IN THE COURT OF APPEAL
Date: 3 JULY 1972
BEFORE: APALOO AND BENTSI-ENCHILL JJ.S.C. AND SOWAH J.A.
CASE REFERRED TO
Mortlock v. Buller (1804) 10 Ves. 292; 32 E.R. 857; [1803-1813] All E.R. Rep. 22.
NATURE OF PROCEEDINGS
APPEAL from a judgment of the High Court, Accra, wherein judgment was given for the plaintiff in an
action for, inter alia, account of rent. The facts are fully set out in the judgment of Apaloo J.S.C.
COUNSEL
E. D. Kom for the appellants.
Quansah for the respondent.
JUDGMENT OF APALOO J.S.C.
This case has some unusual features and in order to appreciate the judgment from which this appeal has been brought, it is necessary to relate the facts on which it is grounded. The plaintiff who is a minister of religion, was at some time prior to January 1958, the owner of a house described as No. 98/5 Fanofa, Accra. The exact nature of the title which he had to the land on which the building stands is far from clear. The evidence shows that an unspecified title to a large plot of land on
which the house in dispute is situate, is vested in an entity known as the Akwapim Union. It would seem that the latter promised to grant the plaintiff a lease of this land and permitted him to enter into possession and erect a building thereon. The evidence is imprecise as to when the building was erected, but it is clear that it must have been some time before January 1958, because at that date, the house was in the occupation of a Mr. Constodontis to whom the plaintiff had let it at a monthly rental of £G35. The second defendant is a limited liability company and its name suggests that it is a benevolent society of a sort. Some time in 1957, the first defendant, who was described as the chairman of the second defendant company, offered on behalf of the company to purchase the
[p.321] of [1972] 2 GLR 318 premises. This offer was accepted by the plaintiff after the purchase price was agreed at £G2,000. It seems that the parties did not seek professional assistance in their negotiations. Had they done so, there would have been the usual investigation as to title and this would have revealed the precise nature of the interest which the plaintiff had in the land on which he erected the building. The negotiations crystalized into a binding contract on 21 January 1958. On that day, the defendants paid to the plaintiff the sum of £G1,000 being part payment of the purchase price. The plaintiff issued a written receipt (exhibit 1) in favour of the defendants in the following terms: “I, Rev. J. E. Addo of Accra have this 21st day of January, 1958, received from the directors of Nyemimei Enterprises the sum of one thousand pounds (£G1,000) being part payment of my two plots of land with buildings thereon, including the furnishings, electrical and water installations, situate and lying at Fanofa off Ring Road East, Accra. The property referred to above comprise of two plots of land measuring 150 ft. on the SOUTH, 140 ft. on the NORTH, 100 ft. each on the EAST and the WEST respectively, with house No. C98/5 thereon. ”The plaintiff did not state by what title he held these two plots of land but it is reasonable to think that he was offering to sell the absolute title to those plots to the defendants. On receipt of the part payment of the purchase price, he put the defendants in possession of the premises. It seems clear that the defendants did not require physical possession of the premises and they seemed to have intended the purchase as a sort of investment. The plaintiff accordingly authorised them to collect the rents accruing therefrom and appended his signature to a document captioned a “Declaration.” As the rights and obligations of the parties flowed from this document, it is necessary to reproduce its terms in full. It reads:
“DECLARATION
I, Rev. J. E. Addo of Accra do hereby declare that by the part payment of one thousand pounds (£G1,000) on account of my house No. C98/5 and adjoining land situate and lying at Fanofa off Ring Road East, Accra, empower the Directors of Nyemimei Akpee Enterprises to collect and receive the rent of thirty-five pounds (£G35) per month in respect of the said premises from Mr. Constodontis, my tenant, with effect from the month of January, 1958 the month in which the first payment on account of the agreed purchase price of two thousand pounds (£G2,000) was made.
