“The government could only have the mortgage set aside if it could prove that the lender knew that the initial transfer to the developer was tainted. There is no evidence available to the government to prove this, so the charge is valid,” he said.

Taylor disputes this.

“I do not agree with the AG,” he said. “’Bad’, i.e. the title of the land in this case, cannot give rise to ‘good’. It infects everything.”

The crux of the matter would therefore seem to be that, the original transfer having been "set aside" or annulled, i.e. never having existed in the first place, the purchaser may never have been legally capable of granting a valid mortgage over the land in question.

Therefore, although the lender may still pursue the borrower for the money advanced, can it enforce a charge that the borrower may have had no legal standing to grant in the first place?

The full text of the attorney general’s response to Samsune Taylor is reproduced below, with permission of both parties:

Dear Mr Taylor

Thank you for your email of 22 May 2012.

Whilst I understand and appreciate your concerns, I have to say that it does not appear to me that you have fully understood the situation that the Government is facing in relation to the land on Joe Grant’s Cay.

The present position is this:

1. Martin J found that the transfer of Joe Grant’s Cay to the developer was tainted by corruption and set the transfer aside. The land therefore reverted to the Crown.

2. The developer had borrowed money using part of the land as security, and thus part of the land returned to the Government was subject to a mortgage.

3. The Government could only have the mortgage set aside if it could prove that the lender knew that the initial transfer to the developer was tainted. There is no evidence available to the Government to prove this, so the charge is valid. Your assertion in numbered paragraph 2 of your letter that the mortgage is tainted is therefore inaccurate.

4. The lender can enforce the charge by selling the mortgaged parcel of land, whether the Government agrees or not, and it therefore seems to the Government that, in order to obtain the maximum benefit for the Islands as a whole, it would be best if the Government were to sell the land. There is simply no money available, given the other demands on the Budget, for the Government to discharge the mortgage.

With respect, it also appears that you have confused the work being done by the SIPT with what is being done under the civil recovery programme. The recovery of Joe Grant’s Cay was made as a result of civil proceedings brought on my behalf and not as a result of the work undertaken by SIPT. As there are a number of persons facing trial for criminal offences as a result of the SIPT investigations, I cannot comment on what may or may not be alleged in those proceedings.

The civil recovery programme is also continuing, and further civil proceedings are pending. I cannot comment on pending cases, but what I can say is that, like any lawyer when contemplating any kind of litigation, I have to be confident that I have sufficient credible evidence to justify the bringing of proceedings. In other words, I cannot and will not launch proceedings unless I am satisfied that I have sufficient believable evidence to prove the affirmative case I am putting forward. These are purely legal considerations, and politics plays no part in them.

Kind regards

Huw Shepheard

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R. F. Zebo:

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You can't mortgage what you don't own. You need clear unrestricted title in order to enter into a mortgage agreement.