COURT OF APPEAL
DATE: 24 APRIL 1967
BEFORE: OLLENNU, AZU CRABBE AND APALOO JJ.A.
CASES REFERRED TO
(1) Ex parte Voisey; In re Knight (1882) 21 Ch.D. 442, 52 L.J.Ch. 121; 47 L.T. 362; 31 W.R. 19, C.A.
(2) Dapaah v. Poku (1950) Oll.C.L.L. 173, W.A.C.A.
(3) Awuku v. Agbemakpettor (1949) D.C. (Land) ‘48-’51, 137.
(4) Amusu v. Fenuku (1952) D.C. (Land) ‘52-’55, 75.
(5) Daly v. Edwardes (1900) 83 L.T. 548, C.A.
(6) Clore v. Theatrical Properties Ltd. & Westby Co., Ltd. [1936] 3 All E.R. 483, C.A.
(7) Douglas v. Culverwell (1862) 4 De G.F. & J. 20; 31 L.J.Ch. 543; 6 L.T. 272; 10 W.R. 327.
(8) Re Walden (1878) 10 Ch.D. 76; 48 L.J. Bk. 1; 39 L.T. 333; 27 W.R. 274.
(9) Kreglinger v. New Patagonia Meat and Cold Storage Co. [1914] A.C. 25; 83 L.J.Ch. 79; 109 L.T. 802; 30 T.L.R. 114; 58 S.J. 97, H.L.
(10) Cannon v. Villars (1878) 8 Ch.D. 415; 47 L.J.Ch. 597; 38 L.T. 939; 42 J.P. 516; 26 W.R. 751.
(11) Roe v. Siddons (1889) 22 Q.B.D. 224; 60 L.T. 345; 53 J.P. 246; 37 W.R. 228, C.A.
(12) Inland Revenue Commissioner v. Raphael [1935] A.C. 96; 104 L.J.Ch. 24; 152 L.T. 217; 51 T.L.R. 152, H.L.
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(13) Parkin v. Thorold (1852) 16 Beav. 59; 16 Jur. 959; 51 E.R. 698.(14) Samuel v. Newbold [1906] A.C. 461; 75 L.J.Ch. 705; 95 .T. 209; 22 T.L.R. 703, H.L.
(15) Gwynne v. Heaton (1778) 1 Bro.C.C. 1; 28 E.R. 949.
(16) Mould v. Smith (1943) 112 L.J.Ch. 279.
(17) Monypenny v. Monypenny (1861) 9 H.L.Cas. 114; 31 L.J.Ch. 269; 11 E.R. 671, H.L.
(18) Simpson v. Foxon [1907] P. 54; 76 L.J.P. 7; 96 L.T. 473.
(19) Lloyd v. Lloyd (1837) 2 My. & Cr. 192; 6 L.J.Ch. 135; 1 Jur. 69; 40 E.R. 613.
(20) Mackenzie v. Devonshire (Duke of) [1896] A.C. 400, H.L.
(21) Golightly v. Ashrifi (1955) 14 W.A.C.A. 676.
NATURE OF PROCEEDINGS
APPEAL against the decision of the High Court that certain deeds purporting to be a lease were in substance a lease and not a moneylending transaction and the plaintiff could not redeem.
COUNSEL
B. J. da Rocha for the appellant.
H. V. A. Franklin for the respondents.
JUDGMENT OF OLLENNU J.A.
The proceedings which culminated in this appeal commenced in the High Court with an originating summons which called upon the High Court to determine whether a certain deed entered by the parties and purporting to be a lease “is in substance a mortgage and not a lease, and if it is, whether the plaintiff is entitled to redeem it.” Upon the summons coming before it, the High Court made a consent order directing that a special case be stated and signed by counsel for the parties; this order was complied with and the case was accordingly stated and signed. The stated case sets out all the relevant facts. Paragraph (10) of the stated case reads: “The questions upon which the opinion of the court is sought are:
(i) whether upon a true construction of the deeds of 7 February 1944 and 14 February 1945 the transaction between the parties was a mortgage or loan transaction and not a lease.
(ii) 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.
(iii) If the said deeds were a mortgage whether the defendants as mortgagees in possession are liable to account.”
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Put in simpler language the question which the court below was called upon to determine is, whether whatever the form of the document, the transaction between the parties is substantially a moneylending transaction.
At the trial in the High Court, counsel for the plaintiff requested the court to admit oral evidence of facts as to what took place between the parties culminating in the execution of the deeds, exhibits A and B. This application was vehemently opposed by counsel for the defence on the grounds, among other things, that all the relevant facts necessary for the determination of the issues before the court are those agreedupon by the parties and set out in the special case stated. ow the special case stated bearing out the questions posed is 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 McLintook, joint liquidators of L.C. Ltd. (formerly G. B. Ollivant & Co., Ltd.) and judgment and costs for £3,457 5s. 6d. were 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 on 7 February 1944 and registered in the Deeds Registry as No. 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 7 February 1944 was cancelled and superseded by a deed made on 14 February 1945 [exhibit B] between the same parties in which the said premises were demised to the defendants for a term of 50 years in consideration of the sum of £3,555 11s. 2d.
(7) The total sum received by the plaintiff’s family was £3,555 11s. 2d.
(8) The demised premises are 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.
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(9) At the time the deeds referred to in paragraphs (5) and (6) were executed the premises yielded an annual rent of £300 and they are now yielding an annual rent of £800.” Paragraph (4) of the case stated is the only paragraph which shows the circumstances in which the documents came to be executed. The wording of it is most significant. It says, “The said family approached the defendants to obtain money to pay off the said judgment debt and save the family’s property from attachment.” This can only mean that the plaintiff’s family approached the defendants to obtain a loan to pay off their debt. Those facts contained in paragraph (4) of the case stated, being the only explanation to the recital in the deed, must be read together with the recitals in the deed. When so read, the only interpretation which can be given to the words “the lessor applied to the lessees to provide the necessary funds to liquidate the balance of the judgment debt” is that the plaintiff’s family applied to the defendants to lend them money to pay off the judgment debt. Having heard arguments the trial judge held that the document is not a legal mortgage, because it does not on the face of it contain the essential attributes of a legal mortgage; those attributes he said are: “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 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 or mortgage; and then the proviso for the reconveyance after payment of the debt.” He concluded: “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 exhibit A and B be said to be deeds of mortgage?”
