AMOAH v. POKU [1965] GLR 155

DIVISION: SUPREME COURT

DATE: 15 MARCH 1965

BEFORE: MILLS-ODOI, OLLENNU AND SIRIBOE JJ.S.C.

CASES REFERRED TO

(1) Amoah v. Manu [1962] 1 G.L.R. 218, S.C. (2) Egyin v. Aye [1962] 2 G.L.R. 187, S.C. (3) Jenkins v. Jones (1860) 2 Giff. 99; 29 L.J. Ch. 493; 2 L.T. 128. (4) Bailey v. Barnes [1894] 1 Ch. 25; 63 L.J. Ch. 73; 69 L.T. 542, C.A. (5) Parkinson v. Hanbury (1860) 1 Drew. & Sm. 143; 62 E.R. 332. (6) Lisk v. Barlatt (1938) 4 W.A.C.A.. 56. NATURE OF PROCEEDINGS

APPEAL from two rulings of Djabanor J. delivered in the High Court (unreported) wherein he ruled in favour of the respondent in an action to recover possession of and damages for trespass to a farm which he had bought at an auction sale.

COUNSEL

Appellant in person. Victor Owusu for the respondent.

JUDGMENT OF OLLENNU J.S.C.

Ollennu J.S.C. delivered the judgment of the court. This is an appeal from two rulings given by Djabanor J. one on 22 April 1963, another on 26 April 1963, and a judgment given by him on 3 May 1963, consequent upon his said two rulings. Before the learned judge was a claim and counterclaim in respect of a cocoa farm originally owned by the defendant-appellant, which the plaintiff purchased at an auction sale held at the instance of one Kwaku Manu in purported exercise of power of sale under a mortgage of the same to him by the defendant. The issues which the learned judge was called upon to resolve were not without some difficulties as is revealed in the history of the dispute. By deed of mortgage dated 4 June 1956, the defendant mortgaged his farm to Kwaku Manu to secure cash advances to the limit of £G500 to be made by Kwaku Manu to him for the purchase and supply of cocoa to the said Kwaku Manu for the duration of the 1956-57 cocoa season. The relevant part of the mortgage in that behalf is as follows: “The mortgagee has at the request of the mortgagor agreed to advance the mortgagor the sum of £G500 for the purpose of buying cocoa beans and delivering same to the mortgagee at Teppa during the 1956-57 cocoa season until at the close of the season so that any amount of money collected shall be accounted for.” The mortgage further provided that if default of payment is made upon the expiration of the period the mortgagee could exercise his

[p.159] of [1965] GLR 155 right of sale after “giving one month’s notice in writing to the mortgagor to pay off the same, and if the mortgagor shall still have failed to pay the mortgage debt then remaining due and owing on this security one month next after the time of giving any such notice.” The 1956-57 cocoa season closed on 28 February 1957, as by Gazette Notice No. 331 of 9 February 1957, which stated that “the current main crop season will close on Thursday the 28th day of February 1957.” Without waiting for the season to end and without going into accounts with the defendant to ascertain whether or not any amount was due and owing to him, Kwaku Manu on 10 January 1957, purported to give notice to the defendant, and on 8 March 1957, sold the property at a public auction. The plaintiff was declared the purchaser at the sale. After some correspondence had passed between the defendant on the one part and Kwaku Manu and the plaintiff on the other, the defendant, on 3 August 1957, instituted an action against the plaintiff and Kwaku Manu and in it, claimed: “(a) A declaration that since the first defendant did not serve the plaintiff with default notice, the sale of the plaintiff’s cocoa farm situated at a place commonly called Twemayeagya on or about 9 March 1957 by the first defendant is wrongful. (b) A declaration that the document under which the first defendant purported to exercise power of sale is not a legal deed of mortgage, and that the sale of the plaintiff’s cocoa farm under and by virtue of the said document is wrongful. (c) An order of the court setting aside the said sale of the plaintiff’s said cocoa farm. (d) £G300 damages against the first defendant for the wrongful sale of the plaintiff’s said cocoa farm.” It will be observed that claims (a), (b) and (c) were against Kwaku Manu and the plaintiff jointly, while claim (d) was against Kwaku Manu only. In the statement of claim he filed in that case, the defendant pleaded the facts he relied upon for his contention that the sale was void and passed no title in the land to the plaintiff. These include a plea that the right of sale had not accrued under the mortgage to Kwaku Manu, and that the notice he, Kwaku Manu, purported to give was illegal. The relevant paragraphs of his statement of claim were: “(2) By document made between the plaintiff and the first defendant in June 1956, the plaintiff as sub-broker offered to the first defendant as factor, one cocoa farm situated

