DIVISION: IN THE HIGH COURT, ACCRA
DATE: 11TH JUNE, 1963
BEFORE: PREMPEH J.
NATURE OF PROCEEDINGS
BY ORIGINATING SUMMONS to the High Court the plaintiff sought for a declaration that an indenture
made by his predecessor in 1945 demising certain properties to the defendants was a mortgage and not a
lease.
COUNSEL
Puplampu for the plaintiff.
H. V. A. Franklin for the defendants.
JUDGMENT OF PREMPEH J.
These proceedings were commenced by an originating summons issued at the instance of the plaintiff as
head of family of Chief John Quartey’s family of Otublohum.
[p.21] of [1963] 2 GLR 20
The summons asked for the determination of the following questions:
(1) Whether the indenture made on the 14th February, 1945, between George Hertford Mensah
Quartey the plaintiff’s predecessor of the one part and Elias John Moubarak and Michael Daniel
Bassil of the other part in respect of house No. D.173/2, formerly numbered S.40/6 is in substance
a mortgage and not a lease.
(2) If the indenture of the 14th February, 1945, is a mortgage whether the plaintiff’s family is not (a)
entitled to redeem it upon payment of the principal debt and any interest payable thereon, and (b)
an account of the rents and profits of the mortgaged property as from the time the defendants went
into possession of the said property.
When the matter came up for consideration on the 16th November, 1962, counsel for the parties intimated
that they would be prepared to submit a special stated case signed by them for argument and for the
court’s opinion or decision on such points of law as may be set out or disclosed in the said special stated
case.
Accordingly following a consent order which I made the following special case was in due course filed:
“Special case stated for opinion of the court pursuant to Order 34, rule 1 as follows:
1. The plaintiff is the present head of the chief John Quartey family of Otublohum, Accra.
2. In 1943 the plaintiff’s family was sued by Alfred Ernest Jones and Sir William Mclintock, Joint
liquidators of L.C. Ltd., (formerly G.B. Ollivant & Co. Ltd.) and judgment costs for £3,457 5s. 6d.
was obtained against the said family.
3. The said liquidators went into execution under the said judgment and attached for sale all the
properties of the said family.
4. The said family approached the defendants to obtain money to pay off the said judgment debt and
save the family’s property from attachment.
5. By a deed made the 7th February, 1944, and registered in the Deeds Registry as 66/1944 the
plaintiff’s family demised premises then numbered as house No. S.40/6 and now numbered as
D.173/2 for a term of 45 years in consideration of the sum of £3,200.
6. The said deed of 7th February, 1944, was cancelled and superseded by a deed made on the 14th
February, 1945, between the same parties in which the said premises was demised to the defendants
for a term of 50 years in consideration of the sum of £3,555 11s.
7. The total sum received by the plaintiff’s family was £3,555 11s. 2d.
8. The demised premises is a two-storey building on High Street, Accra, and contains some twenty
rooms on the first floor and some ten rooms and two large stores on the ground floor.
9. At the time the deeds referred to in paragraphs 5 and 6 were executed the premises yielded an annual
rent of £800.
[p.22] of [1963] 2 GLR 20
10. The questions upon which the opinion of the court is sought are:
(1) Whether upon a true construction of the deeds of the 7th February, 1944, and 14th February,
1945, the transaction between the parties was a mortgage or loan transaction and not a lease.
(2) If the said deeds represented a mortgage transaction, whether the plaintiff is entitled to redeem
the mortgaged property upon payment of the principal debt and any interest due.
(3) If the said deeds were a mortgage whether the defendants as mortgagees in possession are
liable to account.
This case is stated by Opoku-Akyeampong & Co., solicitors for the plaintiff, and H. V. A. Franklin, Esq.,
solicitor for the defendants.
Sgd. B. J. da ROCHA
P. P. OPOKU-AKYEAMPONG & CO.,
Solicitors for the Plaintiff
Sgd. H. V. A. FRANKLIN
Solicitor for the Defendant.”
