Equity

Principle Authority

Equity is the body of rules administered in England by the Court of

Chancery on the one hand, as distinguished from the Common Law
courts on the other hand, before the Judicature Acts of 1873 and 1875

Why Equity Developed

Rigidity in the system of writs hence equity looked at the substance
and not the form

No new writs were being issued by the common law courts

Literal technical application of the law e.g. in respect of holders of

legal interest against beneficiaries

Inadequate remedies in the form of damages e.g. trespass, nuisance,

defamation, breach of contract

Common law favoured the rich land owners – rich people will easily
pay out damages and peasants could not

Strict adherence to doctrine of stare decisis so even where there was a

novel case, judicial precedents will still be followed and this operated
to prevent reliefs

Stereotype

Inability of common law courts to deal with litigants who were

difficult i.e. could not be compelled to attend court or provide
evidence or deliver documents

Why Judicature Act Came About

The courts of chancery and law were reaching different conclusions
on the same matter e.g. trusts, rescission, rectification, etc

Parties were jumping from one court to the other for different
remedies and interlocutory matters e.g. in a declaration for title to land
where the defendant is committing waste

Court of Chancery was recognising rights where the common law

courts did not e.g. trusts

Uncertainty as to which court’s order to follow

It abolished the separate jurisdictions of the courts of chancery and

law and fused the jurisdiction in one high court.

Per the Judicature Act, when law and equity conflict, equity prevails Walsh v Lonsdale

MAXIMS OF EQUITY
Equity will not suffer a wrong to be without a remedy Tahiru v Mireku [agreement for sale of house in instalments to P. D
then sells it to anor. Held: not decreeing specific performance
- Where there are wrongs where the common law didn’t provide a would be contrary to section 3(2) of NRCD 175 which provides
remedy that ss 1 & 2 shall be subject to the rules of equity including the
o Trusts rules relating to unconscionability, fraud, duress and part-
o Inadequacy of damages performance]
o Procedural defects at law
o Rectification Ramia v Ramia [P purchases property in wife’s name and seeks to
o Presumption of advancement convey them to himself. Held: presumption of advancement can be
claimed by his wife. It was a gift]
- There are wrongs for which equity may not provide a remedy
o Where no existence of or injury to a legal right Day v Brownrigg [Ashford Villa to Ashford Lodge. Not every
o Illegal or immoral contract wrong is with a remedy. There must be injury to a legal or equitable
o Conduct of the claimant [Lartei v Fio] right not just damage]
o Want of mutuality
o Contracts of service
o Inability to enforce the order

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Principle Authority

Equity follows the law

Amuzu v Oklikah
- It follows the law by acknowledging a statutory provision that no
legal interest has been created but where injustice will occur, an Ackah v Pergah Transport
equitable interest will be created.
- In determining priorities between competing interests, equity Western Hardwood Enterprises Ltd v West African Enterprises Ltd
follows the law.
- Mortgages/Mortgagor’s equity of redemption Djan v Owoo
- Estate contracts
- Restrictive covenants
- Joint tenancies and tenancies in common
- Dev’t of interest by analogy
- Words of limitation

Where equities are equal, the law prevails Adu-Sarkodie v Karam & Sons [

- Order of creation
- Bona fides
- Notices
- Fraud
- Estoppel

Where the equities are equal, the first in time shall prevail Gyimah & Brown v Ntiri [

- Order of creation
- Bona fides
- Perfection of title/registration
- Notice of creation

Equality is equity
- Trusts where it’s not stated how the beneficiaries are to take the
property

He who comes to equity must come with clean hands Lartei v Fio [5 ropes of land sold, only 4 delivered; recovery 30
years later= laches]

Fofie v Zanyo [Nima house, rents turned into purchase price over
10 yrs; sullied hands never found favour in a court of equity]

Equity acts in personam Anton Piller v Manufacturing Processes Ltd [The order is an order
on the defendant in personam to permit inspection hence he can
refuse to comply but at his own peril]

