FINDING a solution to his mounting financial problems with mortgage company, CLICO, was the main priority for Attorney-At-Law George Dhanny.

Dhanny had secured a mortgage in 1978 with CLICO for a property at 105 Woodford Street, Newtown, for $350,000, but because of the Rent Control Act and the collapse of the local economy in the early 80s, the lawyer began experiencing problems with his repayment schedule within a very short time period.

After failing to get CLICO to help him with a new schedule for repayment, Dhanny came up with another plan to lessen his financial burden to CLICO.

Attorney-at-law
GEORGE DHANNY

Accordingly, Dhanny retained the services of a firm of surveyors, Murray & Partners, to survey the buildings on the property and divide them into condominiums.

The plan was drawn up, approved and registered at a cost of over $6,000.

Dhanny also got the written consent of CLICO and sold three of the units and made capital payments to the insurance company between May, 1981 and March 1982.

CLICO received three payments - $91,907.48 on May 25, 1981; $83,333.34 on March 3, 1982; and $83,333.34 on March 17, 1982 -- thus making the aggregate total at the end of $1983, $284,482.15.

Within a five-year period, Dhanny had managed to repay more than three-quarters of the capital sum borrowed.

During October, 1982, Dhanny wrote to CLICO, seeking a reduction of the capital sum and indicated the need for adjustment of the instalments payable, consequent on the aggregate payment of $284, 482.15 as of March 18, 1982.

But CLICO never responded directly to him on the subject of his letter, but one R.A.Zamore, purporting to be the Assistant Accountant of CLICO, wrote to Dhanny informing him of arrears outstanding and threatening foreclosure.

Dhanny demanded, by several letters, a full and complete statement of account and also requested the amortised schedule of payments which, when provided, showed discrepancies and inconsistencies in the accounts.

The amortised schedule was also incomplete in that it did not begin as from August 14, 1978, that being the date when the mortgage deed was executed.

“In an effort to reconcile the discrepancies and inconsistencies in the statement of account provided by CLICO, I had to appoint two accountants to meet and discuss the statement of account with CLICO representatives,” Dhanny recalled.

“A chartered accountant met with Andre Monteil, the Assistant Financial Comptroller and reported his findings to me in December, 1983.

“His report showed a divergence between the accounting method adopted by CLICO in relation to the said mortgage and the amortised schedule provided.

“Accordingly, I was advised by my accountant that as of December 31, 1983, the remaining principal sum outstanding was $219,371, and I was further advised that in the light of the sum paid of $284,482.15 on the account, there were no arrears outstanding as at December 31, 1983.”

But CLICO took a completely different approach and differences continued to emerge with respect to the insurance company’s accounting methods and its insistence that, in accordance with Claus 6 (4) of the Deed of Mortgage that the lumpsum payments made did not affect the capital sum in any way; that monthly payments would remain as if no such lumpsum payments were ever made; and that the only effect of such lumpsum payments was to reduce the period of the mortgage.

“CLICO’s application of the mortgage conditions was purely bureaucratic and, in the circumstances, clearly unreasonable and an unjust interpretation of the relevant provisions of the mortgage deed by the insurance company in the light of representations made to vary the strict application of the said provisions,” Dhanny stated.

“This has proven quite oppressive on me and has led to the problems surrounding this matter.”

By 1985, the economy was in recession and CLICO agreed to refinance the balance of the mortgage loan for a fresh period of 15 years at 14 per cent variable at a monthly instalment of $4,115.52.

In August, 1985, Dhanny met with Monteil again to discuss the quantum of the instalment payable and the newly-increased interest rate of 14.5 per cent.

“I inquired whether there could be a reduction of the interest rate because of the recessionary state of the economy, the reduced rental income, as well as reduced income from other sources,” Dhanny confided.

“I was hoping for either a reduction of the interest rate or an extension of the period of the mortgage so as to make the instalment more manageable.

“Monteil advised me that I should try to raise a capital sum to reduce the capital and consequently, the monthly instalment.

“I thought the man had to be joking because I had raised capital of close to $300,000 and the company pointedly refused to use it to reduce the capital, now they were telling me to raise more capital to reduce the capital. Doesn’t that sound like dishonesty?”

So, despite his reservations, Dhanny hit the streets, looking for additional financing but with the economy in a tailspin, none of the lending institutions were prepared to offer any solution.

And Dhanny’s financial problems only worsened with CLICO, with the insurance company raising the monthly instalment to $4,721.40.