MARFO AND OTHERS v. ADUSEI [1965] GLR 320

DIVISION: SUPREME COURT

DATE: 3 MAY 1965

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

CASES REFERRED TO

(1) Marfo v. Adusei [1964] GLR 365, S.C.

(2) Dicker v. Angerstein (1876) 3 Ch. D. 600; 41 JP 53; 45 L.J. Ch. 745; 24 W.R. 844.

NATURE OF PROCEEDING

APPEAL from a judgment of Bannerman J., as he then was, given on 17 January 1963 in the High Court,

Kumasi. The facts as summarised in the headnote are taken from the judgment of Acolatse J.S.C.

COUNSEL

Osei Bonsu for the appellants.

Hayfron-Benjamin, Sen. for the respondent.

JUDGMENT OF ACOLATSE J.S.C.

This is an appeal against the judgment of Bannerman J. given on 17 January 1963, in the High Court,

Kumasi, in favour of the plaintiff-respondent, hereinafter called the plaintiff. The defendants-appellants, hereinafter called the defendants, have appealed from the judgment against them to this court on several grounds. The proceedings were commenced in the trial court at the instance of the plaintiff upon a writ of summons issued out on 4 February 1961, in which the claim was for:

“(i) One thousand pounds (£G1,000) damages for loss sustained as the result of the wrongful and unlawful sale of the plaintiff’s cocoa farms situate at Atamho (as described in paragraphs (2) (b) and

(8) in the statement of claim) which cocoa farms the defendants had no right to sell, being as to

£G660 special damage and as to £G340 general damages.

(ii) An order of court setting aside the alleged sale of the said cocoa farms.”

The material complaints averred in the statement of claim put shortly were that the fourth defendant purchased at an auction sale conducted by the third defendant, a licensed auctioneer, at the instance of the first and second defendants, two cocoa farms under a wrongful and unlawful sale in respect of the farm described in paragraph (2) (b) and that the first defendant had no right to exercise his power of sale under a mortgage deed executed by him, the plaintiff, because the debt had been paid off and secondly the first defendant and second defendant had caused the third defendant to illegally sell the other farm situate at

Atamho which was not covered by the mortgage deed as security.

The plaintiff’s case was that by a deed of mortgage dated in or about May 1957, he mortgaged two cocoa farms to the first defendant to secure a loan and interest amounting to four hundred and fifty pounds

(£G450), as described under paragraph (2) in the statement of claim, as follows:

[p.322] of [1965] GLR 320

“(a) One cocoa farm situate at Biemso on a land called Mbotorno. (b) One cocoa farm situate at Biemso on a land called Atamho and having boundaries with a forest on one side and a timber road on the other side.”

The present proceeding was the culmination of an action instituted by the plaintiff herein against the first defendant herein, as the mortgagee, in the High Court, Kumasi, claiming that in 1958 the first defendant wrongfully and unlawfully sold the cocoa farm described in paragraph (2) (a) (supra). Judgment, in exhibit 3, was given on 29 June 1960, in favour of the plaintiff, the mortgagor under the mortgage deed, that the said sale was unlawful, and inter alia, in the following terms:

“I therefore give judgment for the plaintiff, set aside the sale of the plaintiff’s cocoa farm set out in this statement of claim, order an account of the proceeds of the cocoa collected from the time of the sale date of judgment, but as no damage has been proved, I award no damage with costs assessed at out of pocket expenses £G10 7s. 6d. Counsel’s fees assessed at £G26 5s.”

As a result of the above judgment the plaintiff, the mortgagor herein, by letter submitted a statement of accounts to the first defendant, the mortgagee, on 9 July 1960, under exhibit A, showing the sum of

£G265 as the balance of account due to him the plaintiff, to be paid by the defendant. This letter contained a warning that on “failure to forward this balance to me, I have prepared to take another step against you in claiming this amount.”

The first defendant took no notice of the plaintiff’s letter of 9 July 1960, including the statement of account. On 20 July 1960, the first defendant, through his solicitor, informed the plaintiff that his farm at

Mbotorno was sold at a public auction for £G50 on 18 June 1958 and that, after deducting expenses, an amount of £G40 19s. was realised in part-payment of the mortgage debt of £G450 leaving a balance of

£409 1s. The plaintiff was also informed that the judgment of the court on 29 June 1960 declaring the sale as wrongful and setting it aside had been appealed against. The letter continued to give and serve upon the plaintiff one calendar month’s notice expiring on 31 August 1960, requesting the plaintiff to pay the remaining balance of £G409 1s. failing which the first defendant would proceed to attach and advertise for sale the farm at Atamho in pursuance of his power of sale contained in the mortgage deed executed by the plaintiff in or about May, 1957.

