SEIDU v. AGRICULTURAL DEVELOPMENT BANK [1992] 1 GLR 536
The defendant-bank in 1983 advanced a loan to OY & Co. to purchase a tractor. The tractor was registered at the licensing office only in the name of OY & Co. By a deed of assignment, exhibit 1, OY & Co. assigned the tractor for a specified period to the defendants as security for the loan. Later OY sold the tractor to the plaintiff to whom he gave a receipt to cover the sale. OY & Co. having defaulted in paying the loan, the defendants seized the tractor from the plaintiff in spite of his vehement protests and subsequently sold it. The plaintiff then instituted the instant action against the bank claiming declaration of title to the tractor, recovery of its possession and damages for detinue on the ground that he was a bona fide purchaser for value without notice of any defect in his vendor’s title as diligent inquiries from his vendor and the licensing office confirmed that OY owned the tractor. Counsel for the defendants however contended that the plaintiff could not pass for a bona fide purchaser because: a. contracts of sale involving a company must be signed and sealed by the company, however there was no indication on the face of the receipt that it was the act of OY & Co. as there was no seal or any indication of what relationship the signatory of the receipt had with the company; and (b) the plaintiff failed to obtain a change of ownership certificate as required by regulation 6 (1) of the Road Traffic Regulations, 1974 (L.I. 953). Counsel for the defendants further contended that under section 13 (4) of the Agricultural Development Bank Act, 1965 (Act 286) dealing with charges, the bank was empowered to enforce the terms of exhibit 1 against a third party like the plaintiff. The court found that the bank had sold the tractor to an undisclosed purchaser and that none of the parties knew where the tractor was.
Held: (1) the plaintiff was a bona fide purchaser for value of the vehicle without notice of any defect in the vendor’s title or any adverse title thereto because: (a) OY & Co. was only a business name and not different from OY and that was why OY executed the deed of assignment, exhibit 1, without any special seal, not even a stamp, of OY & Co. Since the defendants dealt with OY in that capacity it would not lie in their mouth now to challenge the plaintiff for also dealing with OY in the same capacity for OY & Co. If the transfer to the plaintiff was invalidated for lack of a seal then exhibit 1 would also have to go for the same reason. Similarly as between the plaintiff and OY the latter would be estopped from denying that he was different from OY & Co. because his conduct prior to the sale, inquiries from him and the licensing authority confirmed that he knew he was validly selling the tractor to the plaintiff. Since OY would be estopped, it followed that his privies including the defendants were also estopped from distinguishing the legal personality of OY from the company.
(b) Failure to register a change of ownership of a vehicle in breach of regulation 6 (1) of the Road Traffic Regulations, 1974 (L.I. 953), though a punishable offence, did not give rise to any cause of action. Registration of a change of ownership only provided notice of the change to the public in terms of section 33 (1) of the Sale of Goods Act, 1962 (Act 137) and was consequently in the interest of the purchaser. In any case since a vendor could not impeach a sale of a vehicle on the ground that the purchaser had not registered the change, a third party like the defendants could not challenge the plaintiff’s title on that ground. Furthermore, since on the evidence the plaintiff had paid the purchase price, taken delivery and was in possession of the vehicle, those acts were more effective to confer ownership on him than a mere change in ownership.
(2) It was evident from the provisions of the Agricultural Development Bank Act, 1965 (Act 286) that the legislature intended to facilitate the retrieval by the bank of loans and other fiscal facilities granted its customers. Hence under section 13 (4) even a bona fide purchaser of property charged to secure a loan from the bank was not saved. And although Act 286 did not define what a charge was, section 13(3) mentioned pledge, mortgage, hypothecation, assignment and charge as if they were the same thing in the sense that whatever form was used the purpose was to give the bank security for the loan advanced, and accordingly, it did not matter which name was given to the security provided. It was in that sense that section 13 (4) of Act 286 should be understood and thus given an interpretation that would prevent evasion of its provisions. Consequently, the court, mindful of the mischief rule, would not be so astute as to narrow the language of the Act to allow persons within its purview, such as, in the instant case, the bona fide purchaser-plaintiff, to escape its net. Accordingly, the Act should be applied to the substance rather than the mere form of transactions and thereby defeat any shifts and contrivances which the parties, i.e. the plaintiff and his vendor, might have devised in the hope of falling outside the Act. Consequently, for the purpose of creating a charge within the meaning of section 13(4) the legislature did not intend it to be exclusionary to an assignment, pledge, hypothecation and mortgage. What mattered was that the property must be secured for a loan or advance. (3) Since a charge as applied to property signified that it was security for the payment of a debt or performance of an obligation, it was clear that as long as exhibit 1, the deed of assignment, between the defendants and OY & Co., was valid then by the provisions of section 13(4) of Act 286 any disposition made thereunder without the defendant’s knowledge and consent would not pass a good title. However, exhibit 1 was for a one-year duration expiring on 15 April 1984 and therefore section 13(4) of Act 286 protected the defendants for only that duration. Accordingly, when the plaintiff purchased the tractor from his vendor on 15 August 1984 legally the tractor was not under any encumbrance with the defendants. Therefore, by that fact of the assignment having come to an end at least as far as innocent third parties were concerned, coupled with the registration of the tractor in OY & Co’s business name only, the plaintiff obtained an unimpeachable title to the tractor as a bona fide purchaser. Two years after exhibit 1 had expired was too long for the defendants to move against an innocent third party. Therefore the defendants admitted seizure and sale of the tractor and its accessories was wrongful.
(4) The court had the discretion in actions founded on detinue to order specific restitution. Moreover, the plaintiff in an action in detinue was entitled to the value of the goods at the date of trial, and also to recover damages for loss of use for the period after the demand and refusal to the date of judgment. Since in the instant case the tractor could not be found, the plaintiff would be given judgment for the purchase price of the tractor; and damages for loss of use at the daily hiring rate from the date the bank seized the tractor from him up to the date of judgment less the number of days that would have been required for servicing the tractor, public holidays and Sundays within the period. Rosenthal v. Alderton and Sons Ltd. [1946] K.B. 374, C.A. and Strand Electric and Engineering Co. Ltd. v. Brisford Entertainments Ltd. [1952] 2 Q.B. 246, C.A. cited.