Equity looks on that as done which ought to be done Walsh v Lonsdale [

He who seeks equity must do equity Adu v Atta [sale of house at Chorkor to borga’s mum; time of
essence, failure of P to show that he was ready, desirous, prompt
and eager to do his part]

Hasnem Enterprises v IBM World Trade Corp [SP to service copier

but P owes D on outstanding servicing]

Delay defeats equity Lartei v Fio [recovery after 30 yrs]

Equity looks to the intent rather than to form Francois v Bank of West Africa

SPECIFIC PERFORMANCE
It’s a decree of the court in exercise of its equitable jurisdiction,
directed at a particular person(s) to compel the discharge of an
obligation already lawfully undertaken.

The reason for the grant of the decree of SP is that the subject-matter Centex Homes Corp v Boag [held by US court that subject matter
of the contract is so unique, rare, antique, or has such sentimental or of the contract, a condo apt unit had no unique quality but is one of
intrinsic value that damages at law would be inadequate compensation 100s of identical units so no SP to compel prospective buyer to

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Principle
for failure to perform.
Compliance is ensured by issuing the decree on pain of imprisonment
for disobedience.
The remedy is available against any person who is within the
jurisdiction of the court.
It’s been argued that specific performance is available in Ghana not
only as an equitable remedy but as a customary law remedy
It’s a discretionary remedy which will not be granted if it will
adversely affect the rights of equity’s darling.
It will not be granted to a tenant in breach of an important term of his
agreement because he who comes to equity must come with clean
hands
Conditions for grant
- Complete and binding contract
- Agreement on key essentials
o Parties
o Subject matter
o Price
- Acts of part performance
- Inadequacy of damages
- It will be fraudulent on the part of the defendant to take
advantage of the contract not being in writing
The remedy will only be granted iro a concluded agreement in which
the parties are ad idem on all the material terms. i.e. there must be a
binding contract.
Equity does not enforce unconscionable bargains. Thus the plaintiff
must show that the contract is fair and reasonable. A contract which is
oppressive or unconscionable will be denied specific performance.
Evidence in writing. Unless a transaction is regulated exclusively by
customary law, it is unenforceable unless it’s evidenced in writing.
Doctrine of part performance. The requirement of writing may be
excused if there is a sufficient act of part performance
Doctrine of part performance. The acts of part performance must be
done on the faith of the contract and must be unequivocally referable
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complete the purchase.
Sobotie v Omabegho [Van Lare J. disagreed in ‘52]
Lartei v Fio [5 ropes of land, put in possession of 4; since both
parties Ghanaian, to be governed by customary law]
Busby v Acquah [although agreement for a lease found to exist,
court refused SP on grounds that the property had been put outside
its reach by subsequent conveyance to BAssil]
Koglex (no. 2) v Field [although discretionary, the relief of SP lies
whenever agreement between parties have got to such a stage that it
would amount to fraud on the part of the other party to refuse to
perform his side of the bargain]
Short v Morris [Sierra Leonean, sale of land, 850 – 1000; there was
no concluded agreement for sale of land since price was not agreed]
Asare v Antwi [P offered to buy one of several plots of land in
Adabraka if price right; plot wasn’t identified, price not agreed; yet
he paid an advance. Order for SP set aside by AC on grounds that
there was no binding concluded contract]
Fofie v Zanyo [there was no evidence of acceptance of the offer to
sell the house, hence no contract to enforce SP]
Campbell Soup Co v Wentz [red cored carrots; soup company could
reject them and pay no damages; farmers would pay damages if
they sold to 3rd parties without consent of company]
Akwei v Agyapong [action for trespass successful because no
agreement btn the parties for sale of land; no drinks presented at
custom, no part payment, nada]
S3(2) Conveyancing Decreee, 1973 (NRCD 175)
Sbaiti v Samarasinghe [an agreement for sale of land to build a
school saved by part performance]
Djan v Owoo [price of property not on receipt but instalments paid
hence SP decreed]
Maddison v Alderson [housekeeper stayed on based on promise of a
life interest in a will. Performing conditions precedent to an
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to a contract such as the one alleged to exist. agreement is not part performance]