[p.323] of [1965] GLR 320

An auction notice of attachment, exhibit C, dated 3 September 1960, was issued by the third defendant, the licensed auctioneer that upon instructions from the first and second defendants herein he was to sell on 17 September 1960 the property under-mentioned, described as, “All that cocoa farm situate at Biemso on a land called Atamho and bounded on all sides by forest and timber road.” The property was eventually sold on 24 September 1960 by the third defendant to the fourth defendant, the purchaser herein, as the highest bidder at the auction sale.

Evidence led by the plaintiff and accepted by the learned trial judge was that some time in October 1960 the plaintiff went to the farm and saw the fourth defendant cutting plantain from the said farm. The fourth defendant on being challenged as to his authority for being on the farm claimed that he had purchased the farm at Atamho described in the mortgage deed and another farm of the plaintiff’s at Atamho bounded on all sides by a road only. The plaintiff alleged that the fourth defendant loaded a seven ton truck with

2,640 bunches of plantain and drove away. As a result of the purported sale he also lost 132 loads of cocoa for three years. He claimed only for 1960-61 cocoa season, the proceeds therefrom at £G3 per load amounting to £G396; 2,640 bunches of plantain at two shillings each amounting to £G264. He therefore claimed by way of special damages a total of £G660; he also claimed £G340 general damages.

I should here point out at this stage that the defendant, in that case, being aggrieved with the judgment in exhibit 3 affecting the farm in paragraph (2) (a) of the statement of claim had appealed to the Supreme Court and it was listed as Civil Appeal No. 62/62 of 25 May 1964. The first defendant, however, pending the determination of the said appeal in the Supreme Court, caused the farms in the present action, as described in paragraphs (2) (a) and (8) in the statement of claim, to be sold by the third defendant on 24

September 1960 alleging a default in the payment of the remaining balance of the mortgage debt after giving the plaintiff due notice of the intended sale in exhibit B. It cannot be gainsaid that it was a big risk the first defendant took by attaching and selling the farms, the subject-matter of this action. It was a gamble which turned out well, for the Supreme Court, in the Civil Appeal No. 62/62 delivered its judgment on 25 May 1964 in his favour and allowed the appeal and set aside the judgment in exhibit 3, declaring that “at its very best, the sale would merely be irregular, not illegal. Therefore the respondent’s remedy, if any, will depend upon proof of substantial injury”: see Marfo v. Adusei.1

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It is not disputed in the statement of defence that the first defendant, as the mortgagee, instructed the third defendant, a licensed auctioneer, to conduct the sale of the farm under the mortgage deed, and the third defendant sold the farm to the fourth defendant who was the highest bidder. The second defendant denied having at any time authorised the third defendant or anyone else to sell or in any way interfere with the said farm and averred in her statement of defence that the action against her was misconceived, frivolous and vexatious and must be dismissed. The fourth defendant claimed that the farm he bought and of which he is in possession is the one described in the auction notice and he has taken no more than that. The fourth defendant, however, admitted in cross-examination that roughly he had cut six bunches of plantain and he had been on the farm six times. In his evidence he said that since he took possession of the farm he bought at the auction sale, he had plucked fourteen loads of cocoa in 1961. Each bag, he said, if well loaded contained two-and-a-half loads. He denied that the farm could yield 132 loads a year, saying,

“Even 40 loads you cannot get.” He denied that the plantain, that matured and that which had not matured, would amount to 2,640 bunches. In short, his defence was that the farm which was ordered to be sold was the one mentioned in the mortgage deed.

At the trial, a fierce controversy arose as to whether the first defendant had any right to exercise his power of sale under the mortgage deed since the mortgage debt had been paid off and as to whether he had any right to sell another farm not covered by the mortgage.

