Mortgage -
Sale without due notice
Appellant's predecessor in title
(deceased K.N.) mortgaged three
farms to the respondent Kwaku
Atakora by deed containing a
power of sale with a proviso
that this power shall not be
exercised unless there was
default in payment" on demand,
and also for ... one month next,
after a notice in writing
requiring such payment shall ...
have been given" (full text in
judgment below). The loan was
£220, repayable after a certain
tiine, but before that time was
up the respondent (Kwaku Atakora)
gave the appellant (as successor
to the deceased) notice to pay,
and without further notice the
farms were sold, after the date
o~ which payment was due, for
£378.
There were
two other mortgages already due
for payment, one for £225 in
favour of K.E., the first
co-defendant, and the other for
£48 in favour of K.A., the
second co-defendant. The
respondent Kwaku Atakora and the
first codefendant paid off the
second co-defendant, and shared
the proceeds of sale.
The
appellant (as plaintiff below)
sued the respondent Kwaku
Atakora (as defendant) claiming
£158 (viz. £378, the proceeds of
sale, less £220 due to this
defendant) which would have been
the balance but for the other
mortgages, or in the alternative
to set aside the sale or to have
damages. That defendant caused
the other three co-defendants
(the third being the auctioneer)
to be joined. The trial Judge
dismissed the claim.
The
plaintiff appealed and his main
ground was that the notice of
intention to sell was not legal
or proper in that when it was
given the debt was not due for
repayment under the mortgage
deed, and the sale was therefore
wrongful.
Held:
The proviso in the deed
meant that if on the date on
which repayment was due, after
demand, the debt was not paid,
then the mortgagee, if he wished
to exercise the power of sale,
must give notice in writing
requiring payment and could only
sell if there was default for a
month after notice. The sale was
therefore wrongful, but as the
sale took place about three
months after the due date and
there was no evidence that the
appellant could have repaid the
debt or that he suffered any
damage from the wrongful sale,
his appeal would be dismissed.
Case
cited:
Selwyn
v. Carfit (1888), 38
eh. Div. 273.
Appeal
from Supreme Court by plaintiff:
No. 30/50. I<.
Opoku-Akyeampong for
Appellant.!
k A.
Bossman for Respondents.
The
following judgment was
delivered:
Manyo-l(lange, J. This is an
appeal from a judgment of the
Divisional Court. Kumasi,
dismissing the
plaintiff-appellant's claim for
£158, being balance or surplus
of proceeds of sale of mortgaged
property or to account for the
said surplus or, in the
alternative to set aside the
sale of the mortgaged property.
three
cocoa farms, on the grounds:
[pg 4]
" (1)
Invalidity of the sale due
to sale taking place before
power of sale had
arisen.
(2) For
not exercising the power of
sale in accordance with the
rules required by the law,
or. in the alternative for
£450 (Four hundred and fifty
pounds) damages for wrongful
sale of the said cocoa
farms."
The facts
in this case are brief! y as
follows:
One
Kwabena Nkromah by Exhibit"
A ", a deed of mortgage
dated the 15th August, 1947,
mortgaged to the first
defendant-respondent three
cocoa farms on land,
described as "Namon" at
Kubin, to secure a loan of
£220, repayable within a
period of eight months from
the date of the mortgage.
Exhibit" A " contained the
usual power of sale but the
deed provided that " the
power of sale herein before
contained shall not be
exercised unless and until
default shall be made in
payment of the total sum of
£220 or any part thereof by
the mortgagor to ·the
mortgagee under this
security as aforesaid on
demand, and also for the
space of one calendar month
next, after a notice in
writing requiring such
payment shall by or on
behalf of the mortgagee have
been given to the mortgagor
or left at the usual or last
known place of abode of the
mortgagor or one of his
executors or left upon or
affixed to some part of the
said hereditaments or on
some building thereon ... "
Kwabena
Nkromah died before the due
date and the
plaintiff-appellant who
became Kwabena Nkromah's
successor according to
native law and custom was
served with a notice to pay;
the notice is Exhibit" 3 "
and is dated 2nd January,
1948. The notice although it
was addressed to Kwabena
Nkromah, was served on his
successor,
plaintiff-appellant: see
page 7 of the record.
After the
notice of 2nd January, 1948,
no other notice was served
on plaintiffappellant and,
the mortgage debt not having
been paid on 16th April,
1948, the due date, the
mortgaged farms were sold on
the 22nd April, 1948.
When the
notices of the sale were
filed, Kwame Ewuah, first
co-defendantrespondent
notified the auctioneer that
he was holding a prior
mortgage on the farms
advertised for sale; his
mortgage is Exhibit" 1 ".
Then Kwaku Addae, second
co-defend ant-respondent
sued plaintiff-appellant,
defendant-respondent and the
auctioneer, third
co-defendant-respondent,
claiming for a declaration
that by a mortgage dated 3rd
August, 1948, he was a
mortgagee of one of the
farms advertised for sale
and for an injunction to
restrain the sale, pending
the hearing of his claim.
Kwaku Addae's mortgage is
Exhibit" 2 ".
Upon
investigation by the
auctioneer, it was
discovered that the three
farms mortgaged to
defendant-respondent were
also mortgaged to Kwame
Ewuah, first
co-defendant-respondent, and
one of them to Kwaku Addae,
second
codefendant-respondent.