Wakeham v Mackenzie [widow moved in with widower on promise

of leaving his house to her when he died. Moving out of her council
flat, taking care of the deceased and paying for her own board and
coal were sufficient acts of part performance]

Doctrine of part performance. Entry into possession of land is Kingswood Estate Co. Ltd v Anderson [statutory tenant under Rents
recognised as ample part performance Restriction Act relocated on promise that she could have the place
for her life but later served notice]

Circumstances under which part performance will not be decreed Maddison v Alderson per Earl of Selborne L.C.

1. Acts preparatory to the completion of a contract

2. Forbearing to engage in an act on condition that a benefit will
accrue to the plaintiff
3. Performing conditions precedent to an agreement
4. Payment of money by itself, without parole evidence of
agreement

In an appropriate case, money may constitute a sufficient part Steadman v Steadman [divorce, part payment of maintenance order
performance of a contract based on agreement to sell interest in property to H., only paid
£100]

The subject matter of specific performance was traditionally only

contracts for the sale and lease of land because every piece of land
was considered unique. However it’s no longer restricted to this
subject matter and will be granted in any case in which the court is
satisfied that it is just to do so.

Jurisdiction was first extended to cover unique chattels or articles of

intrinsic value. Now, it will be granted where there is a breach of
contract and damages or the offer of land/goods of a similar nature
will be inadequate.

Statutory effect has been given to the doctrine of SP in respect of S58 of Act 137; court may decree SP in a breach of contract to
movable property. deliver specific or ascertained goods

Doctrine of mutuality. Equity will not specifically enforce an

agreement unless the remedy is available to both parties.

Doctrine of mutuality. There is want of mutuality where one party is Flight v Bolland
under a disability or incapacity.

The Ghanaian courts appear prepared to re-examine the principle of Lartey v Bannerman [father pays for house in the name of daughter
mutuality because in an obiter, the CA per Amissah J.A. said that but vendor fails to deliver.]
where an infant has performed all his obligations under a contract, the
remedy of SP ought to be available to him.

Misdescription may vitiate the whole contract if it’s substantial as
such the contract cannot be specifically performed.
British Bata Shoe Co. v Roura & Forgas Ltd [BBS agreed to
purchase a freehold but found out R&F only had a life interest. The
SC refused to decree SP for the sellers on the basis that a purchaser
cannot be compelled to take something which is different in
substance from that for which he bargained]

Relief will not be granted to a volunteer. Thus in all cases the plaintiff
must have given consideration for without consideration, there would
be no contract which the relief will be sought for.

Although the law allows contracts under seal to be enforceable even Jeffreys v Jeffreys [
when there is no consideration, no SP will be granted for such a
contract.

Illegal or immoral contracts are not capable of being specifically Ewing v Osbaldiston [decree of SP iro an agreement to act plays for
performed. hire, gain or reward within 20 miles of London and w/o the
authority of the Lord Chamberlain, contrary to the law, was