The learned judge then proceeded to address himself on the essential ingredients of a lease and toexamine the document in question in the light of those essentials. Having done so he came to the conclusion that:
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“By the operative words in both exhibits A and B the intention of the parties are 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 7 February 1944 and in exhibit B for a period of 50 years beginning from 7 January 1944.” Before coming to that conclusion the learned judge stated that reserved rent is an essential of a deed of lease and that that essential element of a lease is absent from the deeds in question. But an amount of £3,200 is shown in the deed, exhibit A, and an amount of £3,555 11s. 2d. is also shown in exhibit B as having been paid. There is nothing on the face of either of the deeds to show what those amounts were paid for. That, therefore, is the main issue which the judge below was called upon to determine. And it is for the purpose of assisting him to resolve that issue that the parties furnished him with the agreed facts.
Instead of using the materials provided him by the parties in the case stated and the recitals in the deeds, the learned trial judge elected first of all to presume the very thing he was called upon to decide, namely, what the amount of £3,555 11s. 2d. was paid as, and then to draw inferences from the circumstances. And, having done so, he held that this omission of reserved rent is not fatal, because, he said, if the amount of £3,555 11s. 2d. paid is regarded as rent for 50 years, and it is apportioned it would show an annual reserved rent of £71 2s. For this proposition he relied upon Ex parte Voisey; In re Knight (1882) 21 Ch.D. 442 at p. 458, C.A. But why should the court indulge in speculations or presumption and inferences when there is evidence provided by the parties themselves both in the agreed facts in the case stated and in the deed from which he could tell what the amount of £3,555 11s. 2d. was paid for?
From that judgment the appellant appealed to this court on the grounds that the learned trial judge misdirected himself by confining his consideration to a legal mortgage to the exclusion of other forms of moneylending transactions, and concluding that the transaction between the parties is a lease. Counsel for the appellant further submitted that if the learned judge in the court below had directed his attention to the agreed facts as set out in the special case stated, he would certainly have come to the conclusion that all that happened between the parties is that the plaintiff applied to the defendants for a loan, and gave them the property to secure payment of the loan and interest thereon.
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Counsel for the respondents argued that the trial judge was right in confining his attention to the form of the deed and not to the facts. He did not dispute that upon the face of the deed, and upon the agreed facts, the appellant was in financial difficulties and applied to the defendants for money to pay his debts, and gave them the property for 50 years for the repayment of the amount. But he says he would call the giving of the money financial assistance, and not a loan. Counsel further contended that prima facie the form of the document is a lease and not a mortgage. He conceded that the absence from the document of reserved rent payable periodically is a defect as far as a lease is concerned. But he submitted that the trial judge was right in holding that it may be inferred from the amount advanced and the number of years that annual rent is reserved.
Now the basis of the special stated case is that prima facie the documents in question are not legal mortgages, and that they are akin to leases, in other words, they are ambiguous. Hence the request to the court to decide whether despite the form in which the deeds seem to have been drawn up, and havingregard to the agreed facts, the transaction is substantially a moneylending transaction. In the circumstances the only means by which the true nature of the transactions can be ascertained is by reading the documents together with the agreed facts as set out in paragraph (4) of the special stated case. These are: “The said family approached the defendants to obtain money to pay off the said judgment debt and save the family’s property from attachment” and “the lessor applied to the lessees to provide the necessary funds to liquidate the balance of the judgment debt above mentioned and to take the premises on lease.” The question is, when the documents are so read can they be said to be leases or can they be said to be loan transactions? In other words, was the £3,555 11s. 2d. paid as rent, or was it paid as a loan?
Upon the facts as agreed between the parties and set out in the special case stated, which is evidence before the court, it is quite clear that at the time of the transaction the appellant was in great financial distress, execution had issued against him from a court of competent jurisdiction, and he was to be sold out; that in those distressed circumstances he approached the respondents for money, i.e. for a loan, to pay off his debt, and to take the property for a period of years in payment of the loan. There is no evidence which shows any other transaction.
In this country there are three forms of loan transactions secured with property. These are: [p.244] of [1967] GLR 237
(i) legal mortgage,
(ii) equitable mortgage, and
(iii) pledge under customary law.
The essentials of a legal mortgage as pointed out above include mutuality of rights, i.e. a right in the creditor to foreclose, and a right in the debtor to redeem. The essentials of an equitable mortgage is deposit of title deeds by the debtor with the creditor. And the essentials of a pledge include the right of the creditor to possession and enjoyment of the property without liability to account, and a right in the debtor to redeem at any time by tendering the money lent.
Now and again attempts have been made to circumvent one or, other of these three forms of moneylending transaction to the advantage of the creditor, and to the detriment of the debtor. And people in financial distress have been compelled to execute deeds in respect of unconscionable transactions which do not represent the true nature of the transaction between them. It is to meet such harsh cases and other matters connected with moneylending transactions that the Loans Recovery Ordinance, Cap. 175 (1951 Rev.), was enacted, to give the court jurisdiction to determine the real nature of a transaction, despite the form in which the transaction is recorded in writing. The courts are bound to give effect to that enactment so long as it remains on the statute book. In Dapaah v. Poku (1950) Oll.C.L.L. 173, W.A.C.A. a case very similar to the present one in some respects, the plaintiff who as in the present case was about to be sold out applied to the defendant for funds to pay his debts and to take his cocoa farm which was yielding £20 to £60 profit per annum and to hold the same for a period of thirteen years. The defendant advanced the money and took the farm. A document was then drawn up in which the plaintiff covenanted that he would leave the defendant in quiet possession and would not redeem until upon the expiration of the thirteen years; and the defendant also covenanted that he would yield up the premises to the plaintiff upon the expiration of the thirteen years.
The only material way in which that case is different from the present one is that the document called the money advanced a “loan” not “necessary funds” as in this case. Four years after the transaction had been entered into, the borrower applied to the creditor to redeem and tender the amount he had borrowed. Prima facie that transaction in Dapaah v. Poku is not a legal mortgage for it lacks the essential ingredientsof a mortgage. It is not a pledge under customary law either, because the defendant was accountable for the mesne profits as he had to apply them in liquidation of the amount advanced and reasonable interest thereon.
