It is possible that the attorney general (the AG), representing the government of the TCI and its people, may apply to the court to have the mortgage security made between Star Platinum Limited and Temple Mortgage (“Temple”), set aside. The AG is arguing that the mortgage binds the government even though the land title at Joe Grant’s Cay, on which the security rested, was improperly transferred from the Crown. The Crown successfully reversed that improper transfer and had the lands returned to it. Now the government is agreeing to be bound by a mortgage and a security over its lands even though the Crown was successful in proving to the court that the lands were improperly taken from it.
People who know what mortgages are all about do not agree.
Many observers see this bad precedent being set so that the government may take the same approach to the 2,500 acres on Middle Caicos where Belize Bank/British Caribbean Bank (BCB) has a mortgage. It is being said that, when Temple gave the mortgage to Star Platinum, Temple did not know that the, security, i.e. the land title, was improper.
The AG’s response as published would suggest, subject to clarification, that they, the Crown, are relying on the rules relating to the law of Illegality. It is agreed that, if Temple were not aware that the title to the land was bad, i.e. illegal, Temple ought not be caught with this obligation and the question then is on whom the risk should fall. It should now fall on Star Platinum and not the Crown. It is suggested that “illegality” is not the sole issue here and that issues relating to risk allocation and where the risk should lie, the security, the quality of the title and the “law of mistake” continue to arise.
One would think, per the AG’s response, that Temple does not live in the TCI and is not aware of the many scam deals that the former PNP government entered into. Temple must have been aware of the land deals, etc. that the government was doing and they had a right to check the title. Anyhow, the TCI government proved to the Supreme Court that the title on the land at Joe Grant’s Cay was bad and defective and got the land back. On this same bad and defective title rests a security, in the form of a mortgage with Temple, which the government is now saying that it is bound by, even though the government never had access to the funds, never signed the mortgage and was in no way party to the loan with Star and Temple. One cannot ‘buy’ into this idea that the government is bound even though its strongest connection to the Temple loan security is a defective title that they were able to undo.
Star Platinum and Temple entered the mortgage suffering from the “mistake” that the title was good and courts have set agreements aside on this ground. To enforce this agreement, the mortgage may be contrary to the intentions of Temple and Star Platinum because it may be presumed, unless the contrary is shown, that they only wanted to act on a good land title.
Temple or Star Platinum may seek to withdraw from the mortgage on the grounds that both were mistaken as to the nature of the land title, thinking it was good, when it was bad. With a bad title it is suggested that the enforceability of the mortgage or the security, is not possible. The Crown and Temple may consider pursuing Star Platinum for the return of the monies. There is no rational ground for the risk of liability or repayment to fall on the Crown, the government or the people of the TCI. The deal was bad, the Crown got out of the deal by getting the land back so why should the Crown be liable for funds it never had, it never signed off on and never agreed to borrow. It is suggested that the agreement was void from the beginning because of the essential need for the title to be a good one. With the title being bad, where is the security to rest? The Crown? No!
This is setting a politically -- emphasizing the politics here -- bad precedent and alters the law of obligations in a fundamental way. Meaning those who did not sign off on a mortgage could also be liable. In this event, the quality of the title is at issue and is akin to the one falling in the case of Bell v Lever Brothers, 1932, where two senior executives were given an employment benefit of £50,000. At the time the benefit was given, the employers were unaware that these executives had already breached their employment agreements and were not really entitled to the benefits. The “quality” of their employment agreements was defective and, as in this event, the “quality” of the land title.
In one sense Star Platinum was promising that it had a good title when indeed they presented a bad title to Temple. Temple, as a result, “had nothing to hold onto”. On these grounds the government may sue for damages and to be compensated. On the Bell v Lever Brothers point, the court in that case ruled that mistake will be operative where the “thing required” is missing and that thing is so important that without “the thing required”, herein a good title, the agreement would be essentially different from the thing it was believed to be. I am suggesting the “thing required” is the security and that security, the title to the land, was defective to the point where it could not protect Temple’s interest and or anyone else’s. The Crown, ad nauseum, was able to have it set aside. The court in Bell used the analogy of a painting where the parties thought it was an ‘old one’, making it valuable, but the painting was ‘new’ making the painting worthless
It is suggested that the question as to whether the land title was bad or good, goes far beyond “quality” and is a ‘material factor’ in a mortgage transaction. The “quality” of the title in a mortgage deal, where the land title is the security, has an element of tangibility attached to it. The point being that, if Temple ever sought to enforce the terms of the mortgage, can they assert the bad title on which the mortgage is placed? The answer is unequivocally no! So if Temple was never in a position to assert for the return of the monies based on the security, i.e. the bad title, how could they now assert a claim to the monies secured by a bad land title and against a non-party, the Crown? Temple lent monies based on a security that the borrower did not properly own
Consequently it is suggested that it would be tragic if the government sold the 200 acres at Joe Grant’s Cay. It sets a bad precedent because now the government can take the same position with the 2,500 acre land deal at Middle Caicos, where some $7.5 million is registered as security with the former Belize Bank, now British Caribbean Bank. The Crown similarly did not consent to the mortgage, did not use the monies and is not bound to repay the monies. Based on the “rules of mistake” the Crown may apply to the court to have the mortgage set aside. The action should now be against Star Platinum, with Temple assisting the suit for the recovery of monies.