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Where a contract is legal in the country it’s made but illegal or
immoral in the lex fori, SP will not be decreed.
SP will not be granted of a contract which requires a constant
supervision by the court because equity will not issue a decree unless
it is in a position to enforce it.
SP will not be decreed iro contracts of personal service or those
involving the use or application of personal skill.
Consequently, the courts will not compel an employer against his will
to retain an employee in his employment.
SP will not be decreed iro an agreement to lend or borrow money
Although equity will not decree SP of an agreement to lend money, if
the money has been actually advanced against the promise of a
mortgage, equity will enforce specifically the agreement to create the
legal mortgage.
The courts will not split a contract in order to grant SP of a part only,
unless the contract as a whole is specifically performable or those
parts to be specifically performed are severable.
SP is a discretionary remedy and may be refused based on the conduct
of the plaintiff e.g. no clean hands, delay/laches, acquiescence, against
public policy (immoral purpose)
Equity only intervenes to do justice and will refuse to decree SP if it
will work unnecessary hardship to either of the parties
Specific performance is not available against the Republic
INJUNCTIONS
It is an order of the court to a party to do (mandatory injunction) or
refrain from doing (prohibitory injunction) a specified act.
It is issued when the conduct of the party is likely to cause such injury
to his opponent that it cannot be adequately compensated in damages.
Thus it’s also sought when the act is merely threatened
There must be a pending action before the court in order for an
injunction to be granted.
It’s applied for by way of a motion, with an affidavit in support as
well as a statement of case setting out arguments and relevant legal
authorities
Where an earlier application is dismissed but new material which is
likely to sway the court is discovered, the applicant may re-apply for
the motion.
Classification of injunctions
- Mandatory or prohibitory
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refused]
Hope v Hope [
De Francesco v Barnum
Lumley v Wagner [SP not granted to compel a singer to honour her
agreement as it will be a case of servitude.]
Owusu-Afriyie v State Hotels Corp. [Hayfron-B granted a relief for
reinstatement in P’s position due to wrongful terminated. However
this was reversed by the CA]
Sichel v Mosenthal
Tebb v Hodge [
Ogden v Fossick [agreement for a lease iro coal wharf to be granted
at certain rent if D appointed manager throughout the tenancy at a
fixed pay. SP refused because D’s appointment was a CP and was
not specifically enforceable; also want of mutuality]
Walsh v Lonsdale [P was also in breach of some of the covenants in
the agreement for a lease]
Lartei v Fio [laches for 30 yrs]
S13(1) of State Proceedings Act, 1961 (Act 51) check ’98 Act 555
GPRTU v Danful [P holding themselves out as executive of
GPRTU while disobeying D would become viral]
Order 25 r1 sub-r 12, C.I. 47; it can’t be applied for before the issue
of a writ.
Order 25 r1 sub-r 3, C.I. 47
Vanderpuye v Nartey per Amissah JA it is well known that the
situation of the parties in relation to one another during the
currency of a case may keep altering from time to time and the
courts would find themselves incapable of giving interlocutory
relief if some principle like res judicata were to be introduced into
this area to fix positions which cannot and, indeed, ought not to be
so fixed.
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Principle Authority

- Ex parte or injunction on notice

- Interlocutory/interim or permanent
- Quia timet injunction

A mandatory injunction orders a party to do a particular act

An interim injunction is granted for a specified period after which the

order terminates. It’s applied for before the case is completed.

An interlocutory injunction is granted iro the pendency of the suit and

only ends after the suit has been determined. It’s applied for before the
case is completed.

A permanent injunction is granted at the conclusion of a case, as part

of the judgment.

Quia timet injunction is ordered where no right has actually been

violated but is only threatened

In an application ex parte, the order will not be granted unless the Order 25 r1 sub-r 8, C.I. 47
applicant specifies some irreparable damage or mischief which will be
caused to him if he proceeds in the ordinary way.

The order shall lapse after the expiration of 10 days unless the court Order 25 r1 sub-r 9 & 10, C.I. 47
otherwise directs

Once an interlocutory injunction is ordered, any disobedience will Rep v HC; ex p Afoda [self-help after sheriff ejected D cuz claimed
lead to contempt of court and imprisonment of the contemnor, thus the order was void and incurably bad]
order must be expressed clearly and precisely for the defendant to
know what is expected of him.

An injunction is a discretionary remedy because the plaintiff is not

entitled to it as of right. It’s grant is subject to equitable rights and
principles, however, judicial discretion isn’t subjective but guided by
precedents as well as notions of fairness and justice.