I do further declare that I undertake to execute the necessary Instruments of transferring the said property to the Directors of Nyemimei Akpee Enterprises within one month of the date of
[p.322] of [1972] 2 GLR 318 payment of the first instalment and that it has been agreed upon that the balance of one thousand pounds (£G1,000) be fully paid to me on the conclusion of the execution of the Instrument of transfer. Should I fail to abide by this declaration the Directors of the aforesaid Nyemimei Akpee Enterprises are empowered to recover the necessary Instruments of transfer by any means at their disposal.” The plaintiff was not able to execute an instrument of transfer to the defendants as “declared” and the evidence suggests that he wrote to the defendants offering to “redeem” the house and to return the part payment to the latter. The defendants seem to have agreed to this and addressed a letter dated 30 December 1958 to the plaintiff requesting him to refund the £G1,000 immediately. The latter did not comply. On 7 March 1959, the defendants addressed another letter to the plaintiff in which they reminded him of their letter of 30 December 1958 to the plaintiff requesting him to refund the £G1,000 immediately. The latter did not comply. On 7 March 1959, the defendants addressed another letter to the plaintiff in which they reminded him of their letter of 30 December 1958, in which the plaintiff offered to redeem the house and to return the £G1,000 paid to him. They threatened in that letter that if they had no response from the plaintiff within seven days from the date of that letter, they would exercise their rights under the contract (exhibit D). The evidence does not show the plaintiff’s reaction to this letter. It seems, however, that in July 1966, the plaintiff and the defendants held a meeting before a Mr. Halm-Addo to discuss and probably compose their differences. Nothing however came out of this. In a letter dated 30 January 1967, and addressed to Mr. Halm-Addo, the plaintiff adverts to this meeting and described it as an arbitration. But as no rights were claimed by the plaintiff as a result of this so-called arbitration, this aspect of the case is unimportant save that in the letter of January 1967 (exhibit Fl) the plaintiff demanded “that my house should be released to me without fail” or in default he “would be left
with no alternative but to appeal to a higher authority for redress.” The authority turned out to be the court because on 5 December 1968, he commenced an action in the High Court, Accra, and claimed against the defendants jointly and severally (a) an account of all the rents collected or which should have been collected from the house from 1958 to date less the part payment of £G1,000, (b) recovery of possession of the house and (c) recovery of the furniture or its value of N¢386.
In his statement of claim, the plaintiff alleges in the main, the facts stated above. It is only in paragraphs (7) and (11) that he adverts to his own obligations under the contract of 21 January 1958. In paragraphs (7) and (11) he states as follows: [p.323] of [1972] 2 GLR 318
“(7) The defendants later demanded the conveyance of the property from the plaintiff, but the plaintiff could not do so and explained that the plot was part of a larger tract of land given to the Akwapim Union and that individual owners had been promised separate leases but had not as yet received them. (11) The plaintiff has been unable to obtain the lease as yet in order to convey or assign the unexpired term of the lease to the defendants and this has been explained to the defendants who have acquiesced in the situation. ”The defendants, for their part, admitted substantially the facts alleged in the statement of claim but denied that on those facts they were in any way accountable to the plaintiff. In paragraph (8) of the statement of defence, they denied that they acquiesced in the plaintiff’s breach of contract and set out their conception of the plaintiff’s obligations under the contract as follows: “that it was a term of the agreement that the balance of the purchase price should be paid on the execution of the conveyance.” On those virtually uncontroverted facts the serious issues of law which arose for decision were, whether
the defendants were accountable to the plaintiff and whether the plaintiff justified his claim to recovery of possession of the premises. These two matters were in fact set out as triable issues in the summons for directions together with another one of little moment.
When trial opened before Anterkyi J. on 23 October 1969, the plaintiff alone gave evidence almost in
conformity with his statement of claim. When however he came to that part of his evidence that touches upon the obligation he assumed under the contract (exhibit E), his testimony did not quite tally with his pleading. On his inability to execute an instrument of transfer to the defendants, he said: “At the end of January 1958, the defendants requested me to convey the house to them. Inquiries I made relative to the conveying of this house revealed that the land was vested in the Akwapim Union by deed and I therefore could not convey the portion on which my house stood.”