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It was contended on behalf of the creditor that the transaction was a lease with the rent for the term of thirteen years paid in full in advance. The West African Court of Appeal held as stated in the headnote that:
“the correct way of looking at the transaction is to say that if it is a native mortgage, the mortgagee could not defeat the fundamental principles of native law by making such a condition as that the mortgage should not be redeemable for 13 years. But even if it is not a native mortgage, the Court can order a return of the property on repayment of the loan under the Loans Recovery Ordinance, Cap 146 [(1935 Rev.).]”
In the course of his judgment in that case Blackall P. said at p. 174 inter alia: “Mr. Asafu-Adjaye with considerable skill tried to argue that it is not a loan at all but it seems to me that it clearly comes within section 3 (3) of Chapter 146 which embraces every transaction which, whatever its form may be, is substantially one of moneylending.” Other cases of similar nature are Awuku v. Agbemakpettor (1949) D.C. (Land)’48-’51, 137 and Amusu v. Fenuku (1952) D.C. (Land)’52-’55, 75. In the latter of the two cases, a document was executed by the parties in terms similar to the one in the present suit; by it the debtors purported to demise their valuable fishing creeks to the creditors for 45 big fishing seasons. About thirteen years after, the debtors tendered to the creditors the amount they took, and claimed recovery of possession. The creditors refused to accept the money and to yield up possession of the creeks, contending that the transaction was a lease and not a loan transaction.
The debtors therefore brought action under the Loans Recovery Ordinance, Cap. 175 (1951 Rev.), claiming (a) a declaration that despite the form of the document the transaction was a loan and not a lease,
(b) an order for accounts crediting the creditors with the highest interest they would be entitled to under the Ordinance, and (c) an order that the debtors recover possession upon payment to the creditors any sum which may be found due.
At a stage in the proceedings in that case, counsel for the creditors conceded that by reason of section 3 of the Ordinance, Cap. 175, the transaction was a loan transaction despite the fact that the document was drawn up as a lease. It was then contended that the transaction was a pledge, and that the creditors were not entitled to accounts, and must pay the full amount of the loan to redeem.
It was held that the transaction was not a pledge, that it was one of the innovations in moneylending transactions which work to the detriment of the debtor; it was further held that the Loans Recovery Ordinance, Cap. 175, applies to any transaction which is substantially a loan transaction whatever its form may be, and that the court has jurisdiction to re-open the same and to take accounts thereon.
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I do not see any material difference between the three cases I have cited and the present one. I would therefore apply to this case the same principles as were applied in those cases.
I am of opinion that the trial judge erred in assuming that the amount of £3,555 11s. 2d. is full rent for 50 years paid in advance, and consequently in inferring that rents are reserved. Thus he erred in looking only at the operative words of the deed, when what he was called upon to do is to examine the agreed facts and the recitals along with other parts of the deeds, in order to ascertain the real intent of the parties and to saywhether despite the form which is prima facie not a mortgage, but seemingly a lease, the transaction between the parties is, in the language of section 3 (3) of the Loans Recovery Ordinance, Cap. 175,
“substantially one of moneylending.” As I have said earlier, so long as section 3 (3) of Cap. 175 remains part of the law of the land the courts are under an obligation to give effect to it in transactions which may otherwise elude the courts.
I interpret the words “approached the defendants to obtain money” and the words “applied to the lessees to provide the necessary funds to liquidate the balance of the judgment debt” appearing in paragraph (4) of the case stated and in the deeds, exhibits A and B, to mean “applied to the creditors for a loan to pay the judgment debt.” In my judgment, therefore, the transactions are substantially moneylending transactions dressed in the imperfect robes of a lease. Now it is agreed by the parties as appears in paragraph (9) of the case stated that at the date of the execution of the deeds, exhibits A and B, the premises in question were yielding annual rent of £300, and are now yielding annual rent of £800. At the rate of £300 per annum the loan of £3,555 11s. 2d. would be paid off in just under twelve years. Therefore within the 50 years the creditors would realise more than four times the amount they lent. Again, at the rent of £800 per annum, the capital would be paid off in just under four years; therefore in the 50 years the creditors would collect more than twelve times the amount lent. This works out at a very excessive and unconscionable rate of interest per annum. That, in my opinion makes the transaction harsh and unconscionable, and one to which the Loans Recovery Ordinance, Cap. 175, and section 13 of the Moneylenders Ordinance, Cap. 176 (1951 Rev.), apply.
[p.247] of [1967] GLR 237 For the reasons given above, I would allow the appeal, set aside the judgment of the court below including the order as to costs, and order that any costs paid to be refunded. For the judgment of the High Court I would substitute the following answer to the questions put in the special case stated:
(i) The transaction between the parties in respect of which the deeds of 7 February 1944 and 14 February 1945 were executed is one of moneylending secured with the property described in the deeds.
(ii) The plaintiff is entitled to redeem upon payment to the defendants the capital loan and interest thereon at the rate of twelve and a half per cent per annum as prescribed in section 13 (1) of the Moneylenders Ordinance, Cap. 176.
(iii) The defendants are liable to account to the plaintiff for the profits from the premises.
I would therefore enter judgment for the plaintiff against the defendants jointly and severally in terms of the answers to the questions and would award the plaintiff costs in the court below fixed at 200 guineas or ›420.00.
The appellant will have his costs of this appeal.
JUDGMENT OF AZU CRABBE J. A.
It is unfortunate that in a comparatively simple matter as the present case it has not been possible to achieve unanimity. I have had the advantage of reading in advance the judgments of my brothers Ollennu and Apaloo, and, having myself given independent thought to the sole problem that arises in this case, I find myself in entire agreement with the conclusion of my brother Ollennu that this appeal should succeed. The issues in this appeal fall within a very narrow compass, for the only real, indeed, the crucial, questionis whether the indenture dated 14 February 1945 replacing the indenture dated 7 February 1944 and made between the parties to this appeal is in substance a mortgage.