The principles which guide the court to order an injunction or not

include

- Existence of a legal or equitable right

- Triable issues/ a serious question to be tried
- Inadequacy of damages
- Ability to enforce the decree
- Balance of convenience
- Conduct of the applicant
o Unclean hands
o Acquiescence
o Laches
- Undertaking in damages
- Equity’s darling

The applicant need not show a prima facie case in order for an American Cyanamid Co v Ethicon
application for interlocutory or interim injunction to be granted.
Rather, P must show the following Vanderpuye v Nartey [P appointed D agent iro admin of father’s
estate but D sold some of the property and challenged P’s interest.
1. A serious question to be tried HC shouldn’t have dismissed P on grounds of no prima facie case.
2. Inadequacy of damages Indeed there is a serious question to be tried and on the balance of
3. Balance of convenience convenience, the property needed to be protected by injunction else
4. Special cases injustice will be suffered by P]

MUSIGA v Abraham [the bandsmen’s rights hadn’t been violated

since they had no right in the copyright but even if any rights
violated, damages would be adequate]

In order for an injunction to be granted, the claimant must show that C v S [the putative father of the unborn child had no locus standi]
he has a legal or equitable right which is being infringed upon

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There must be a serious question to be tried
In every action where damages will be adequate, an injunction will not
be granted.
Prima facie injunctions are not granted for actionable wrongs for
which damages will be adequate
Where it will be oppressive to the defendant to grant an injunction,
and the damage is one capable of being estimated in money so that
compensation will be adequate, the order will not be granted
Where on the balance of convenience it will be onerous on the
respondent for an injunction to be granted, the court will refuse to
make such an order
There’s a statutory requirement that a successful party upon an
application for an order of interlocutory injunction may give an
undertaking in damages. The successful party must also prove that
s/he has capacity to pay the quantum of money involved.
An injunction will not be ordered if the defendant voluntarily provides
an undertaking to the court that he would refrain from doing certain
acts during the pendency of the action (cut it amounts to an injunction)
Where injunction is sought against a public authority, the court will
consider whether such an order will make it impossible for the
authority to perform its duties
Where there has been acquiescence on the part of the applicant, the
order will not be granted.
If a person having a right and seeing another person about to commit
or in the course of committing an act infringing upon that right, stands
by in such a manner as really to induce the person committing the act
and who might otherwise have abstained from it, to believe that he
assents to it being committed, he cannot afterwards be heard to
complain. This is the proper sense of the term acquiescence
Where there has been laches i.e. unreasonable delay or inaction by
the claimant after the infringement of his right has already taken place
such as to make it unjust to the defendant that an injunction should be
granted, it will not
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MUSIGA v Abraham [the copyright belonged to their employer and
not to bandsmen so had no cause of action]
AG v Sharp [unlicensed omnibus driver no dey fear pecuniary
penalty; although no right infringed, court has jurisdiction to
restrain an illegal act of a public nature at the instance of AG suing
on behalf of the public even where a sanction is prescribed for its
breach]
AG v Harris [florists selling near entrance of cemetery in breach of
local law and happily paying fines after convictions and continuing
acts; held, injunction will lie]
Thorne v BBC [injunction against BBC for propaganda against ppl
of German origin in contravention of a criminal Act. held; only AG
is empowered to enforce the Act hence busy body Dr. T]
Maxwell v Hogg [advertising the future publication of a magazine
doesn’t give an enforceable right to order injunction]
Day v Brownrigg [Ashford Lodge and Ashford Villa; a matter
which only causes annoyance doesn’t necessarily give rise to a
cause of action]
London & Blackwall Rly v Cross [compensation to ferry company,
D had no authority; proceeding to arbitration at own peril and if
lost, damages adequate. Appeal allowed]
per Lindley LJ.
MUSIGA v Abraham [damages would be adequate in case the final
determination of the case goes in favour of P since D isn’t
impecunious]
Wood v Sutcliffe [right to use stream, P taking ‘rents’ from other
polluters hence damages would be adequate to compensate]
CFC Construction v Accra City Council [refuse dump site at
Tesano]
Order 25 r9, C.I. 47
CFC v Accra City Council [dumping of refuse in quarry at Tesano;
grant will lead to other actions]
Hogg v Maxwell [H registered name of mag first, M without DD
registered it too, and advertised the impending publication. Even
places an ad with H. H however quickly publishes a mag with the
name and claims copyright. Held; they had no copyright]
De Bussche v Alt [
Wood v Sutcliffe [P watched as D constructed factory as well as
start polluting stream without telling them of the breach of their
rights. They didn’t vindicate their right and so injunction not
ordered]
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Where the claimant does not have clean hands, an injunction will not GPRTU v Danful [
be granted.