When the matter ultimately came up for argument the two documents referred to in paragraphs 5 and 6 of
the special case stated and held by the defendants were by consent admitted in evidence. The one of the
7th February, 1944, was marked exhibit A and that of the 14th February, 1945, was marked exhibit B.
Counsel for the plaintiff stressed – as a preliminary point – that he was entitled to adduce parol evidence
of negotiations that took place before and during the execution of the documents in order to ascertain the
intention of the parties to those documents. I heard arguments on the point and gave reasons for my ruling
against that contention as it applies to this case.
In arguing the substance of the special case stated, counsel for the plaintiff contended that the true effect
of exhibits A and B was that they were deeds of mortgages and not a lease, the ground for such contention
being put forward is as follows: (a) That no rents were reserved. (b) That the second and third recitals
purport to show circumstances that the plaintiffs were at the material time under financial pressure and
that what was obtained was a loan which was repayable, and that therefore the transaction was a
mortgage. (c) That the consideration for the grant of the lease was so inadequate such that the transaction
in exhibits A and B should be looked on as a mortgage and not a lease.
I think in these circumstances it is necessary to consider primarily what are the essential characteristics of
a legal deed of mortgage.
The chief parts and main attributes of a deed of mortgage may be stated as follows: The parties therein
named that is the borrower or mortgagor on the one part and the lender or mortgagee on the other part; the
recital of the mortgagor’s title to the property sought to be charged for the repayment of the loan; the
recital of the agreement to lend and the covenant for the repayment of the loan either with or without
interest
[p.23] of [1963] 2 GLR 20
on a fixed date; the right of redemption which is a fundamental characteristic of a deed of mortgage; the
mortgagee’s right of foreclosure which also is a very essential element of a deed of mortgage; and then
the proviso for the reconveyance after payment of the debt.
In the case of Goodman v. Grierson,1 reproduced in Coote’s on Law of Mortgages (9th ed.), Vol. 1, p. 16,
Lord Manners stated as follows:
“The fair criterion, by which the Court is to decide whether this deed be a mortgage or not, I apprehend to be this, are the remedies mutual and reciprocal? Has the defendant all the remedies a mortgagee is entitled to?”
Can it be said that there are in exhibits A and B any of the principal attributes of a deed of mortgage as I
have enumerated above?
If there are no such attributes, in particular the equity of redemption to the lessor in this case (whom the
plaintiff chooses to call a mortgagor) and a right to foreclose in the lessee (whom the plaintiff chooses to
call a mortgagee) can exhibits A and B be said to be deeds of mortgage?
Before dealing with the points raised by counsel for the plaintiff, I think it is necessary also to consider
what are the essential elements of a deed of a lease.
In Cheshire’s book on Real Property (8th ed.) at page 388, the chief parts of a lease are given as follows:
(1) the premises, (2) the habendum, (3) the reddendum, (4) the covenants and provisions. It then goes on:
“The object of the premises, which consist of all the parts of the deed prior to the habendum, is to name the
lessor and the lessee, to define and describe the property, and to indicate, by what are called the operative
words, the intention of the parties.
The habendum defines the extent of the term by specifying its beginning and its duration, and the
reddendum fixes the amount of rent and the date upon which it is to become payable.
Covenants and provisions are inserted in order to give effect to any special stipulations which may have
been agreed to by the parties.”
I shall now consider the objections of the plaintiff, the first of which is as to the non-reservation of rent in
both documents.
By the operative words in both exhibits A and B the intention of the parties is clearly shown that the legal
relation between the plaintiff as landlord and the defendants as tenants was to exist for the consideration
therein contained and the habendum quite clearly fixes the duration of the tenancy in exhibit A for a
period of 45 years beginning from the 7th February, 1944, and in exhibit B for a period of 50 years
beginning from the 7th January, 1944. Now it is true that the rent due payable in a deed of lease should be
made certain, but it was held in the case of Ex parte Voisey; In re Knight2 that rent is certain if by
calculation and upon the happening of certain events it becomes certain.
