GOVERNMENT OF GHANA v. GHANA CONSOLIDATED MACHINERY AND TRADING CO., LTD. [1963] 1 GLR 106

DIVISION: IN THE HIGH COURT, ACCRA

DATE: 11TH FEBRUARY, 1963

BEFORE: AKAINYAH J.

CASES REFERRED TO

(1) Mills v. Charlesworth (1890) 25 Q.B.D. 421, C.A.

(2) Adjei v. Dabanka (1930) 1 W.A.C.A. 63

(3) Young v. Abina (1940) 6 W.A.C.A. 180

NATURE OF PROCEEDINGS

INTERPLEADER ACTION claiming for a declaration of title to certain chattels assigned by the judgment-debtors to the claimant on the 14th March, 1961, and which were later assigned to the judgment-creditors on the 12th February, 1962.

COUNSEL

N. M. C. Dodoo for the claimant.

C. C. Lokko for the judgment-creditors.

JUDGMENT OF AKAINYAH J.

This is an interpleader action in which the claimant the Government of Ghana claims for declaration of title to certain chattels seized in execution under a writ of fi. fa. at the instance of the judgment-creditors herein—Ghana Consolidated Machinery and Trading Co., Ltd. [His lordship here set out the respective statement of claim of the claimant and the statement of defence of the judgment-creditors and continued:] On the 31st January, 1963, Mr. Lokko for the judgment-creditors argued a preliminary point taken by him and submitted that:

“(a) On the 4th June, 1962, the judgment-creditors obtained a judgment (exhibit 2) against the judgment-debtors of the sum of £G18, 145 and costs of 700 guineas.

(b) The judgment-creditors base their claim to the chattels on a bill of sale dated the 12th February, 1962,

(exhibit 3).

(c) When the bill of sale (exhibit 3) was executed the judgment-debtors did not disclose to the judgment-creditors that the said chattels had been assigned to Government—the claimant herein. Had the fact been disclosed, the judgment-creditors would not have given the judgment-debtors any credit at all, and exhibit 3 would not have been executed.

(d) The claimant says that it is the owner of the said chattels (traxcavator and crushing plant) by virtue of a deed of assignment dated the 14th March, 1961, (exhibit A) but the judgment-creditors do not admit that the claimant is the owner of the said chattels.

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(e) The claimant is a quasi-mortgagee therefore it only has equitable interest in those goods; because it has not averred that it gave notice to the judgment-debtors in respect of any arrears under the mortgage nor was it alleged that a breach of some provision in the deed of assignment which ought to have been observed or performed by the mortgagor-the judgment-debtors-other than a covenant for payment of the mortgage money and interest. The provisions or requirements are not statutory. They are common law requirements.

(f) The claimant’s deed of assignment (exhibit A) is defective as a legal assignment because, it does not contain provision for notice and demand. It can operate only in equity therefore claimant can enforce it only by coming to court.

(g) The equities in this suit are equal therefore the judgment-creditors who are in possession are entitled to sell the chattels. They should be treated as bona fide purchasers for value without notice and be given priority over the claimant.”

Counsel referred to Halsbury, Laws of England (2nd ed.), Vol. 16, p. 631, and Vol. 13, p. 92, paras. 84-86 in support of his submissions. He conceded that both the claimant’s assignment (exhibit A) and his bill of sale (exhibit 3) are not registrable.

Mr. Dodoo for the claimant in reply submitted that: (a) the claimant obtained legal title to the said chattels by the deed of assignment, exhibit A; (b) that exhibit A is really a bill of sale; (c) that it was executed on the 14th March, 1961, long before exhibit 3 was executed. The claimant is therefore first in time. Counsel referred to Goodeve on Personal Property (9th ed.), p. 152 which reads as follows:

“Where the Bill of Sale is by way of mortgage, the property passes to the grantee subject either to a condition making the transfer void on performance of the condition, as by the payment of money, or to a proviso entitling the grantor to redeem the property by such payment, and thereupon to have it reconveyed to him.” In Mills v. Charlesworth1 Lord Esher M.R. said:

“A bill of sale, in its ordinary meaning, is the document which is given where the legal property in goods passes to the person who lends money on them, but possession does not pass.”

In Adjei v. Dabanka2 it was held that a document expressing the intention to mortgage property but not constituting a legal mortgage is an equitable mortgage. The later case of Young v. Abina3 appears to decide that where property is mortgaged by the conveyance of the legal estate to the mortgagee and a subsequent mortgage of the same property is given to another mortgagee without the first mortgagee reconvening the legal estate, the second mortgage is an equitable mortgage even though the first mortgage debt has been completely liquidated.

[p.109] of [1963] 1 GLR 106

The judgment-creditors do not dispute that the claimant’s deed of assignment dated the 14th March, 1961, exhibit A, was duly executed on the day of the date upon the consideration stated therein. Their contention is that the said assignment did not “confer appropriate provisions and safeguards as required by law to constitute an indefeasible right and power of sale.” Counsel did not cite any authority on the point. In my view, exhibit A contains the necessary safeguards.

I hold therefore that the deed of assignment, exhibit A is a bill of sale which passed the legal property in the chattels to the claimant on the 14th March, 1961, and that the bill of sale dated the 12th February, 1962, purporting to be a mortgage of the same chattels to the judgment-creditors was incapable of taking effect as a legal mortgage and therefore the legal title did not pass. At the date of its execution, the mortgagor’s interest in the said chattels was the equity of redemption which alone passed to the judgment-creditors. I do not accept Mr. Lokko’s submission that the claimant is a quasi-mortgagee. Having held that exhibit A is a legal assignment it follows that the question of equitable priorities does not arise at all. It seems to me that counsel conceded indirectly that exhibit 3 merely created an equitable mortgage, because he submitted that the judgment-creditors should be treated as bona fide purchasers for value without notice of prior encumbrances. That is a plea by a person whose title and/or possession is equitable—what the Roman lawyers called bonorum possessio. It cannot affect or postpone the holder of the legal estate or title.

In the circumstances, I reject Mr. Lokko’s contention and uphold Mr. Dodoo’s submissions and declare that the claimant is the legal owner of the chattels, the subject matter of the suit herein. This ruling disposes of the whole case and therefore there will be judgment for the claimant with 90 guineas costs.

DECISION

Judgment for the claimant.

[Reported by S. A. BROBBEY, ESQ., Barrister-at-Law.]