Land law and conveyancing – Conveyance – Unconscionability – Lease of land with temporary structure at ¢1,000 per annum from 1982 to 2002 – Whether unconscionable – Conveyancing Decree 1973 (NRCD 175) s 18.

The plaintiff leased her land and a temporary structure thereon to the 1st defendant for an annual rent of ¢100 per annum for the first ten years and thereafter by “annual payments in advance”. The 1st defendant paid rent advance of ¢10,000 on 26 October 1981 for a period of twenty years from 28 August 1982 to 27 August 2002. The lease provided further that the lst defendant should pull down any temporary structure on the land and build thereon. The 1st defendant assigned the lease to the 2nd defendant who in turn assigned it to the 3rd defendant. In 1991 the plaintiff sued the defendants for an order to set aside or modify the lease agreement made between her and the 1st defendant in 1972, alternatively for a declaration that the lease was for ten years certain. The judge held that the plaintiff’s claim of unconscionability was rather late in the day as the plaintiff had all along accepted the position. Nevertheless, the judge ordered that the recoverable rent be assessed by the Rent Assessment Committee and the rent so determined be the chargeable rent with effect from 1 January 1991.

Held, Lutterodt JA dissenting, section 18 of the Conveyancing Decree 1973 (NRCD 175) gave the court the power to set aside or modify an agreement. On the facts the agreement was unconscionable and ought to be set aside. The trial judge’s view that the plaintiff had all along accepted the position, even if true, ought not deny her remedy under the Decree.

Per Lutterodt JA contra: From the wording of section 18 of NRCD 175 a party seeking to invoke the aid of the court must lead evidence on the bargaining conduct of the parties, their relative bargaining positions, the value to each party of the agreement reached and the commercial setting and also the purpose and effect of the agreement. There is no evidence of misconduct of the parties during the bargaining e.g. fraud, impersonation, duress, undue influence or pressure; neither was there evidence of the bargaining positions of the parties e.g. immaturity, senility,

poverty or hardship of which the defendant took advantage. The plaintiff failed to adduce evidence on the essential matters and the trial judge rightly rejected the plea of unconscionability.

APPEAL from the decision of the High Court.

Allotei Mingle for the appellant.

Wontumi for the 3rd respondent.

ESSIEM JA. This is an appeal from the judgment of Dove J, delivered on 23 January 1991. The facts are sufficiently set out in the judgment of the court below and I reproduce the same.

The plaintiff, by her amended writ of summons claims under the Conveyancing Decree 1973 (NRCD 175):

“(1) An order to set aside or in the alternative to modify the lease agreement registered as No 2354/73 dated 28 August 1972 and executed between the plaintiff and the 1st defendant on the ground of unconscionability.

(2) Alternatively the lease agreement dated 28 August 1972 between plaintiff and the 1st defendant was for ten years certain upon a true construction of the document.”

The plaintiff is the owner of the disputed land at Osu. She claims to have put up a building on it up to roofing level and had fenced it; she granted a lease of the land with the uncompleted building to the 1st defendant.

The 1st defendant completed the building commenced by the plaintiff and subsequently assigned his interest in it to the 2nd defendant who in turn assigned his interest to the third defendant. It seems to me that the duration of the lease registered as No 2354/73 is the main bone of contention between the parties. In other words what were the terms of the lease agreement between the parties to that agreement?

I shall deal with the state of the land which formed the subject of the lease. The trial court rejected the plaintiff’s claim that she had a building on the land. After examining the evidence, the trial judge expressed the opinion that:

“I would say from the foregoing that there was only a temporary structure on the land when it was leased to the 1st defendant and he constructed a building on it in accordance with the provisions of exhibit C.”

Exhibit C is the lease made on 28 August 1972 between the plaintiff and Shahin Elias Shahin. It is the term granted by this exhibit which is in dispute in this case.

The trial judge’s finding that there was only a temporary building on the land is clearly supported by the evidence on record.