The courts are typically reluctant to grant mandatory injunctions and

will consider the following before making the order;

- Need for constant supervision

- Expense of enforcement
- Need for precision Morris v Redland Bricks Ltd
- Unjust enrichment of the claimant

Mareva Injunction Mareva Compania Naviera SA v International Bulkcarriers SA per

If it appears that the debt is due and owing, and there is a danger that
the debtor may dispose of his assets so as to defeat it before judgment,
the court has jurisdiction in a proper case to grant an interlocutory
judgment so as to prevent him disposing of those assets. Also called a
freezing injunction
Denning MR [hire of Mareva on time charter to D who sub-hires to
voyage charterers who pay D but D refuses to pay P due half-
monthly instalment]
Or 25 r2 C.I. 47

- Application is made without notice to the other party

- Show a serious question to be tried
- Show a risk of disposal of the assets
- Applicant is under a duty of frankness or uberimmae fidei
- Applicant must give an undertaking in damages

Search Order/Anton Pillar Order Anton Piller v Manufacturing Processes Ltd [trade espionage viz
frequency converters for PCs.]
In an extreme case where there is grave danger of property being
smuggled away or of vital evidence being destroyed, the court may Order 25 r2 sub-r 1, C.I. 47 - On the application of any party to a
order the defendant to ‘permit’ the applicants to inspect and take away cause or matter the Court may make an order for the detention,
such property or evidence custody or preservation of any property which is the subject-matter
of the cause or matter or in respect of which any question may arise
- Applicant must have a strong case in the action, or may order the inspection of any such property in
- Potential or actual damage to his interest must be serious the possession of a party.
- Clear evidence that D has possession of incriminating evidence
- Presence of solicitor experienced iro search orders
- Only remove materials covered by the search and keep an
inventory with copy for D
- Insure materials taken against loss

RESCISSION
Equity follows the law, thus if a contract is void at common law,
equity will also treat it as a nullity. However, some contracts which
are deemed to be valid at common law may be held to be
unenforceable in equity. The equitable remedies are rescission,
rectification, refusal of specific performance

Rescission is the setting aside of a contract. in equity. its aim is to Cooper v Phibbs [defendants given a lien over the fishery for the
cancel the contract and to restore the parties as far as possible to the money they had spent improving the property]
position they were in before the contract was made in an attempt to
achieve restitutio in integrum

In equity, a contract is liable to be rescinded if the parties were under a Sole v Butcher [controlled rent]
common misapprehension either to facts or as to their relative and