He omitted any reference to the averment in his pleadings that the Akwapim Union promised to give him a lease and that this was awaited. The defendants declined to offer any oral evidence and rested their case on legal arguments addressed to the court. Their counsel, however, informed the court that his clients would be prepared to purchase any interest that the plaintiff had in the land. On the conclusion of the hearing, the learned judge reserved judgment because he said “the issues involved in the case were not as simple as they appeared to be in the summons for directions.” He read his judgment just over seven months afterwards, that is on 27 July 1970. [p.324] of [1972] 2 GLR 318
On the crucial issue whether or not the defendants were accountable to the plaintiff, he held that they
were. He founded this holding on a process of reasoning which, to say the least, seems quaint. He held that the contract of January 1958 had been dissolved by the defendants’ letter of 7 March 1959 (exhibit D) and that that letter constituted the new contract between the parties. Under it, the judge held the defendants to be constructive trustees. As the judge himself put it: “My finding therefore is that as implied trustees at the conclusion of the contract, and as constructive trustees from the moment of dissolution of the contract, by their own acquiescence, to the date of this judgment, in which I have made such dissolution known to them, they had been at all material times trustees for the plaintiff relative to the building which had been the subject-matter of the contract of sale, and as such they are accountable to him in respect of that building and its rents collected by them.”
The learned judge thought the plaintiff was also entitled to recover the building from the defendants
because, in his view, that was provided for by what the judge held to be the new agreement of the 30
December 1958, and recited in the letter of March 1959 (exhibit D). The judge said: “Thus, by this new agreement, the old contract of sale had at 30 December 1958 been totally extinguished by
absorption into the new agreement, as none of its original respective obligations did remain executory, or had been completely executed; for, the plaintiff was by that new agreement rather entitled to assume possession of the building and was no more under the obligation to dispose of his title to it.” Although the plaintiff merely sought an order for account, the judge in fact gave them an ascertained sum of money, because he thought the rents were unlawfully collected. As he put it:
“I find that the rents were collected by the defendants from March 1958 to 30 December 1958, the date of the new agreement dissolving the old contract of sale, and that those rents were unlawfully collected because of the implied term in the contract as referred to in (1) above that the rents were to be collected conditionally upon the defendants paying the balance of the purchase price by 21 February 1958 or at any rate by the end of February 1958. Those rents were collected by the defendants as trustees for the plaintiff, upon their failure to implement that promise.”
The implied term arose because the judge thought that on a proper construction of the contract of 21
January 1958, the intention of the parties was: [p.325] of [1972] 2 GLR 318
“(1) The first payment of £G1,000 (half the purchase price of £G2,000) was to be made by the defendants to the plaintiff in January 1958 to entitle the defendants to go into possession of the premises and to collect the rents for their use from the date of payment.(2) Both the execution of the conveyance by the plaintiff and the payment of the balance of £G1,000 must be effected within one month from the date of payment by the defendants of the first amount of £G1,000 evidenced on exhibit 1, i.e. within one month from 21 January 1958. (3) An implied term that in the event of failure by the defendants to pay the balance of £G1,000 on due date their rights to possession and to the rents of the premises shall cease.”As to the offer by the defendants to purchase whatever interest the plaintiff had in the building, the judge thought it legally incompetent. He said: “Yet counsel for the defendants had argued, in addressing the court, that the defendants were prepared to buy
any interest the plaintiff had in the building in question. This is akin to saying that the defendants were prepared to negotiate for a new contract; because, there was no evidence before the court that when it was found that the plaintiff had no title, the defendants had agreed with the plaintiff that the contract should be varied to operate on whatever interest the plaintiff had in the building; otherwise I cannot understand why exhibit D was written by the defendants. Even if such evidence was available, that agreed variation of the term of the contract must still have been evidenced in writing to satisfy section 4 of the Statute of Frauds, 1677 (29 Cha. 2, c. 3).”