[p.160] of [1965] GLR 155 on Abesewa stool land at a place commonly called Twemayeagya, as security in good faith for the cocoa business transaction which the plaintiff and the first defendant carried on . . . (4) The plaintiff says that because the whole transaction was clearly one of business between broker and factor, the said document contained no fixed date within which to pay or repay a fixed or specific amount or any amount at all to the first defendant. The plaintiff will at the hearing refer to the said document for its full terms meaning and effect. (5) The plaintiff says that as no date was fixed in the said document for the repayment of any fixed amount or any amount to the first defendant, the first defendant could not give default notice to the plaintiff to sell the plaintiff’s property until an account had been gone into between them and the definite amount due is known, and the plaintiff says further that in fact no such default notice was ever served on him. (6) On or about 9 March 1957, the first defendant purporting to exercise power of sale under the said document, caused the plaintiff’s said cocoa farm to be sold at a public auction, whereby the said cocoa farm was purchased by the second defendant herein. (7) The plaintiff will contend that the document which the plaintiff executed in favour of the first defendant is not a deed of legal mortgage, and that therefore the first defendant could not exercise the power of sale under the said document, and that the said sale of the plaintiff’s said cocoa farm is wrongful and void. (8) The plaintiff says that if accounts had been gone into between the first defendant and himself, and he had been given due notice as to any outstanding balance due by him to the first defendant, the plaintiff would have been in a position to pay the said amount and that he would have paid same.” Kwaku Manu and the plaintiff filed one joint statement of defence; in it the plaintiff identified himself in every respect with Kwaku Manu, and did not raise any separate defence, not even the defence of a bona fide purchaser for value without notice which was open to him. The following paragraphs in their said defence are significant. “(1) Defendants deny paragraphs (2), (3), (4) and (5) of the plaintiff’s statement of claim . . .

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(3) Defendants say that on delivery of cocoa by plaintiff to first defendant on every occasion the value of the cocoa was deducted from the advance and plaintiff told there and then what was due to first defendant on account from him. (4) Defendants say that at the close of the season plaintiff knew exactly what was due to the defendant on the mortgage but notwithstanding this, and in accordance with the terms of the mortgage deed, the first defendant on 10 January 1957 served the plaintiff and his surety with demand notice requesting them to pay the balance of £G232 16s. 3d….. (6) The plaintiff failed to pay the balance and so on 8 March 1957, the first defendant caused the said farm to be sold. (7) Paragraphs (7) and (8) of the statement of claim are denied. In further reply defendants contend that the document was a legal mortgage; that accounts were settled and known to all parties to the mortgage deed and that notices were duly served on plaintiff. (8) Defendants deny that the plaintiff is entitled to the relief sought or at all.” By that defence the plaintiff positively averred that he was seised with knowledge of the prerequisites for the vesting of the right of sale in Kwaku Manu under the deed, that he was aware of all the steps taken by Kwaku Manu in that behalf, and therefore satisfied himself that the exercise of the power was proper before he made the purchase. Thus the issues for trial agreed upon by all parties are: “(1) Whether or not the document under which the first defendant exercised power of sale (and caused the plaintiff’s cocoa farm to be sold) is a legal deed of mortgage. (2) Whether or not the plaintiff was served with any default notice or notice of demand. (3) Whether or not accounts were settled between the plaintiff and the first defendant at the close of the 1956-57 cocoa season, and whether or not – by reason of the terms of the document – the first defendant should have first instituted court proceedings for any amount due – before proceeding with the sale of the plaintiff’s farm. (4) Whether or not the plaintiff is entitled to the remedy he seeks.” The case was tried in the High Court by H. Christian Esq., Commissioner of Assize and Civil Pleas, as he then was, who on 9 April 1960, dismissed the defendant’s claim. In the course of his judgment the learned commissioner said:

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“The plaintiff’s claim in effect is that his cocoa farm was wrongly sold by the defendants . . . There is no question about the efficacy of the mortgage agreement, exhibit A. The principal point to be decided by this court is as to whether or not the parties have complied with its terms . . . The court prefers the evidence of the second witness of the plaintiff and that of the defence. This court considers that an account was agreed between the parties and that there was a failure to settle them when the defendant was called upon to do so. The one month’s notice required by exhibit A was given and the farm was rightly sold.” From that judgment the defendant appealed to this court, but did not serve notice of his appeal on the plaintiff, and described him as non-respondent. He was successful in his appeal. In the course of the judgment sub nom. Amoah v. Manu1 the court said that the notice which Kwaku Manu purported to give to the defendant, “is so grossly faulty, that the sale under it cannot but be unlawful. It is an improper and illegal notice, because principally it was given when the time fixed for giving it, i.e. after the close of the 1956-57 cocoa season, which we have discovered to be the 28th February, 1957, had not arrived; and the steps prescribed to be taken, i.e. the investigation of the accounts and ascertainment of what may be properly due, had also not taken place . . . It follows that the sale pursuant to that notice dated the 10 January, 1957, must be and is hereby declared to be illegal.” The court therefore allowed the appeal and entered “judgment for the plaintiff awarding him £G300 damages for the wrongful sale of his farm . . .”2 That judgment of the court was delivered on 2 April 1962, and it would appear that the defendant who had in the meantime been dispossessed of the farm by the plaintiff resumed his occupation, whereupon the plaintiff instituted the present action against him and claimed: “(a) possession of the cocoa farm described and particularised in the schedule hereto, and (b) damages for trespass thereto by defendant at the rate of £G125 per cocoa season from May 1962 to date of judgment or date of recovery of possession of the said farm by plaintiff whichever shall be earlier.”