The learned trial judge by his judgment in effect found as a fact that the second defendant knew nothing about the sale. Although her name appeared on the auction notice as having authorised the sale, the second defendant in fact never authorised it. He continued, “It is clear from the evidence that the farm was sold on the instruction of the first defendant alone and that the wrong farm was sold. The sale was therefore unlawful.” He found also that the fourth defendant, in spite of his denial, had collected cocoa and plantain from the farm. He then concluded his judgment as follows:

“I am satisfied that as a result of the wrongful act in selling the plaintiff’s farm, the plaintiff lost 132 loads of cocoa valued at £G396 and 1,000 bunches of plantain at two shillings a bunch, total £G100.

I give judgment for the plaintiff for £G496 and I award the plaintiff £G150 damages against the first, third and fourth defendants jointly and severally. I accordingly set aside the sale of the farm.”

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From this judgment the defendants have appealed to this court. The main grounds of appeal argued are:

“2(a) The learned judge erred when he held that `that the wrong farm was sold’ since the auctioneer said he sold that farm described in the deed of mortgage, and the fourth defendant bought no more than appears on the sale’s account.

(b) There was no sufficient evidence on the record to warrant the finding that `The sale was therefore unlawful.’

(c) The evidence does not support the finding that the plaintiff lost `three lorry loads of plantain, total 2,640 bunches at two shillings a bunch.

(d) Since the learned judge himself finds that 2,500 bunches of plantain mentioned by the plaintiff is an exaggeration, there was no basis for awarding the plaintiff damages for 1,000 bunches.

The said figure is too arbitrary, and ought to be rejected.

(f) The fourth defendant being an innocent purchaser for value without notice of any irregularity he acquired a good title and the learned judge erred in setting aside the sale as against him.”

Dealing with the point raised against the finding by the learned judge “that the wrong farm was sold” and that “the sale was therefore unlawful,” I think it is manifestly clear from the evidence that the learned judge was referring to the fourth farm which was described in paragraph (8) in the statement of claim as bounded on all sides by a road only. Learned counsel for the defendants wisely conceded before us that there was evidence that the wrong farm was sold. It follows then that the sale of the farm which is bounded on all sides by a road was not only unlawful but illegal and void ab initio and no title passed under it. For these reasons grounds (a) and (b) referred to supra therefore fail.

Counsel for the defendants submitted in support of ground (f) that the fourth defendant acquired a good title under the sale of the farm described in paragraph (2) (b) of the statement of claim as an innocent purchaser for value without notice. He referred us to the case of Dicker v. Angerstein,2 also Marfo v.

Adusei.3

The English case of Dicker v. Angerstein referred to supra was a case in which a mortgage contained a power of sale to be exercised by the mortgagee after default, with a proviso reciting the “purchaser’s protection clause.” The mortgagee purported to exercise the power

[p.326] of [1965] GLR 320 in favour of a purchaser for value. In a suit by an incumbrancer of the mortgagor to establish his priority over the mortgagee, it was alleged that if the accounts were taken it would show that the security was satisfied at the time of the sale. The court held that the sale, having been made to a bona fide purchaser without notice, was valid, even if the security should prove to have been satisfied.

In the instant case the sale of the farm in question was conducted under a mortgage which contained the

“purchaser’s protection clause.” The mortgage deed was referred to in the case of Marfo v. Adusei.4 It was relied upon by the plaintiff in that case. It contained a “purchaser’s protection clause” which reads as follows:

“PROVIDED ALWAYS that the title of a PURCHASER shall not be impeachable on the ground that no case had arisen to authorise the sale or that the due notice was not given or that the power of sale was otherwise improperly exercised.”

Coote’s Law of Mortgages (9th ed.), Vol II, p. 925, sets out the principle of the law on the rights of parties in a mortgage deed containing this clause in which it states, inter alia, that “In such a case the mortgagee can sell, and make a good title to a bona fide purchaser without notice of the breach of the conditions, and the contract for sale will bind the mortgagor, whose only remedy will be in damages against the mortgagee …”

It is not, however, clear from the finding of the learned judge whether the judgment embraced the farm described in paragraph (2) (b) of the statement of claim being the farm covered by the mortgage deed.

The plaintiff’s claim was that the sale of the two farms was unlawful and he sought the aid of the court to declare the sale invalid and for an order setting aside the alleged sale of the cocoa farms. The concluding part of the judgment runs in these words, “I accordingly set aside the sale of the farm.” Thus there is no definite finding in respect of the farm covered by the mortgage deed which was purchased by the fourth defendant, the issue being “whether the sale of all or any of them was wrongful and unlawful.”