The learned judge accordingly adjudged the plaintiff entitled to the rents from March 1958 to June 1970 at the rate of £G35 per month, but that this sum should be diminished by the sum of £G1,000 with interest of five per cent that being the part payment of the purchase price made by the defendants. He also ordered that the “Plaintiff do recover forthwith possession of house No. B98/5 . . . together with all the pieces of furniture . . .” The judge concluded that as the defendants have been in possession of “the premises so unjustifiably for more than twelve years” he ordered them to pay somewhat punitive costs of ¢1,850. The defendants contest that judgment by this appeal. It was argued on their behalf that in view of the terms of the contract (exhibit E) and the fact of their being put in possession of the premises, the defendants were entitled to collect the rents in their own right and were in no way accountable to the plaintiff. It was also argued that the judge was in error in construing the defendants’ letter of 7 March 1959 as a new contract and not merely as an offer made to the plaintiff. Counsel for the appellants also disputed the correctness of the judge’s holding that the contract (exhibit E) contained an implied term that the defendants [p.326] of [1972] 2 GLR 318 were to pay the £G1,000 within a month or relinquish possession of the premises. Accordingly, Mr. Kom for the defendants invited us to reverse the judgment. Mr. Quansah who appeared in defence of the judgment, urged that after the conclusion of the contract of sale, a trustee-beneficiary relationship arose between the parties. This gave rise to a duty to account by the defendants who became trustees of the plaintiff. Accordingly, he argued that the judge’s decision on this point was right and ought to be sustained. I do not recall counsel advancing any particular argument on those other points on which the judgment was challenged.
As the learned judge based himself on what he held to be the new contract which superseded the January 1958 one, it is necessary to see if he was right in holding that a new contract had in fact come into existence. The document on which the learned judge founded himself and from whose provisions, he spelt the abrogation of the old contract and the creation of a new one is exhibit D. It reads as follows: “I am directed to invite your attention to the letter addressed to you on 30th December, 1958, in which acquiescence was given to your request to redeem your house No. C98/5 by refunding to the Board the part payment of £G1,000 made to you, and to request you to make immediate refund of the amount. In this connection I am requested to draw your special attention to paragraph 3 of the letter under reference which reads: ‘Should you fail to make the refund by this request and as contained in your letter above quoted the only chance left to the Enterprise is to consider the use of its rights under the agreement and yourdeclaration.’ Accordingly if you fail to respond to this letter within SEVEN days from the date herein the Enterprise will be compelled to use its rights under the agreement and your declaration.” In so far as any inferences can properly be drawn from that letter, it appears that on a date prior to 30 December 1958, the plaintiff wrote to the defendants offering to “redeem” the house in dispute upon refunding to the defendants the part payment of £G1,000 which he received on account of the purchase price. The defendants agreed to this on condition that he make an immediate refund. It seems that by 7 March 1959, the plaintiff had not made the refund and by their letter of 7 March 1959, the defendants drew his attention to his offer and its conditional acceptance. The plaintiff failed to fulfil the condition. He did not refund the £G1,000 to the defendants then or indeed at any other time. I think, therefore, that no valid substituted contract eventuated between the parties, and the defendants were right in their contention. It follows, therefore, that the contract of January 1958 (exhibit E) remains in full force and governs the rights and obligations of the parties. With respect, I think the learned judge’s contrary finding was wrong. [p.327] of [1972] 2 GLR 318 If that be right, the question which calls for an answer is, whether in view of the terms of that contract and in view of what actually transpired between the parties, the defendants can in any sense be said to be trustees of the plaintiff of the rents they collected from that building, and therefore came under an obligation in equity to render an account of these to the plaintiff. Nobody who reads the contract (exhibit E) with attention can help thinking that the intention of the parties was that the defendants should collect the rents for their own benefit. They had bought the house and paid one-half of the purchase price. In so far as any principles of equity can be invoked to aid a resolution of this matter, the defendants became the owners in equity of the house. The bare legal title only remained in the plaintiff. But the latter was entitled to a lien on the premises for the security of the unpaid purchase price and the right to retain it until the purchase price was fully met. He was also entitled to the rents till the day of completion. But in this case, the plaintiff contracted himself out of those rights by relinquishing possession to the defendants and expressly authorizing them to receive payment of the rents. Vis-à-vis the plaintiff, the defendants did not stand in any fiduciary relationship and I cannot see any ground for thinking that a court of equity would hold that good conscience obliged the defendants to account for these rents to the plaintiff. The basis on which the learned judge held the defendants to be either implied or constructive trustees vis-à-vis the plaintiff was ill articulated in his judgment and the reasoning was, in some parts, confused.