It thus seems to me that the building on the land was not put up by the appellant neither did she even have any uncompleted building

on the land. I agree therefore with the trial judge that the building on the land was put up by the 3rd respondent.

The crucial issue is, on what terms did he put up that building? The answer is contained in exhibit C, the lease made on 28 August between the parties herein, which provides inter alia:

“In consideration of the rents and covenants hereinafter reserved and contained the Lessor doth hereby demise unto the Lessee all that piece and parcel of land situate lying and being at Cantonments Road, Christianborg, Accra aforesaid and bounded on the north by Government land measuring sixty feet (60’) more or less on the south by a road measuring sixty feet (60’) more or less on the east by the vendor’s property measuring one hundred and fifty feet (150’) more or less and on the west by Mabel Dove’s property measuring one hundred and fifty feet (150’) more or less and covering an approximate area of .223 of an acre more or less TO HOLD the premises unto the Lessee from the date of executing the agreement herein yielding and paying therefor yearly during the said term hereby granted the rent of ¢100 (one hundred cedis) per annum the rent in respect of first ten (10) years amounting to ¢1,000 (one thousand cedis) having been paid on or before the execution of these presents (the receipts whereof the Lessor doth hereby acknowledge) and thereafter by annual payments in advance. And it is further agreed between the parties that the lessee of the said plot of land shall at his own cost within reasonable time pull down and remove any temporary structure which may be on the said land and erect and build thereon.”

It is on the basis of this agreement that the respondent built on the land. There is evidence on record that the appellant subsequently took further rent advance of ¢10,000 in 1981. The plaintiff issued a receipt exhibit 1 for this and, as was held by the court below, this amount was to cover ground rents up to the year 2002. The plaintiff’s case before the court was to challenge the lease on grounds of unconscionability. This was fully appreciated by the court below but that court rejected the plaintiff’s claim. In the words of the trial judge:

“It appears from the evidence that the plaintiff had all along accepted the position and her complaint about unconscionability and suppression have come rather late in the day.”

The learned trial judge then held that “the value of money has gone down over the years so that ¢100 which was quite a substantial amount in 1972 is no longer so”. The learned trial judge then concluded his judgment as follows:

“I shall therefore interfere with the lease exhibit C to the extent that I hereby order the recoverable rent to be assessed by the Rent Assessment Committee and that shall become the rent payable as from 1 January 1991.”

From the evidence on record, I accept as true the contention of counsel for the respondent that “what was leased to the 1st defendant was virtually a vacant land”.

Counsel went further to contend that the ground rent agreed upon was adequate. It is needless for me to state that the appellant thinks the rent was inadequate. There is evidence that 1st respondent sold his interest in the property in dispute to George Abou-Bboud, which transaction is evidenced by an indenture dated 15 August 1977 for ¢20,000.

In his submission to this court learned counsel argued that under section 18 of the Conveyancing Decree 1973 the court, before determining unconscionability, has to consider all the circumstances of the case including:

(a) bargaining conduct of the parties;

(b) their relative bargaining positions;

(d) evidence as to commercial setting; and

(e) purpose and effect of their agreement.

The learned trial judge took the view that the plaintiff had all along accepted the position and her complaint about unconscionability and suppression have come rather late in the day. He however held that the rent of ¢100 should be re-assessed by the Rent Officer.

The undisputed fact in this case shows that the rent advance of ¢1,000 works out at ¢100 a year.

When the 1st defendant was cross-examined on 19 December 1990 he gave evidence in part as follows:

“Q What is the cost of the building you put upon the plaintiff’s land?

A About ¢24,000.

Q Do you know how much rent could be paid for the building?

A Not less than ¢50,000.”

Exhibit E shows that the witness was paid ¢20,000 when he assigned his interest in the property. Exhibit 1 shows that on 26 October 1981, Anna Badu Cofie, the plaintiff was paid ¢10,000 for the twenty-year period beginning from 28 August 1982 to 27 August 2002. That receipt was witnessed by one Joseph Anelema Nokoe, a legal practitioner.