Applying the principles of the law as cited above in respect of a bona fide purchaser without notice I think the sale of the property in the mortgage deed to the fourth defendant is valid and unimpeachable in favour of the fourth defendant. The plaintiff’s claim in respect of the property must fail. Being, therefore, of that opinion, I allow the appeal under ground (f) and hold that the fourth defendant acquired a good title to the mortgaged farm in the form described in paragraph (2) (b) of the statement of claim.

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There now remains only the question of damages which will depend upon proof of any injury suffered by the plaintiff. For the alleged wrongful sale of the two farms the plaintiff claimed £G340 general damages and £G660 special damages. The learned trial judge found as a fact from the evidence that the fourth defendant had collected cocoa and plantain from the farm. There was evidence, accepted by the trial judge, that as the result of the wrongful sale of the farms the plaintiff lost 132 loads of cocoa at £G3 a load valued at £G396 for 1960-61 cocoa season. The learned judge, however, did not accept the evidence of the estimated value in respect of 2,640 bunches of plantain at two shillings each as claimed in the particulars of special damages. He found however that, “From the evidence this figure is rather exaggerated” and awarded instead 1,000 bunches of plantain at two shillings a bunch, total £G100. He then gave judgment of the plaintiff for £G496 and also awarded the plaintiff £150 damages against the first, third and fourth defendants jointly and several.

I find nowhere on the record evidence of how many bunches of plantain were taken from each of the plaintiff’s farms involved in this action. In my opinion, evidence should have been led to prove conclusively the bunches of plantain taken from the mortgaged farm and those from the farm illegally sold, to enable the learned judge to assess the damage suffered by the plaintiff in respect of the farm not covered by the mortgage. The plaintiff in his own evidence said, “The labourers were taking from the farms which had been mortgaged and those which had not been mortgaged and bounded all round by the timber road.” His evidence as also that of his witness was based merely on guess work. Under cross-examination he admitted that he did not count the number of plantain loaded on the truck. The learned judge, however, having rejected the figure given took upon himself the burden of proof and, without any basis whatsoever fixed the figure at 1,000 bunches of plantain at two shillings a bunch.

Counsel for defendants took objection in his submission at the figure arrived at by the learned trial judge and contended that there was no evidence upon which the figure of 1,000 was based. It is difficult to understand, in the absence of any reasons given, how the learned judge came to the conclusion that he was “satisfied that the plaintiff lost 1,000 bunches of plantain” as the result of the wrongful sale of the plaintiff’s farm. There is weight in the submission in support of grounds (c) and (d) and in my opinion there was no basis for awarding the plaintiff £G100 for 1,000 bunches of plantain as special damages.

This award ought to be rejected and the submissions upheld on these grounds of appeal as in fact the plaintiff failed to prove that any bunch of plantain was carried away from the farm

[p.328] of [1965] GLR 320 wrongfully sold to the fourth defendant. It follows therefore that the plaintiff could only have suffered special damages in respect of the proceeds of cocoa from the farm wrongfully and illegally sold which in fact was proved and accepted by the lerned judge at £G396.

For these reasons I will dismiss the appeal in respect of the plaintiff’s farm situtate at Atamho which was not covered by the mortgage and which is described in paragraph (8) of the statement of claim, as bounded on all sides by a road only. I will, however, allow the appeal in respect of the from covered by the mortgage deed, as described in paragraph (2) (b) of the statement of claim, as having boundaries with a forest on one side and a timber road on the other side and set aside the judgment in respect thereof. For that judgment the following is substituted:

The plaintiff’s claim in respect of the farm not covered by the mortgage, and described in paragraph (8) in the statement of claim, “as bounded on all sides by a road only” is allowed and he is awarded damages assessed at £G471 of which £G396 is special damage and £75 is general damage.

Having succeeded in part the plaintiff is entitled to half his costs in this court fixed at £G37 12s. 6d.; he is also entitled to half his costs in the court below which are assessed at 30 guineas.

JUDGMENT OF MILLS-ODOI J.S.C.

I agree.

JUDGMENT OF OLLENNU J.S.C.

I also agree.

DECISION

Appeal dismissed in respect of the farm situate at Atamho, but allowed in respect of the farm not covered by the mortgage.

S. K. D.-B