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respective rights provided the misapprehension is fundamental and the
party seeking to rescind was not himself at fault
A condition for the rescission of a contract is the possibility of
restitution. Thus, if restitution is impossible, there can be no rescission
of the contract. restitution need not be exact or precise but it must be
substantial
Where the subject matter is only deteriorated in value but still retains
its substantial identity the right to rescind is not lost
In equity, mistake may
- be a defence in an action for specific performance;
- entitle the parties to have a written contract rectified;
- be a ground for setting aside a contract or making it voidable
A common mistake, even on a most fundamental matter, does not
make a contract void at law; but it makes it voidable in equity.
A contract is liable in equity to be set aside if the parties were under a
common misapprehension either as to facts or as to their relative and
respective rights, provided that the misapprehension was fundamental
and that the party seeking to set it aside was not himself at fault
An innocent misrepresentation gives the party misled a right to rescind
the contract but it does not entitle the party misled to claim damages.
The misled party may also repudiate the contract and set up the
misrepresentation as a defence to an action brought against him for
breach of contract or for specific performance of the contract.
The party misled may bring an action for rescission and in some cases,
claim an indemnity against all losses or liabilities imposed on him by
the contract itself
Where a person agrees to purchase property which unknown to
himself and the seller it’s already owned by the buyer, such a contract
may be void by reason of the common mistake as to title
A fraudulent misrepresentation occurs when a person makes a false
representation knowingly, or without belief in its truth or recklessly,
careless whether it is true or false
Equity will not allow a person who exercises or enjoys a dominant
religious influence over another to benefit, directly or indirectly, by
the gifts which the donor makes under or in consequence of such
influence unless it be shown that the donor, at the time of making the
gift, was allowed full and free opportunity for counsel and advice
outside, and the means of considering his or her worldly position, and
of exercising an independent will about it.
The courts will set aside a voluntary gift where it’s satisfied that the
gift was the result of influence expressly used by the donee for such
purpose unless it can be proved that it was the spontaneous act of the
donor acting in circumstances which enabled him to exercise
independent will
Rescission is impossible where the subject matter has been so altered
as to change the character of it
Where the subject matter is only deteriorated in value but still retains
its substantial identity the right to rescind is not lost
When a contract is voidable, and a third party acquires an interest in
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Grist v Bailey [statutory tenant dead, property with vacant
possession cost more, specific performance denied]
Erlanger v New Sombrero Phosphate Co [phosphate mine bought
not so worked that restitution was impossible hence restitution
ordered]
Head v Tattersall [return horse sold as thoroughbred which was
seriously wounded in a trial to test it]
Sole v Butcher [mistake that flat not tied down to controlled rent,
lessee sought a reduction, held that the mistake was fundamental
but not void, thus rescission on terms stated by Denning]
Grist v Bailey [hse sold for less cuz assumption that there was a
statutory tenant so no vacant possession. Tenant had died. Mistake
fundamental, rescission ordered]
Redgrave v Hurd [contract to buy house and useless solicitor’s
practice rescinded]
Cooper v Phibbs [salmon fishery devolved to plaintiff who
unknowingly thought it belonged to his deceased uncle; defendants
given a lien over the fishery for the money they had spent
improving the property]
Derry v Peek [shares purchased in reliance on info in IPO that
company had permission to use steam to power trams; held
representation not fraudulent as made bona fide]
Allcard v Skinner [while a member of a sisterhood, A made gifts of
money and stock to the Mother Superior on behalf of the
sisterhood. She was not allowed to talk to anyone outside the
sisterhood without consent of the Mother Superior and so had no
access to independent advice. She left the sisterhood and 5 years
later, sought to recover her stocks. Held title to gifts was voidable
but delay and conduct of A after leaving disentitled her]
Clarke v Dickson [shares taken in a partnership which was turned
into an LLC. Held rescission impossible]
Head v Tattersall [return horse sold as thoroughbred which was
seriously wounded in a trial to test it]
Phillips v Brooks [Sir George Bullough]
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the subject for value, in good faith and without notice, the party with Lewis v Averay [Richard Greene]
the right to rescission loses his right to rescind

TRUSTS
A trust is an equitable obligation, binding a person (who is called a Underhill
trustee) to deal with property over which he has control (which is
called the trust property) for the benefit of persons (who are called
beneficiaries or cestuis que trust) of whom he may himself be one, and
any one of whom may enforce the obligation

In addition to Underhill’s definition, “we should add charitable trust Pettit

which may be enforced by the AG”

A trust is the relationship which arises wherever a person called a Keeton

trustee is compelled in Equity to hold property, whether real or
personal, and whether by legal or equitable title, for the benefit of
some persons (of whom he may be one and who are termed cestuis
que trust) or for some object permitted by law, in such a way that the
real benefit of the property accrues, not to the trustee, but to the
beneficiaries or other objects of the trust.