At the trial no evidence was adduced, but the facts as agreed upon by the parties were stated and signed by counsel for both sides in pursuance to Order 34, r. 1 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A). The two documents of 7 February 1944 and 14 February 1945 were by consent accepted in evidence and marked exhibit A and exhibit B respectively. Accordingly, argument by counsel was restricted, as it should be, to the facts stated and to the two exhibits.
In his judgment the learned trial judge stated the main submission of counsel for the plaintiff that the true effect of exhibits A and B was that they were deeds of mortgage and not a lease, and he said
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that in those circumstances his primary duty was to consider (to use his own words) the “essential characteristics of a legal deed of mortgage.” After stating the essential features of a deed of mortgage the learned trial judge posed to himself the following question, “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?” Without answering this question, the learned trial judge posed a further hypothetical question: “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 forclose in the lessee (whom the plaintiff chooses to call a mortgagee) can exhibits A and B be said to be deeds of mortgage?” Again, deferring an answer to this further question, the learned judge thought it was necessary to proceed to a consideration of “the essential elements of a deed of lease,” as stated in Cheshire’s Real Property (8th ed.) at p. 388.
The learned trial judge then proceeded to examine in some detail the main features of exhibits A and B in order to determine whether they bore all the characteristics, which, according to Cheshire’s Real Property, are the hallmarks of a deed of lease. After this examination he rejected the contention of the plaintiff’s counsel and came to the conclusion that exhibits A and B were leases. This conclusion he expressed in the following passage of his judgment: “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 7 February 1944 and of 14 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.” It is plain that the learned trial judge was more preoccupied with determining whether the form of exhibits A and B was compatible with a deed of lease than in finding an answer to the cardinal question upon which his opinion was sought, namely “Whether upon a true construction of the deed of 14 February 1945, the transaction between the parties was a mortgage or loan transaction and not a lease.” In my view, the learned trial judge fell into an error in deciding this question merely by looking at the form of the two documents. It is of no moment that the parties made a formal agreement purporting to be a lease and describing themselves as landlord and tenant. The
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true test is one of fact, and not of form: see Megarry and Wade, The Law of Real Property (2nd ed.), p. 607. Common instances are where a document purporting to be a lease of land is in fact a grant of a licence: see Daly v. Edwardes (1900) 83 L.T. 548, C.A. and Clore v. Theatrical Properties Ltd. [1936] 3
All E.R. 483, C.A. Sometimes also a conveyance which is absolute in form can be shown to be in fact amortgage: Douglas v. Culverwell (1862) 4 De G.F. & J. 20 and Re Walden (1887) 10 Ch.D 76.
In this appeal the only ground of appeal argued is stated in these terms: “The learned trial judge was wrong in holding that the transaction contained in the deeds dated 7 February 1944 and 14 February 1945 was a lease and not a mortgage.” In arguing the appeal Mr. da Rocha criticised the learned trial judge for not looking at the equitable aspect of the matter, and submitted that the court was bound to look at the substance of the transaction.
He contended that on the undisputed facts the appellant’s family went to the respondents and asked for money to save their house from being sold by the deputy sheriff. He submitted that equity permits the court to look not only at the document, but beyond it. Equity looks to the intent rather than the form. He further submitted that the intent that is readily inferrable from the recitals is that the transaction into which the parties entered was one for the granting of a loan to the appellants by the respondents. Mr. da Rocha argued that there are two tests to be applied: (1) the consideration given in relation to the value of the property in question; and (2) the circumstances of the grantor. The court, he said, will also take into account whether the respondents went into possession. Of the two tests suggested by Mr. da Rocha, I think the second is more vital. It cannot be denied, as Mr. da Rocha, submitted, that the appellants wanted a loan to enable them to free their house from attachment. Finally Mr. da Rocha invited this court to hold that in the face of the recitals and all the circumstances the transaction was for a loan, and that therefore exhibits A and B were mortgage deeds.
In both exhibits A and B there are the words “the lessor which expression where the context so admits shall include his successor as representative or head of the said family or his assigns,” “the lessees which expression where the context so admits shall include their executors, administrators and assigns,” “He the lessor doth hereby demise unto the lessees,” “TO HAVE AND TO HOLD the same unto the lessees for a term of forty-five (45) years” and “the lessees for themselves their executors administrators and assigns covenant with the lessor.” These are followed by the usual covenants common to leases. These are words which prima facie have the effect of a demise of land, so that both exhibits A and B look very much like a lease of
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land. It was therefore submitted by Mr. Franklin, counsel for the respondents, that from the document itself it is clear that the granting of a lease was intended by the parties.
As I have said a little earlier in this judgment, exhibits A and B are prima facie leases. Nevertheless, the appellant by his originating summons asked the court to declare that exhibit B is in substance a mortgage and not a lease. How is the court to decide this question? The test which the court applies in determining this question is whether the transaction is in substance a mortgage; if it is, the court will in equity treat it as such, and it is irrelevant if the transaction is clothed in some other guise. This test is stated in Snell’s Principles of Equity (26th ed.), p. 418 thus: “In determining whether any given transaction is in the nature of a mortgage, equity looks at the substance of the transaction and not merely at the form.” In Kreglinger v. New Patagonia Meat and Cold Storage Co., Ltd. [1914] A.C. 25 at p. 47, H.L. Lord Parker of Waddington stated the test more fully in these words: “My Lords, a legal mortgage has generally taken the form of a conveyance with a proviso for reconveyance on the payment of money by a specified date. But a conveyance in this form is by no means necessarily a mortgage. In order to determine whether it is or is not a mortgage, equity has always looked to the real intention of the parties, to be gathered not only from the terms of the particular instrument but from all the circumstances of the transaction, and has always admitted parol evidence in cases where the real intention was in doubt. Only if according to the real intention of the parties the property was to be held as a pledge or security for the payment of the money, and as such to be restored to the mortgagor when the money waspaid, was the conveyance considered to be a mortgage. Further, the mortgage might be given to secure not only a single money payment but a series of money payments extending over many years, and again the money secured might or might not, according to the circumstances, constitute a debt due from mortgagor to mortgagee.”