When this state of affairs
was discovered, it was upon
the advice of the
auctioneer, agreed that
defendant-respondent and
first co-defendantrespondent
should payoff the second
co-defendant-respondent for
him to withdraw his action,
so as to enable the sale to
proceed and for the
defendantrespondent and
first
co-defendant-respondent to
pay themselves out of the
proceeds. This was done and,
on the sale of the farms,
net proceeds of £378 was
realised and this the
defendant-respondent and
first
co-defendant-respondent
shared towards payment of
their respective loans of
£220 and £225 and the £48
paid to Kweku Addae second
co-defendant-respondent.
Had there
been no other incumbrances
on the farms, the
plaintiff-appellant should
have been cntitled to a
surplus of £158 and it was
for this sum he claimed or
in the alternative to set
aside the sale. The
plaintiff-appellant sue4
only the
defendant-respondent;. at
the relltest of the latter,
the first, second and third
co-defendants-respondents
were joined. I should here
point uut that on 22nd
April, 1948, when the farms
were sold, there had been
default under all the three
mortgages .[pg
5]
The
learned trial Judge 4'hiS
judgment in effect found as
a fact the three farms
mortgaged to thp
defendant-respondent had
been previously mortgaged to
the first co-defend
ant-respondent and one of
them to the second co-defendantrespondent.
He also found as a fact that
there was nothing after the
net proceeds of the sale had
been used by the
defendant-respondent to pay
himself and the other two
previous mortgagees. These
findings in my view were
supported by the evidence
and on them he gave judgment
for the defendant and co-defendantsrespondents.
The
learned trial Judge did not
give his reasons for giving
judgment against the
plaintiff-appellant on his
alternative claim to have
the sale set aside or in the
alternative for £450
damages.
The
plaintiff-appellant filed
seven grounds of appeal. The
only grounds of any
substance are grounds one,
three and five which taken
together, challenge the
validity of the sale on the
ground of the wrongful
exercise of the power of
sale, and ground six which
alleges that the
plaintiff-appellant should
have been awarded damages
for the wrongful sale of the
farms. Ground six therefore
depends on grounds one,
three and five which were
argued together. The real
complaint is to be found in
ground five which alleges as
follows:
" That
the alleged Notice of
intention to exercise the
power of sale by the
auctioneer at the instance
of the first defendant dated
2nd January, 1950, was not
legal and proper, in that at
that time the date of
repayment under the mortgage
deed was not due."
In
support of this ground
Counsel for the appellant
referred to the requirement
for written notice in the
mortgage deed which was a
condition precedent to the
exercise of the power of
sale. The deed required
inter alia that the
power of sale shall not be
exercised unless default had
been made " for the space of
one calendar month next
after a notice in writing
requiring such payment shall
by or on behalf of the
mortgagee have been given to
the mortgagor ... ". He
contended that this
requirement was not complied
with, and that the letter
Exhibit " 3 " was no
compliance, because when the
letter was served on the
plaintiffappellant, the
repayment of the debt was
not due; therefore when the
farms were sold there had
not been such a default as
could give rise to the
exercise of the power of
sale and referred to the
case of Selwyn v.
Garfit.
Counsel
for the defendant-respondent
has endeavoured to
distinguish Selwyn v.
Garfit from this
case. He submitted that in
Selwyn v. Garfit
the mortgagor was by
virtue of the proviso to the
power of sale given a
further three months after
the due date to pay and that
the three months had not
expired when the power was
exercised. He contended that
in this case the power
became exercisable. the
moment there was default on
the due date provided one
calendar month's notice had
been given of the intention
to exercise the power, no
matter when that notice was
given, and that exhibit "3"
was a compliance with that
provision.
I am
unable to accede to this
argument. There would have
been some weight in the
argument, if the provision
had only required the
mortgagee to give. the
mortgagor notice of
intention to sell. In this
case, like Selwyn v.
Garfit, the provision
said, if on the due date
that is 31st January, 1948,
after demand, the debt were
not paid, then the mortgagee
if he wished to exercise the
power of sale must give
notice in writing requiring
payment and could only sell
if there were default for
the space of one calendar
month from the date of the
notice.
The only
distinction between the two
cases is the period of grace
after notice requiring
payment; the period being
three i1lrbnths in Selwyn
v. Garfit and in
this case one month. The
letter exhibit" 3 " in my
view is nothing more than
notice of an intention to
act in accordance with the
mortgage deed if the debt
were not paid on the due
date. It follows, that the
mortgagor was not given
[pg 6]one
month's notice requiring him
to make payment, when the
farms were sold, and
therefore the sale was
wrongful. ) .
For this
wrongful sale, the
plaintiff-appellant claimed £450
damages; but I find nowhere on
the record evidence of any
damage suffered by the
plaintiffappellant who, in his
own evidence, admitted that
after the receipt of exhibit ."
3 " he was unable to repay the
loan. There is also evidence
that plaintiffappellant when
invited to witness the sale
which was on the 22nd April,
1948, nearly three months after
the due date, refused to attend
the sale stating, that his
attendance would not prevent the
sale.
There is no
evidence that the
plaintiff-appellant would have
been in a position to repay the
loan even if one month's due
notice had been given before the
power of sale was exercised. It
follows that plaintiff-appellant
could only have suffered .
nominal damages and in fact he
proved no damages as the result
of the wrongful sale. This
appeal in my view should be
dismissed with costs assessed at
£15 10s. 6d.
Foster-Sutton, P. I concur.
Coussey, J. I concur.
Appeal
dismissed.
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