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The main pleas of the plaintiff are: (1) That not having made him a respondent to the appeal, in this court in the former suit, the defendant is estopped by the judgment of Commissioner Christian in the former suit from challenging his (the plaintiff’s) title to the farm; (2) That the judgment of this court in the former suit is not binding upon him, and (3) That he is a bona fide purchaser for value of the farm, and he is therefore protected by the purchaser’s protection clause contained in the deed of mortgage. The defendant joined issue with the plaintiff on each of these issues and counterclaimed for: “(a) A declaration of title to all that cocoa farm more fully described in plaintiff’s writ of summons. (b) An order setting aside the sale of the said farm at the instance of one Kwaku Manu to plaintiff herein. (c) An order for possession of the said farm. (d) An order that plaintiff herein accounts to defendant for the proceeds of the said farm from March 1957 till date of judgment, at the rate of £G240 per season.” The issues agreed for trial are: “(1) Whether the plaintiff by virtue of the provisions of the mortgage deed between the defendant and one Kwaku Manu under which the sale was conducted and by virtue of the plaintiff being a bona fide purchaser for value without notice of any defects is entitled to the fruits of his purchase and possession of the said farm. (2) Whether by the effect of the judgment of Mr. Commissioner Christian of 5 April 1960 dismissing defendant’s action, then as plaintiff, by which defendant then as plaintiff, sought to set aside the sale the defendant can now lay claim to the said farm. (3) Whether the defendant not having appealed against the plaintiff then second defendant in the Christian judgment and having been awarded £G300 damages by the Supreme Court for wrongful sale against the first defendant and been paid the said sum, can now come back and claim the said farm purchased by plaintiff. (4) Whether the plaintiff then second defendant in the Commissioner Christian judgment not being party to the appeal to the Supreme Court could be affected by the judgment delivered against the first defendant only.”

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The learned trial judge having heard arguments on issues (2), (3) and (4) being issues of law, ruled on April 22, that: (i) the judgment of this court delivered on 2 April 1962,3 was not binding upon the plaintiff since he was not made a respondent to the appeal, (ii) the order of this court setting aside the judgment of Commissioner Christian was not effective as against the plaintiff, and that the said judgment, though set aside was still in force and operated as res judicata against the defendant, and that the defendant was estopped from defending the plaintiff’s claim in the present suit, and (iii) the defendant having been awarded £G300 damages by this court against Kwaku Manu for wrongful sale, was not entitled to question the sale even though in the previous suit this court declared the sale illegal. Upon these grounds, the learned judge did not find it necessary to try issue (1), i.e. whether the plaintiff is a bona fide purchaser for value. Indeed whichever way issues (2), (3) and (4) are decided it would not be necessary to deal with that issue. In his concluding order the learned judge awarded the plaintiff twenty guineas general damages. The defendant was not represented in this court by counsel; he rested his submissions on the grounds of appeal filed on his behalf by counsel who appeared for him in the court below, but who, by reason of his present appointment, could not appear to argue the appeal for him. The most important of the grounds of appeal are: (a) On a proper construction of the judgments of 5 April 1960 and 2 April 1962 the plaintiff herein is estopped from prosecuting his claim and the learned judge erred in holding the contrary. (b) The plaintiff has acquired no good title to the farm, in view of the Supreme Court’s judgment of 2 April 1962 and (c) The judge erred in holding that the Supreme Court’s judgment of 2 April 1962 does not bind the plaintiff herein. In making his ruling against the defendant on issues (2), (3) and (4) in the case, the learned trial judge completely overlooked the most important fact that in the first suit, the plaintiff identified himself in every respect with Kwaku Manu, that one and only one set of issues was joined between the defendant on the one hand, and the plaintiff and Kwaku Manu on the other. There are cases in which judgment