In this case no oral evidence was led and the real intention of the parties will have to be spelt from the agreed facts stated, and from the terms of the document, exhibit B, itself. As regards the document the parties are deemed to have meant nothing more or less than what they said. But in order to understand the meaning of the document, the words of the document will have to be applied to the facts of the case, and the circumstances in which they were used. “In construing
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all instruments you must know what the facts were when the agreement was entered into”: per Jessel M.R. in Cannon v. Villars (1878) 8 Ch.D. 415 at p. 419. In Roe v. Siddons (1889) 22 Q.B.D. 224, C.A. Lord Esher M.R. made these helpful observations on the construction of documents at p. 233: “The deed must be construed according to the ordinary rules of construction, one of which is, that you are entitled to look at the circumstances existing at the date of the deed.” If, after construing the document, the court is satisfied that the real intention of the parties was that the property was to be held as security for a loan then the court will give an equitable relief to the mortgagor.
Accordingly, the whole transaction will be attracted by the Loans Recovery Ordinance, Cap. 175 (1951 Rev.), by virtue of section 3 thereof. The object of this Ordinance, as stated in the Bill, is to extend “the powers of the Courts to re-open moneylending transactions brought before them, in order to afford more effective equitable relief to debtors victimised by harsh and unconscionable bargains.”
In order to ascertain the intention of the parties in this transaction, therefore, the court will examine not only the words of exhibits A and B but also the circumstances existing at the date of their execution. The words of the documents are in themselves clear and unambiguous, and parol evidence is inadmissible to vary or contradict them. But the meaning of an instrument cannot always be determined by merely looking at it and reading the words. The court must also know the circumstances in which it was made, and the facts to which they relate. Thus in this present case it is necessary for the court, in order to determine whether exhibit B is a mortgage transaction, to know the facts to which exhibit B refers. These facts are set out in the special case stated, and the relevant paragraphs are as follows: “(2) In 1943 the plaintiff’s family was sued by Alfred Ernest Jones and Sir William McLintook, joint liquidators of L.C. Ltd. (formerly G.B. Ollivant & Co., Ltd.) and judgment and costs for £3,457 5s. 6d. were 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 on 7 February 1944 and registered in the Deeds Registry as No. 66/1944 the plaintiff’s family
[p.252] of [1967] GLR 237
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 7 February 1944 was cancelled and superseded by a deed made on 14 February 1945 between the same parties in which the said premises were demised to the defendants for a term of 50 years in consideration of the sum of £3,555 11s. 2d.(7) The total sum received by the plaintiff’s family was £3,555 11s. 2d.”
The same facts were recited in exhibit B, and I do not think it can be doubted for one moment that the appellant’s family, who found themselves in dire need of money, went to the respondents to take a loan which would enable them to get their family house released from attachment and saved from imminent sale by the deputy sheriff. The recitals contain these crucial words: “the lessors applied to the lessees to provide the necessary funds to liquidate the balance of the judgment debt above mentioned and to take the premises on lease on the terms and condition hereinafter appearing…”
The learned trial judge rejected as a reductio ad absurdum a submission by the plaintiff’s counsel that the court must hold that the transaction was a mortgage, because the recitals in the document provide evidence that money was advanced to the appellants when they were under financial pressure. I regret, albeit with the utmost respect, that unlike my brother Apaloo, I am unable to concur in the trial judge’s rejection of the submission. In my judgment, both the agreed facts as stated and the recitals provide the vital materials upon which a just decision in the case could be based, and by rejecting them the learned trial judge completely disabled himself from adjudicating properly upon the issue between the parties. My brother Apaloo has dealt fully in the judgment he is about to read with the functions of recitals in a deed, and I agree with him that the recitals in the two deeds fulfil the real object of recitals. The introductory recitals in a deed explain how and why the parties have intended to alter the existing state of affairs by agreeing to convey the property. It is now common learning that the recitals do not control the operative parts of a deed, and no one has suggested that they do in this case. But recitals do set out the intention of the parties and the circumstances under which the deed is to operate. It is in this role, that without pretending to control the operative parts of the deeds, that the recitals may be of assistance in construing a deed. The main task of the court is to ascertain the intention of the parties, and this
[p.253] of [1967] GLR 237
is best done by construing the actual words used by the parties with reference to the facts known to them at the time of the execution of the deeds, and these facts may sometimes be collected from the recitals: see Inland Revenue Commissioners v. Raphael [1935] A.C. 96 at pp. 142-143, H.L. In the construction of a deed equity in some cases considers the expressions actually employed. Equity pays more attention to the intention of the parties, the nature of the transaction, and the circumstances under which a right arose or an estate was created, than to the form of the deed itself. And if a strict construction of the words of the deed would defeat the object of the parties, equity would construe the language of the deed to give effect to the apparent intention of the parties rather than the technical meaning of the words used. The well-known maxim is, “Equity looks to the intent, and not to the form.”
The general principle underlying this maxim was explained by Romilly M.R., in Parkin v. Thorold (1852) 16 Beav. 59 at p. 66:
“But Courts of Equity make a distinction in all cases between that which is matter of substance and that which is matter of form; and if it find that by insisting on the form, the substance will be defeated, it holds it to be inequitable to allow a person to insist on such form, and thereby defeat the substance.”
It seems to me that it is entirely beyond question that the only reason that the appellant’s family conveyed their property to the respondents was that they received a loan from the latter in order to settle a judgment debt against them. It is also beyond question that the appellant’s family property which had been attached for sale was immediately released after the appellant had settled the judgment debt. There is no evidence that at the time of receiving the loan from the respondents the appellant’s family offered any other security. Having considered all the circumstances, I have arrived at the inescapable conclusion that house No. D.173/2 formerly number S.40/6, High Street, Accra, was conveyed to the respondents as security for a loan. Thus, it seems to me that the transaction was in substance a mortgage, cast in the form of a lease.In my view the learned trial judge applied the wrong test, and therefore fell into the error of regarding an obvious moneylending transaction as a lease. Although the legal advisers of the parties chose to dress up this mortgage in the robes of a lease of land, yet when one comes to consider carefully the real substance of the transaction between the parties it is plain that it is really a mortgage deed merely masquerading as a lease. Under these circumstances I think that the decision of Prempeh J. was quite wrong.[p.254] of [1967] GLR 237
The next question is whether this particular transaction can be said to be a “harsh and unconscionable” bargain. In answering this question I can do no better than quote the words of Lord Loreburn L.C. in Samuel v. Newbold [1906] A.C. 461 at p. 467, H.L. when construing the English Moneylenders Act, 1900 s. 1 (1), which is in identical terms to section 3 (1) of our Loans Recovery Ordinance, the Lord Chancellor said:
“A transaction may fall within this description in many ways. It may do so because of the borrower’s extreme necessity and helplessness, or because of the relation to which he stands to the lender, or because of his situation in other ways.”