In my opinion, this matter ought to be determined on first principles. The learned judge unwittingly
obfuscated the determination of this issue by reliance on a great body of case law and went astray under its weight. In my judgment, the defendants were not accountable at law or in equity to the plaintiff for the rents they collected from the premises and the judge’s holding on this score was erroneous and ought tobe disaffirmed. As I said, the judge also held that the superseded agreement of December 1958, adverted to in exhibit D absolved the plaintiff from his obligation to sell the premises to the defendants and entitled him to resume possession of it. I have already held that no such contract came into existence and the judge’s holding bottomed on its existence is untenable. If the plaintiff should seek to escape from the obligation he assumed to sell the house to the defendants, he must found himself on the four corners of the contract (exhibit E). That as I said, is the only subsisting contract between the parties. Although that was none of the plaintiff’s case, the learned judge read that agreement as imposing an obligation on the defendants to pay the balance of the purchase price within one month of the date of exhibit E or lose their right to possession of the premises or to the collection of rents. In order to take this view of the contract, the learned judge imported into exhibit E a term “that in the event of failure by the defendants to pay the balance of £Gl,000 [p.328] of [1972] 2 GLR 318 on due date, their rights to possession, and to the rents of the premises shall cease.” I think it elementary that no stipulations are to be implied in a written contract unless such terms can be said to be mutually intended and necessary to give business efficacy to the contract. It seems manifest that such a term cannot have been intended by the parties, much less the defendants. It is clear from the express terms of the contract that the payment of the balance of the purchase price was conditional upon the execution of the instrument of transfer. The obligation to make title and transfer it to the defendants was entirely the plaintiff’s. He agreed to do this in one month in return for the balance of the purchase money. He expressly empowered the defendants to enforce this promise by any means they thought fit. It is impossible to believe that the defendants could have agreed to lose their right to the rents if on the expiration of one month, the plaintiff refused or neglected to fulfil this particular promise. In my opinion, the term implied by the judge ran counter to the expressed intention of the parties and ought not to have been implied. The learned judge seems concerned about the fact that if the agreement were not read that way, inasmuch as the plaintiff could not honestly make title to the defendants, the latter can continue to collect the rents till doomsday without paying the balance of the purchase price. In my judgment, it was not open to the learned judge to find that “the plaintiff could not convey for want of title.” In the contract exhibit E, the plaintiff merely promised “to execute the necessary instrument to transfer the said property” to the defendants. He did not bind himself to convey any particular title though it is reasonable to assume that the defendants at least thought it was absolute ownership. But such evidence as there is, suggests that the plaintiff can convey at least a leasehold title to the premises. As I read the contract, the defendants cannot successfully object that they thought an absolute title was intended. They on their part bought a pig in a poke and could easily be met with a plea of caveat emptor. The plaintiff took no steps to get in that title and seems oblivious of his obligations under the contract.