In the course of his evidence under cross-examination the 1st defendant stated that the property would fetch rent of “not less than ¢50,000 for the building”.

The plaintiff’s case before the court was that the terms of the agreement between the parties were unconscionable. Although the judge rejected the claim, he nevertheless, made an order for the reassessment of the recoverable rent by the Rent Assessment Committee.

Section 18 of the Conveyancing Decree 1973 (NRCD 175) gives the court power either to set aside or modify an agreement. It provides:

“18 The court shall have power to set aside or modify an agreement to convey or a conveyance of an interest in land on the ground of unconscionability where it is satisfied after considering all the circumstances, including the bargaining conduct of the parties, their relative bargaining positions, the value to each party of the agreement reached, and evidence as to the commercial setting, purpose and effect of their agreement, that the transaction is unconscionable.”

In my opinion looking at all the facts in this case, the agreement in question is unconscionable and ought to be set aside. Consequently the court below erred in dismissing the plaintiff’s case. In my opinion instead of dismissing the plaintiff’s case and referring the matter to the Rent Assessment Committee the court below should have upheld the plaintiff’s case.

The view held by the court below that the plaintiff has all along accepted the position is unfortunate because even if true that fact should not deny her the remedy she is seeking from the court. Is the agreement in question unconscionable? That was the first issue before the court.

The plaintiff-appellant had sought from the court, in the alternative, a declaration that upon a true construction of the agreement between the parties that agreement was for ten years certain. I think that in view of the conclusion I have come to, there is no need to consider the alternative request.

I am of the opinion that the defendants’ cross appeal should be dismissed.

ADJABENG JA. I agree that the appeal be allowed and the cross appeal be dismissed. The facts of this case show clearly that the agreement in question is unconscionable and the court below was wrong in not upholding the appellant’s claim even though he saw it fit to interfere with the rent. I do not think that this court should allow the lease to continue for a period of 50 years for a total rent of only ¢11,000 already paid over ten years ago.

LUTTERODT JA. I have had the privilege of reading the judgment of this court. Unfortunately, I hold a different opinion.

The plaintiff-appellant’s complaints against the decision of the trial court are those contained in her notice of appeal. This is because although she filed additional grounds of appeal, at the hearing, she abandoned them altogether and rested her case on the original grounds. Those two grounds which are closely allied to each other are:

(1) That the learned judge erred in law in holding that on the true construction of the lease agreement it was for a term of 50 years.

(2) That the learned trial judge erred in law in holding that the habendum in the lease was for 50 years.

She never appealed against the order dismissing her claim. Her argument before us is that since the habendum in the agreement, exhibit C, does not specify a lease for 50 years, the learned trial judge erred in concluding the lease was for 50 years. Counsel’s contention is that the learned judge ought, (1) to have avoided the lease altogether, (2) to have held further that since the rent was being paid yearly, it was a yearly tenancy, and (3) consequent upon the finding that it was yearly tenancy, ought to have modified the agreement and made it a yearly tenancy agreement.

The general rule of construction in all written instruments is that the document must be construed as a whole in order to ascertain the true meaning of the several terms. Therefore, in the case of the exhibit C, since there are other clauses which specify the duration of the leasehold agreement, the absence of the specific term in the habendum does not make the transaction void. More importantly, the habendum is not essential. The learned author of Halsbury’s Laws of England 3rd ed Vol 11, para 701, writing on the topic, Purpose of premises and habendum, has this to say:

“The habendum is not essential, and if the premises [i.e. the parts of a deed before the habendum] in addition to defining the grantor, the grantee, and the parcels, define also the estate to be taken by the grantee, or leave that to construction of law, the deed is effectual.”

It follows then the absence of the term of 50 years in the habendum does not invalidate the transaction.

By his cross-appeal, the 3rd defendant who is the present assignee of the unexpired term of the agreement is urging that so much of the decision of the court below that ordered that the recoverable rent in respect of the property in question be assessed by the Rent Assessment Committee, to be payable from 1 January 1991 be rescinded. The grounds (a) and (b) of the grounds of appeal are again interrelated.