He continued:
“It seems to me that the policy of this Act was to enable the Court to prevent oppression, leaving it in the discretion of the Court to weigh each case upon its own merits and to look behind a class of contracts which peculiarly lend themselves to an abuse of power.”
I do not think it can be doubted that in this country the contract between the parties in the present case is that type of contract which easily lends itself to abuse. There can be no doubt on the evidence that the appellant’s family were under strong financial pressure at the time they took the loan from the respondents, and considering all the circumstances of the case I do not think that this transaction was in accordance with the ordinary rules of fair dealing. In my view there was, as Lord Thurlow said in Gwynne v. Heaton (1778) 1 Bro. C.C. 1 at p. 9, such “an inequality so strong, gross, and manifest that it must be impossible to state it to a man of common sense without producing an exclamation at the inequality of it.” Having arrived at this conclusion, I am bound to hold that this court ought to re-open the transaction between the parties. On the question of interest, I think the rule in equity is that in taking an account upon a mortgage, and here the appellant’s family are in my view entitled to an account, interest is allowed to the mortgagee, even though the mortgage deed is silent on the matter, unless there is some contractual right or equity excluding it: see Mould v. Smith (1943) 112 L.J.Ch. 279. In this case I agree with the calculation of the rate of interest by my brother Ollennu.
For the above reasons I would also allow the appeal, and would answer the questions in the same terms as
Ollennu J.A.
JUDGMENT OF APALOO J.A.
I have had the advantage of reading beforehand the judgment which has just been read by my brother Ollennu. Having
[p.255] of [1967] GLR 237
given it the best consideration I can, I find myself unable, in the end, to subscribe to it. On the contrary, I think that I should answer the questions raised in the originating summons precisely as the learned trial judge answered them, namely, that on a true construction of the deeds of 7 February 1944 and 14February 1945, the transaction between the parties evidenced by these documents is a lease and not a loan secured by a mortgage. It is a happy feature of this case that there is no controversy between the parties on the facts. So complete was the consensus on the facts that the solicitors for both sides were able to agree and submit an identical statement of the facts to the court. Although counsel for the appellant sought in the court below to adduce parol evidence to supplement the documents, that attempt failed and no complaint was made to us about that. The facts agreed upon and submitted to the court have been set out verbatim in the judgment of my brother Ollennu and I do not wish to repeat them. The facts raise very neatly one problem only and that is one of construction. It is to that problem that I now address myself.
But before doing so, it is perhaps useful to advert to dicta of some very learned judges on how to ascertain the meaning of written documents. These dicta have generally become very helpful aides to construction and have been formulated by text-writers into “rules of interpretation.” The very first of those rules states that “The meaning of the document or of a particular part of it is to be sought for in the document itself.”
That is another way of saying that the intention of the parties must be discovered, if possible, from the expressions they have used.
As long ago as 1861, Lord Wensleydale in Monypenny v. Monypenny (1861) 9 H.L. Cas. 114 at p. 146 gave the warning that: “the question is not what the parties to a deed may have intended to do by entering into that deed, but what is the meaning of the words used in that deed.” In the case of Simpson v. Foxon[1907] P. 54 at p. 57, Sir Gorell Barnes P., enumerated the same principle in different language. He said: “But what a man intends and the expression of his intention are two different things. He is bound, and those who take after him are bound, by his expressed intention. If that expressed intention is unfortunately different from what he really desires, so much the worse for those who wish the actual intention to prevail.”
This somewhat ex cathedra statement of the law is qualified by the equally well-known rule, that where the words used are unclear and ambiguous, the intention must prevail.
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For the latter proposition, we have no less an authority than Lord Cottenham who said in Lloyd v. Lloyd (1837) 2 My. & Cr. 192 at p. 202 as follows:
“If the provisions are clearly expressed and there is nothing to enable the Court to put upon them a construction different from what the words import, no doubt the words must prevail; but if the provisions and expressions be contradictory, and if there be grounds, appearing upon the face of the instrument, affording proof of the real intention of the parties, then that intention will prevail against the obvious and ordinary meaning of the words.”
It is not suggested that the words used in either of the two documents are ambiguous or give rise to any real problems of interpretation. It seems to me therefore that whether the deeds in question are leases or mortgages must be determined by the words which the parties used. If that is the right criterion for determining the intention of the parties, then there should be no difficulty at all in holding that a contract by which a landlord demises unto a tenant, a term of years certain in consideration of rent is a lease. Similarly, a contract by which property is transferred by a borrower to a creditor as security for debt is a mortgage. In so far as the words used are the only proper index to the parties’ intent, I think it is manifest that the documents whose construction is in question, are leases. They have all the attributes of a lease and indeed employed the formal words which time and conveyancing practice have hallowed. The only unusual feature of them, is that all the rent reserved was paid in advance. Nobody suggests and I should not assent to any argument that that fact alters the legal nature of these documents. The learned trial judge, dealing with the question as one primarily of interpretation, held that both documents were leases.
He considered it absurd that he should be driven to construe these documents as mortgages simplybecause the documents contain recitals which show that, at the date of the contracts, the grantor was in financial difficulties. Not only the reasoning, but the conclusion of the learned judge appeals to me and it is one in which I ought to concur unless I am persuaded to the contrary. It is now necessary to examine the argument by which it is submitted that contrary to the clearly expressed intention of the parties, the judge ought to have held, as a matter of construction, that the documents evidence a loan transaction and that the premises which are said to be demised for a term of years certain, were merely a security for repayment of the loan.
