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Court rejects widow’s claims against bank over home sale

HSBC Bermuda’s Front Street headquarters (File photograph)

A widow who sued a bank over the sale of a foreclosed St George’s home has had her case struck out by the Supreme Court.

Denise Trew argued that HSBC Bermuda had failed to get the best possible price for the sale of the property left to her by her late husband, Robert Trew.

But Puisne Judge Larry Mussenden found that the mortgage – and the property – had been left to the estate of her late husband, represented by an executor, while Mrs Trew was only named a “life tenant” in Mr Trew’s will.

The judge said in a written judgement dated July 28 that the bank had upheld its responsibilities to Mr Trew’s estate, and it had no legal duty to Mrs Trew herself.

He found the claim had no reasonable cause of action against the bank and should be struck out because it was “obviously unsustainable”.

The court heard that Mr Trew borrowed $325,000 from the bank in January, 1996 using a promissory note and an equitable mortgage on a home on York Street in St George’s.

Mr Trew died in June, 1999 and his will called for Mrs Trew to be a life tenant at the St George’s property, with his executor to pass the home on to their children upon her death.

Soon after his death, Mrs Trew was warned by lawyers for HSBC Bermuda that loan payments had become delinquent.

The court heard the bank tried to work with her to address the issue, but the mortgage was foreclosed in December 2017.

A structural survey of the property found that it was “severely dilapidated” and would require significant repairs and after valuations it was estimated the market price would be between $540,000 and $660,000.

Several efforts to sell the property fell through before the bank agreed to sell the property for $550,000 in 2018 in a “net-net” sale in which the buyer would cover stamp duty, the agent’s commission and other legal fees.

The sale resulted in a surplus of $164,207.96, which would be put towards the estate of Mr Trew to be distributed to beneficiaries.

Mrs Trew launched a legal action against HSBC Bermuda on the basis that the bank had sold the building for less than it should have and failed in its duties to her.

But HSBC called on the court to strike out the claims on the basis that they were doomed to fail.

John Hindess, counsel for HSBC, said the bank had acted in good faith in the sales process and the bank had no legal duty to Mrs Trew.

Mr Hindess also noted the bank had forgiven more than $84,000 in interest linked to Mr Trew’s loan.

However Michael Scott, counsel for Mrs Trew, said the bank had a legal duty to Mrs Trew as it had looked to her to pay the mortgage after her husband’s passing and claimed it had ignored a higher offer.

Mr Scott also noted that an appraisal and at least two offers were for $550,000 and suggested there should be “serious cross-examination” of the appraisal process.

Mr Justice Mussenden however found that the bank did not have a duty to Mrs Trew as her husband’s will had specified that she would be a life tenant at the property.

The judge said: “I am obliged to reject Mr Scott’s submission that the plaintiff obtained an equitable interest because the bank looked to her for payments.

“The affidavit evidence states that the bank tried to work with the plaintiff for several years in order to have the mortgage repaid.

“There is no authority to support the contention that this changed the plaintiff’s position in respect of the mortgage.”

He added that the bank had explained why it had turned down what appeared to be a higher offer on the basis that it would not have been a “net-net” sale and would have resulted in less money after fees were paid.

Mr Justice Mussenden said there was nothing to suggest that the bank had failed to exercise good faith and fairness in the sale of the property, and there was nothing to suggest “collusion”.

He said: “Mr Scott has dived off the high board with fine form to create a splash about fraud in respect of an appraisal and some offers all landing on $550,000 but then he resurfaces to state that he does not actually allege fraud, which in any event is not pleaded generally or specifically.”

Mr Justice Mussenden concluded that while the power to strike out claims should be used sparingly, the matter was an example of a “plain and obvious” case where it was warranted.

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