The learned judge seems to have thought that the plaintiff could not compel the Akwapim Union to grant him title. The evidence is sparse as to the basis on which that entity permitted the plaintiff to enter into possession of the land and to expend money in building on it. At least there is evidence that they promised to grant him a lease. It is reasonable to assume that it is on the faith of that promise that he expended money on erecting the building on it. Thereafter, the plaintiff remained in undisturbed possession, and as far as the evidence goes, his grantees have also not been disturbed in their enjoyment by the Akwapim Union. If the plaintiff sued the Akwapim Union for specific performance of the promise to grant him a lease, I think any objection founded on want of a written memorandum in compliance with section 4 of the Statute of Frauds, 1677 (29 Cha. 2, c. 3), can be [p.329] of [1972] 2 GLR 318 met by the equitable doctrine of part performance. The Akwapim Union are not parties to this action and I should not be taken to be making any adverse findings against them behind their back. But such evidence as there is provides no warrant for a definite pronouncement that the Akwapim Union cannot be compelled to grant a leasehold interest in the land to the plaintiff. What is clear, is that the plaintiff did not seek it or lead any evidence which suggests that he made any serious attempt to obtain a lease from the Akwapim Union. Accordingly, I find myself in disagreement with the judge’s finding that the defendants committed such breach of their obligations in exhibit E as entitles the plaintiff to resume possession of the premises. But on the judge’s reasoning, even if the plaintiff had got in a leasehold estate from the Akwapim Union, he would still have been entitled to decline to convey that interest to the defendants notwithstanding the latter’s offer to accept such interest as the plaintiff was able to grant. I have already reproduced the court’s reasoning for this holding verbatim earlier in this judgment. The substance of it is, that when the plaintiff was found to have no title to the property, there was no subsequent agreement by the parties that the earlier contract should be varied to transfer whatever interest the plaintiff had. In the judge’s view, even if evidence of such agreement were forthcoming, it would have had to be in writing to comply with section 4 of the Statute of Frauds. The whole plea of the defendants appeared to the judge to be a request by the defendants to negotiate a new contract and this was not permissible. To me, that is a remarkable holding and strikes me as one of the curious features of this case. The plaintiff, who was himself a suppliant in a court of equity, was held entitled to refuse to do equity. The learned judge assumed that what the plaintiff contracted to convey to the defendants was absolute title. I have already given my reason for thinking that the express wording of the contract does not justify that holding. But granted that that was the mutual intention of the parties, the judge thought the plaintiff entitled to rescind the contract on the ground that he could not convey to the defendants the absolute title he contracted to sell and that he was entitled to decline granting them the lesser title which he had and which the defendants were willing to accept. It seems to me wholly contrary to the good conscience of the plaintiff that he should be heard to make such plea, still less in a court which was professedly administering the doctrines of a court of conscience, as the court of equity is sometimes called. My own view is, that such conception of the law runs counter to equity principle and so offends against one’s ideas of propriety and justice that I should reject it unless it has the support of authority binding on me. The learned judge neither cited any authority nor engaged in any form of reasoning that appeals to me. [p.330] of [1972] 2 GLR 318 On the contrary, a respectable judicial dictum contradicts the judge’s view. In Mortlock v. Buller [1803-1813] All E.R. Rep. 22, the plaintiff sought the assistance of a court of equity to grant specific performance of a contract for the sale of an estate at Isleham in the county of Cambridge. The court declined the prayer on the particular facts of the case. But in the course of his judgment, some observations helpful to this case fell from the lips of that great equity judge, Lord Eldon L.C. He said at p. 28: “I agree that, if a person carries an estate to market, not having any title at the time, it is much too late to discuss the question whether it would have been wholesome originally to have held that he should not have a specific performance . . . There is a difference between an estate subject to encumbrances and the case I put where the vendor at the date of the contract has not a title. Some authorities go to the length of giving a specific performance if the vendor can even by an Act of Parliament obtain a title before the report. I also agree, that, if a man, having partial interests in an estate, chooses to enter into a contract representing it, and agreeing to sell it, as his own, it is not competent to him afterwards to say that, though he has valuable interests, he has not the entirety, and, therefore, the purchaser shall not have the benefit of this contract. For the purpose of this jurisdiction the person contracting under those circumstances is bound by the assertion in his contract, and, if the vendee chooses to take as much as he can have, he has a right to that, and to an abatement, and the court will not hear the objection by the vendor that the purchaser cannot have the whole.” That seems to me, if I may respectfully say so, good sense. Indeed it wholly accords with my own view of the matter. I am glad to think I have the support of Lord Eldon in coming to the conclusion that the defendants are entitled to such leasehold interest as the plaintiff has in the house in dispute. In my opinion, the learned judge’s contrary conclusion is untenable. I do not need to go into any further details.I believe I have said enough to indicate the process of reasoning which leads me to the firm conclusionthat the plaintiff was not entitled to any of the reliefs which he sought and that the learned judge was inerror in according them to him.
I think therefore that the judgment appealed from is wrong and ought to be reversed.
JUDGMENT OF BENTSI-ENCHILL J.S.C.
I agree.
JUDGMENT OF SOWAH J.A.
I also agree.
DECISION
Appeal allowed.
S. O.