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It is right that I should say that Mr. da Rocha who appeared for the appellant himself conceded that the problem which this case poses is simply one of construction and that the intention of the parties must be gathered from the document itself. To that extent, we are in agreement. Counsel then referred us to the fairly comprehensive recitals in the document of 14 February 1945, and submitted that in view of the difficult financial situation in which the so-called lessors found themselves and which the document recites, the transaction which the parties intended to enter into was merely a loan in which the premises said to be demised, were intended to be conveyed as security for repayment. It is said, equity looks to the intent and not the form and that the learned trial judge was unduly preoccupied with the formalities of a legal rather than any other form of mortgage. It is also said, that in trying to discover the intention of the parties, one also ought to look at the value of the property. It is said that while rents then fetched £300 per annum, the rent reserved works out at about £75 per year and it is said the learned trial judge overlooked what, counsel said, was the equitable position.
The head and front of counsel’s submission that the documents in question fail to accurately represent the parties’ intention, is founded on the recitals in the deeds. It is not suggested that the operative part of either document used words appropriate to any other transaction save a lease. It is in the recitals that the appellant’s family’s difficult financial circumstances were set out and their dire need of money was expressed as the motivating factor for the grant of the lease. If there had been no recitals, it does not seem to me possible that the argument which is here made could have been made. It is therefore necessary to look at the role of recitals in a deed. Recitals are said to be the introductory or a narrative of what has led up to the necessity or desirability of executing the deed. I believe it to be well-settled law that the recital does not control the operative part of a deed where the operative part is clear. In Mackenzie v. Duke of Devonshire [1896] A.C. 400 at p. 406, H.L. Lord Halsbury L.C. said: “but I never in my life heard of the language of a deed which contained a perfectly unambiguous provision being twisted from the natural ordinary meaning of the words by a preliminary statement of what the maker of the deed intended should be the effect and purpose of the whole deed when made.”
In the same case, at p. 408 Lord Davey expressed his concurrence to that proposition as follows:[p.258] of [1967] GLR 237
“I take it to be a settled principle of law that the operative words of a deed which are expressed in clear and unambiguous language are not to be controlled, cut down, or qualified by a recital or narrative of intention.” If, as I believe to be the position, and counsel has not urged the contrary, the operative parts of the two deeds are clear and unambiguous, then the recitals are superfluous and for the purpose of construing these documents, can safely be disregarded. That done, the contention of counsel becomes entirely bottomless. But it seems to me that the recitals in the two deeds in question fulfilled the real object of recitals. Thelessors were not themselves the owners of the property and they not only expressed the capacity in which they conveyed, but also set out the reasons which prompted the grant. Until it was finally exploded by the Court of Appeal in 1955, in Golightly v. Ashrifi (1955) 14 W.A.C.A. 676, it was generally thought to be the law that stool land could not be alienated save to pay off a stool debt, a law which was held by analogy to apply to alienations of family land. It was therefore eminently prudent of the grantors in 1945 to recite that they had to grant this lease to pay off a family debt. But in so far as these recitals provide any index to the intention of the parties as to the nature of the transaction they agreed to enter into, it affords, in my opinion, the clearest refutation of counsel’s contention that the mutual intention of the parties was to enter into a loan contract, repayment of which was to be secured by a mortgage of the premises in question. Both documents after reciting how the debt arose went on to state that: “The lessors applied to the lessees to provide the necessary funds to liquidate the balance of the judgment debt above-mentioned and to take the premises on lease on the terms and conditions hereinafter appearing.” (The emphasis is mine.) It seems to me therefore that the operative part of the documents faithfully recorded the anterior agreement of the parties. A money loan is usually a sum of money lent to be returned with or without interest. Nothing in the recitals or any part of the documents in question lends the slightest colour to any suggestion that the parties mutually intended that the money which the respondents advanced to the appellant’s family, was to be returned and that the premises said to be demised, were intended to stand only as security. If, contrary to my view, the true intention of the parties, is what counsel contends, then I am bound to say that the words they have used have entirely failed to give expression to their intentions and in that wise, I can do no more than borrow the
[p.259] of [1967] GLR 237
words of Sir Gorell Barnes in Simpson v. Foxon [1907] P. 54 at p. 57, which I have already adverted to, and say that, the appellant’s family and those who take them, are bound by their expressed intention. For my part, I entirely reject the argument that the transaction between the parties and which the documents evidence, “is substantially one of moneylending.” I will take the liberty of permitting myself a rhetorical question. Suppose a man who is in dire need of money to meet his children’s educational expenses, by deed disposes of his house to raise funds. And suppose further that the contract of sale recites that he was obliged to do so because he was in financial stress. Can it then be argued, as a matter of construction that the contract was “substantially a moneylending transaction” because of the recital of the vendor’s plight at the time of the transaction? If that argument is not tenable on those facts, it is difficult to see how it can be said to be valid on the facts of this case. It is also argued, as I said, that equity looks to the intent not to the form of the transaction and that the learned judge failed to consider the equitable position. For myself, I fail to see the force of this argument. Where the form adequately shows the intent, equity does not interfere. It has never striven to override the common law. As has often been said, equity presupposed the existence of the common law which it supplemented. And where documents are shown either by fraud, accident or mistake not to represent the true intention of the parties, it supplemented the common law remedies by providing the reliefs of rescission, rectification and cancellation. If the appellant’s family had considered themselves entitled to seek any equitable relief, it completely passes my understanding why they did not invoke the equitable jurisdiction of the High Court and seek any of these known equitable reliefs. In my opinion, the appellant cannot invoke any equitable rules to defeat the clearly expressed intention of the parties. It is also said that the learned judge was wholly preoccupied with the form of legal mortgages as if those were the only mortgages known to law and in this wise, ignored the fact that equitable mortgages are alsobrecognised by the law. This is hardly anything like a valid criticism of the learned judge’s approach to theproblem posed in this case. Equitable mortgages are created in one of three ways, namely, first, by deposit of title deeds; secondly, by agreement to grant a legal mortgage supported by memorandum or act of part performance and thirdly, by agreement, supported by sufficient evidence in writing or sufficient act of part performance, not to give a legal mortgage but to appropriate a certain piece of property as
[p.260] of [1967] GLR 237
security for a money loan. Nobody suggests that if the documents sought to be construed are in fact a mortgage, they would be other than a legal mortgage. That being so, it would, in my opinion, be purely pedantic for the learned trial judge to engage in the wholly unnecessary exercise of setting out the various forms of equitable mortgages.