[p.24] of [1963] 2 GLR 20
Rent also may be made payable in advance throughout the term of the tenancy: see Hill and Redman’s
Law of landlord and Tenant (13th ed.), page 293, para. 185, on the subject of time and mode of payment
of rent.
Apart from the recitals in the documents that the amounts therein contained were consideration for the
grant of the lease the question may be asked: what other factors are there to show that the amount therein
contained represent rents paid in advance for the duration of the term of the tenancy?
That has been rendered easy to ascertain by calculation – by the existence of the two documents exhibits
A and B. The amount advanced to the plaintiff in exhibit A was £3,200 for a period of 45 years which by
calculation brings down the annual tenancy to the sum of £71 2s. It is commonplace that exhibit A was
superseded by exhibit B which shows that the consideration therein was increased to £3,555 11s. for the
period of 50 years. This also by calculation brings down the annual tenancy to the same figure of £71 2s.
On these conclusions I can have no doubt whatsoever that the consideration contained in both exhibits A
and B and paid by the defendants were rents at £71 2s. per annum paid by them to the plaintiff in advance
throughout for the term of the tenancy contained in the respective documents. This disposes of the
plaintiff’s first objection. Having regard to the second point, I think it is a reductio ad absurdum to suggest that because the
document contains a recital that the amount was advanced to the plaintiff when he was under financial
pressure, the transaction must be a mortgage.
As to recitals in a lease, the following appears in paragraph 574 of Hill and Redman’s Law of Landlord
and Tenant (13th ed.) at page 743:
“Recitals are not often required in a lease, and even where the lease is made pursuant to a power, the power
and the instrument creating it, if mentioned at all, are ordinarily referred to in the operative part. The above
general statement may be, however, subject to qualification; recitals may in some cases be necessary to show
the right of the landlord to grant the lease where he is not absolute owner of the freehold or leasehold
reversion.”
In this case the lessor was not the absolute owner of the property. He as head of his family represented his
family in entering into the transaction with the defendants, and in my view it was good conveyancing
practice to put in those recitals in these circumstances to show the capacity in which the lessor granted the
lease, and in particular—it being family property—to show the circumstances that made it necessary to
obtain the amount which became the consideration for the lease that was granted.
This evidently was done as a safeguard against any possible future action by any member of the plaintiff’s
family – designed to set aside the transaction on the ground of fraud by the lessor or any other grounds.
It is quite clear from the recital and the operative words that the amount shown in exhibits A and B was
consideration representing rents paid by the defendants to the plaintiff in advance for the whole term of
the lease, and I do so find.
[p.25] of [1963] 2 GLR 20
Having regard to the third point, I do not consider that such amount received for the term of years granted
by the lease was inadequate at the time the grant was made.
Since the lessor had to receive respectively 45 years or 50 years rent in advance, there was bound to be a
large discount.
In my judgment there is no measurement to support the contention that the bargain was an unduly hard
one on the lessor.
Apart from these objections taken by the plaintiff, all the cardinal parts of a lease are to be found in
exhibits A and B and taking the view above indicated of their contents I am of the opinion and I do
accordingly decide: That upon a true construction of the deeds of the 7th February, 1944, and of the 14th
February, 1945, marked exhibits A and B respectively, the transaction is clearly one of a lease between
the plaintiff as landlord and the defendants as tenants and not a mortgage or loan transaction.
Having so decided, the two other ancillary questions sought for my opinion do not arise.
Judgment is therefore entered determining the questions raised in the originating summons and framed in
the special stated case filed in favour of the defendants.
I award the defendants 200 guineas costs including 150 guineas counsel’s brief fee.
DECISION
Judgment for the defendants with costs.
K. T.
