39AApplication of income by trustee as mortgagee in

39A Application of income by trustee as mortgagee in possession (1) If a trustee is entitled, whether separately or as a co-mortgagee, to a debt secured by mortgage of land in trust for all or part of the debt for people by way of succession, and the trustee is in possession of the mortgaged land, the trustee must apply the net income of the land in making payments as follows: (a) in discharge of all rents, taxes, rates and outgoings affecting the mortgaged land; (b) in payment of the premiums on any insurances properly payable under the mortgage instrument or under any law in force in the Territory and the costs of executing necessary repairs; (c) in keeping down all annual sums or other payments and the interest on all principal sums having priority to the mortgage in right he or she is in possession. (2) Subject to the mortgagor’s rights, the trustee holds the balance of the income received by the trustee on the trusts to which the mortgage debt is subject. (3) The payments to be made by the trustee under subsection (1) are those that became payable after the trustee enters into possession. (4) However, if on the day the trustee enters into possession the amount of a periodical payment is owing, and the amount relates in whole or part to a period after the trustee enters into possession, the amount is taken, for this section, to accrue from day-to-day and is apportionable accordingly. (5) On the recovery of the amount secured by the mortgage whether in whole or in part, and whether by repayment or on realisation of the security or otherwise, such part of the income applied by the trustee in making payments under subsection (1) as would otherwise have been payable as interest to the person entitled to the interest of the mortgage debt shall as between the persons respectively entitled to the income and corpus of the mortgage debt be deemed to be arrears of interest and the amount received by the trustee shall be apportioned accordingly. (6) Despite anything in this section, the trustee may apply income of the mortgaged property received by the trustee in making payments under subsection (1) that are not authorised by subsections (3) and (4), but the person entitled to the interest on the mortgage debt is entitled to recover out of the capital of the mortgage debt all payments made by the trustee under this subsection. Subdivision 2.2.3 Property not in possession