It is also submitted by counsel for the appellant that it is necessary in discovering the intention of the parties to take into account the value of the property said to be demised at the time. It is said that while the property fetched an annual rent of £300, the rent reserved in the lease does not exceed £75 per annum.
That argument however overlooks the fact that the respondents were paying 50 years rent in advance and were doing so to accommodate the appellant’s family. In those circumstances, it seems to me, that the respondents would wish to drive a hard bargain. But I do not think it resulted in an unfair transaction or what in the eyes of equity, would be a harsh and unconscionable bargain. The usual capitalisation value of property is to take ten years’ rent otherwise technically called ten years’ purchase. By that reckoning, the fair market value of the property in question in 1945 was £3,000. The respondents paid to the appellant’s family a sum which is £350 in excess of this sum, and the latter has vested in themselves, the reversion—a valuable proprietary estate which in less than 30 years hence will fall into possession. I think the appellant’s family must be held to their bargain and that an argument which goes perilously near to saying that consideration for a contract must not only be real but must also be adequate ought not to be allowed to defeat the clearly expressed intention of the parties.
I believe I have said enough to indicate the reasons which, I think, entitle us to concur in the learned trial judge’s conclusion but my brother Ollennu whose experience in these matters is unrivalled, considers that the contention of the appellant’s family ought to succeed. He reinforces the appellant’s arguments with three local cases about which counsel for the appellant was apparently unaware and in his judgment, the principle of those cases is applicable to the instant one. These are the cases of Dapaah v. Poku (1950) Oll.C.L.L. 173, W.A.C.A.; Awuku v. Agbemakpettor (1949) D.C. (Land)’48-’51, 137 and Amusu v. Fenuku (1952) D.C. (Land) ‘52-’55, 75. I have not been able to locate the second of those cases, but have read and considered the first and the last of those three cases. They are, in fact, fully covered in my brother Ollennu’s invaluable book on Principles of Customary Land Law in Ghana.
[p.261] of [1967] GLR 237
Of the two cases, only the first is a decision of the Court of Appeal, the second is a judgment of the High Court but both seem to have been decided on the same principles and had I considered their ratio relevant to this case, I should wholeheartedly apply them. But both cases proceeded on the agreed premises that the plaintiffs received a loan from the defendants and as property was thereafter transferred by the borrowers to the lenders, the court had no difficulty in holding that the properties were transferred as security for the repayment of the loans. In Dapaah v. Poku, the headnote reads: “The appellant mortgaged a cocoa farm to the respondent to secure a loan of £60. The agreement provided that the appellant should recover the farm after 13 years. After 4 years, the appellant sought to redeem the mortgage 0. . . The trial court held that the mortgage must continue for the 13 years [but the Court of Appeal held that] the appellant should be allowed to redeem the mortgage.”
The Amusu v. Fenuku case is hardly different. In that case the plaintiff’s family between 1925 and 1937raised nine separate loans from the defendants and the parties executed an agreement whereby the plaintiffs purported to lease a creek to defendants for 45 big floods. In 1950, the plaintiffs tendered to the defendants a sum of money which they claimed represented the balance of principal and interest.
Although the defendants originally pleaded that the transactions were not a pledge, at a certain stage of the proceedings, they admitted that they were. Thus the controverted issue became: how much should beNpaid by way of principal and interest to redeem the pledge?
As in both cases, the contract between the parties was a loan contract, and as in both cases, the properties were transferred as security for repayment of the loans, it would seem to me, with great respect, that these cases have no affinity with the present one. Indeed in the Poku case, Blackall P. contrasted a loan contract with a contract of sale and said at p. 174, “Now the essence of a loan in contrast to a sale is that what the lender looks for and is entitled to get is his money back with reasonable interest.” As I have endeavoured to say, that is precisely the contract which the parties here did not enter into. And it would seem to me that there was good reason why in 1945, the appellant’s family did not wish to enter into a loan contract. The family seemed to have been, at least from a financial standpoint, in needy circumstances. If they had asked for a loan and secured it with the property in question, the period of repayment would have been the usual one of between four to five years. If they should fail to repay the loan on the due date, the respondents would no doubt realise the security by exercising their right of sale and this
[p.262] of [1967] GLR 237
property which they were anxious to save, would have been lost to the family. If the family did not think they could raise nearly £4,000 in five years, their wisest course would have been to grant a lease of these premises. In this way, they would be making the best of both worlds because, they would have saved this property and would have been under no obligation of paying back any money to the respondents. The latter would also be disentitled to ask for the return of their money or take any steps against the property. That seems to me to be the reason why the appellant’s family chose to pay back the money in kind and that was why in the recitals, they said they requested the respondents to provide them with funds to liquidate their judgment debt and to take the premises on lease. One other significant difference between the cases relied on by my brother Ollennu and this one, is that it would seem that in those cases there was a full trial and the documents relied on were tendered in evidence. Thus, the documents became one of the pieces of evidence by which the court was invited to determine the true intention of the parties. It was therefore possible for the court to arrive at a conclusion as to the intention of the parties by evidence aliunde the documents. That is what the appellant family sought to do by an application to adduce parol evidence, but in this, they were unsuccessful. It follows that unlike the cases referred to by my brother Ollennu, the court in the instant case, had to determine the true intention of the parties by construing the documents and the documents alone. I think in doing so, the only assistance the court could get was from the laid down canons of interpretation. In my opinion, there is no room for applying the provisions of the Loans Recovery Ordinance to the facts of this case.
In the end therefore, I give the same answer to the questions raised in the originating summons as the learned trial judge, namely, that on a true construction of the deeds of 7 February 1944 and 14 February 1945, the transactions evidenced thereby are in substance and in form, leases and that the latter deed having superseded the former the latter should run in accordance with its tenor. I have, since committing my opinion into writing, read the judgment of my brother Azu Crabbe and in view of what he said, I am in no illusion as to what the result of this appeal will be. It will be, of course, as my brothers say, but in so far as I have a vote in this case, I should cast it firmly for dismissing this
appeal.DECISION
Appeal allowed.
L. F. A.