[p.165] of [1965] GLR 155 between two parties can operate as an estoppel against a person who was not party to the proceedings in which the judgment was delivered. The principle in such a case is a combination of an estoppel by record and an estoppel by conduct. This principle is formulated in a judgment of this court in Egyin v. Aye,4 as follows: “If A. identifies himself with B. in a suit against C. on specific issues and B. loses to C., then A. is estopped by conduct from re-litigating the same issues against the successful party C.” In the earlier suit, as already pointed out, the claim that the sale was void of effect and passed no title in the farm was made against Kwaku Manu jointly with the plaintiff; on that issue the plaintiff could stand or fall with Kwaku Manu. The only claim in which Kwaku Manu stood alone is the claim for £G300 damages for wrongful sale. The court set aside the judgment of Commissioner Christian on those issues without making reservation in respect of any part of that judgment. Therefore the whole judgment is vacated and is of no effect as far as any of those issues are concerned. Again, the plaintiff depended upon the validity of the sale of his title; a general declaration that a sale is void is a judgment in rem as to the status of the sale, and not a judgment in personam. In the judgment of this court relied upon by the parties, this court used a term of art, the sale it said “is hereby declared to be illegal.”5 Anything which is illegal is void of effect therefore the sale relied upon by the plaintiff being illegal is void of effect, consequently the plaintiff acquired no title under it which he can litigate. Again, the final order made by this court in the former case, Amoah v. Manu,6 is significant; it set aside the judgment of the trial court, and entered judgment for the plaintiff and awarded him £G300 damages for the wrongful sale. The defendant herein had claimed four reliefs including £G300 damages and the trial court had dismissed the claim in respect of each of those four reliefs. The only proper interpretation of the judgment which set aside that judgment of the commissioner is that the claims were wrongly dismissed, and that the defendant is entitled to each of those four reliefs; the award of the damages of £G300 claimed cannot affect the generality of the effect of the setting aside of the commissioner’s judgment in respect of the other reliefs. The whole of the commissioner’s judgment having been thus vacated in respect of each of the issues raised, no res judicata can be founded upon that judgment which is non est.

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It follows that the learned judge erred in resolving the second, third and fourth issues joined between the parties in favour of the plaintiff. And now to the first issue, i.e. whether the plaintiff can claim relief under the purchaser’s protection clause appearing in the mortgage under which the sale was purported to have been made. This express protection which is a reproduction of the statutory protection given by the Powers of Trustees and Mortgagees Act, 1860,7 s. 13, re-enacted in the Conveyancing and Law of Property Act, 1881,8 s. 21, as amended by the Conveyancing Act, 1911,9 s. 5(1), merely exempts a purchaser under a mortgage from any duty to make inquiries; it does not make the sale unimpeachable and thereby the title of the purchaser unassailable. The law on the point is that: “provided that he has no notice of any irregularity, he is protected notwithstanding that an event giving rise to the power of sale has not occurred, and even though at the time of the sale, the mortgage has been paid off. But he is not protected if he has notice, actual or constructive, of the irregularity; consequently he is not protected if the exercise of the power depends on a notice being given which in the circumstances cannot have been given . . .” See Halsbury’s Laws of England (2nd ed.), Vol. 23, p. 441, para. 649; see also Jenkins v. Jones,10 Bailey v. Barnes,11 Parkinson v. Hanbury12 and Lisk v. Barlatt13. It means that that clause or statutory provision does not give unimpeachable title to a purchaser under a mortgage; it merely provides him with a statutory defence to an action by a mortgagor to set aside a sale under his mortgage; that defence is rebuttable. Applying that principle of law to the present case, we find, as was pointed out earlier, that in the defence filed jointly by Kwaku Manu and the plaintiff, the plaintiff impliedly admitted that he was seised of all the circumstances exactly as Kwaku Manu as to the time when notice should be given, i.e. at the close of the 1956-57 cocoa season, and he must be deemed to have known from the Gazette Notice that the season had not closed at the time when Kwaku Manu purported to give his notice, and further that the season not having closed at the date of the said notice, no accounts could have been

[p.167] of [1965] GLR 155 gone into to determine whether or not the defendant was owing Kwaku Manu the mortgagee, to warrant notice of default being given. Again, in view of the defence filed in the former suit, the plaintiff is estopped from now pleading that he is a bona fide purchaser for value without notice of the irregularities and the illegalities. It follows that the learned judge erred in giving judgment for the plaintiff on his claim against the defendant, and in dismissing the defendant’s counterclaim. In the result, the appeal is allowed, the judgment of the court below is set aside including the order as to costs, any costs paid to be refunded; for that judgment the following is substituted: (a) The plaintiff’s claim is dismissed and judgment entered thereon for the defendant, (b) there will be judgment for the defendant on his counterclaim against the plaintiff for: (i) a declaration of his title to the land in dispute, (ii) an order decreeing the sale null and void, (iii) an order for recovery of possession, (iv) mesne profits assessed at £G200. The appellant will have his costs in this court fixed at £G78 9s. 5d. and his costs in the court below agreed at 50 guineas.

DECISION

Appeal allowed.

K. T.