Counsel put up a very simple and straight-forward argument in respect of these two grounds. He urged that since the said order is not supported by the weight of evidence and more importantly by the learned trial judge’s rejection of the plaintiff’s claim that the agreement was not unconscionable, he ought not to have interfered with the agreement by varying the recoverable rent.

As my learned brother, the President of this honourable court has stated in his judgment, the plaintiff sought an order either setting aside or modifying the agreement, exhibit C on the grounds of unconscionability. While the plaintiff, in the course of the proceedings, sought for and was granted leave to amend her writ by the inclusion of a second relief, she nevertheless failed to amend her writ accordingly in terms of the rules and consequently the leave so granted became ipso facto void.

Section 18 of the Conveyancing Decree 1973 (NRCD 175) does empower a court to interfere with any lease agreement by either setting it aside or modifying it. But the court can only do so when satisfied from all the circumstances of the case, having taken into account:

(d) evidence as to the commercial setting, purpose and effect of their agreement, that the agreement is unconscionable.

It does follow that when a court concludes that the agreement is not unconscionable it would not have power in law to interfere with that agreement. It seems to me, and I am in good company, for my learned brother came to that conclusion, that the learned trial judge perfectly understood the claim; he appreciated the objections plaintiff had against exhibit C; he examined her claim to illiteracy; he looked into her protestations that she did not understand the value of the agreement and rejected them all. He finally rejected the plaintiff’s claim that the bargain she entered into was unconscionable.

I would, in my humble opinion, unlike my learned brother, the President, hold that this final conclusion is supported by the weight of the evidence. It is true that section 18 of NRCD 175 enjoins the court to take all the circumstances of the case into consideration before deciding whether or not the agreement in question is or is not unconscionable.

But my view is that from the wording of the section, there are certain factors which the court must never ignore. It does mean that for a party to succeed in invoking the aid of the court under section 18 of the Decree he must, in addition to other matters he may choose to adduce evidence on, lead evidence on the following:

Looking through the plaintiff’s evidence, I am afraid I find no evidence on the conduct of the parties during the bargaining. For example, she does not speak of any fraud, impersonation, duress, undue influence or pressure practised on her. The nearest to any such thing is her bare allegation that she suspected a trick was played on her.

Again, I find no evidence explicit or implicit on the relative bargaining positions of the parties, say for example, that she, as a result of immaturity or senility, was in a relatively weaker position or either because she was oppressed, or poor and very needy and needed money badly to meet some urgent financial need, the defendant took advantage of this weakness and forced her into a bargain.

So that I would think once the plaintiff failed to adduce evidence on at least these essential matters the judge was right in rejecting her claim that the agreement was unconscionable.

But even more importantly, I think once he came to that conclusion, he was not entitled in law (under the powers conferred on him by section 18 of the Decree) to interfere with the agreement by ordering a reassessment of the recoverable rent. He seems to have been persuaded so to do by the mere fact that the value of the cedi had depreciated so considerably the recoverable rent was no longer substantial.

It is quite true that our peculiar economic woes as a nation has, over the years, brought about a massive devaluation of our cedi. But, much as our sympathies may go to parties caught in this predicament I think that ground per se would not entitle one to obtain relief under section 18 of NRCD 175.

Secondly, his own conclusion that the plaintiff’s claim fails and so ought to be dismissed is inconsistent with this order. Thirdly, it shows at least that the consideration was fair and adequate. I would thus think the order that the recoverable rent be reassessed is wrong in law and I would on this ground allow the cross appeal.

Finally with respect to ground 1, while I would agree that it is the ground rent payable in respect of the bare land that must in any case be assessed, I would not think the judge erred in law in appointing the Assessment Committee to do the assessment.

Under the Evidence Decree, the court has power to appoint any expert to help it determine any issue placed before it.

Editor’s Note: Judgment reversed, sub nom, Cofie v Shahin 17 January 1995, SC.