Elements of a trust

1. It is a fiduciary relationship.
2. The legal title of the subject matter is vested in the trustee.
3. The beneficial interest in the subject matter of the trust is in a person other than the holder of the legal title i.e. the cestui(s) que trust(s).
4. The holder of the legal title has an equitable duty to ensure that he or she does not benefit from the subject matter of the trust qua trustee.
5. It arises from an intention to create a trust relationship, or it’s implied, presumed or imposed by law in certain fact situations.

Classification of trusts

1. Public: primary object of the trust is the promotion of a public welfare, notwithstanding that an individual or class of individuals may
incidentally benefit from it

2. Private: made largely for the benefit of an individual or class of individuals and is ordinarily enforceable by any of the beneficiaries

a. Express: created by the express act of the settlor [Keech v Sandford; Letterstedt v Broers]

b. Constructive: when it arises by operation of law and not the act of the settlor [Eboe v Eboe; Keech v Sandford; Dzidzienyo v
Dzidzienyo]

c. Implied: it arises where it can be shown that the settlor intended to create a trust but there is no proof of the use of express
words to that effect and the formalities for creating a trust have not been followed [Akwei v Akwei]

d. Resulting: created when the settlor successfully conveys the trust property to the trustee but the beneficial interest returns or
results to the settlor or his estate as a result of a number of reasons including when the beneficiary is unable to exhaust the
entire trust property [Cole v Cole; Kwantreng v Amassah]

Express Trusts
In creating an express trust, the three certainties must exist in order for Knight v Knight [beneficiary of family property made a will passing
it to be enforceable it on to his male descendants. But if there were none, the property
- Certainty of words or intention to create a trust was to pass to the ‘next descendant in the direct male line of my
- Certainty of subject matter late grandfather. Contended that the next descendant who died
- Certainty of objects/beneficiaries intestate was bound to leave it to a male and not his daughter. Held;
trust not certain iro beneficiaries property went to next descendant
absolutely]

In making an express trust, no technical words are needed but a
testator must make his intention clear and must employ such language
as to leave no doubt as to what the intention is.
Where the words or intention are not certain, the result is that, no trust
will be created and whoever has the legal interest will also be vested
with the beneficial interest.
Gyasi v Quagraine [testator appointed nephew sole heir and
administrator and charged him with a moral obligation to take care
of his ‘blood relatives’. Held; testator intended nephew to have
absolute beneficial interest in the estate]
Asante v UG [nomination paper with names of beneficiaries of staff
members’ superannuation scheme not intended to create a trust]

Francois v Bank of West Africa [testator created a trust fund in

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Principle
Precatory words, which are words of entreaty, will not be used to infer
a trust. Hence the words or expressions must be such as to constitute a
declaration which is or can be construed as imperative in its terms
Where the donee is given too wide a discretion as to the disposition of
the property, the idea of trust is excluded.
The property which is intended to be the subject matter of the trust
must be expressly designated or be so defined or described that it is
capable of being identified.
- The corpus of the subject matter must be identifiable or capable
of ascertainment
- The interest in the subject matter must also be identifiable
Lack of certainty of subject matter will render the whole transaction
void and the intended subject matter would remain part of the assets or
estate of the settlor.
Where the interest in the subject matter is uncertain, the trustee will
hold it on a resulting trust for the transferor/settlor
Where the intention of the settlor is too vaguely defined, the trust will
be unenforceable
Where the beneficiaries/objects of the trust are not clearly defined, the
trust will not be enforceable. They must be sufficiently described as to
be identifiable.
Where there are two or more beneficiaries, the proportions in which
they are to take under the trust must be set out with certainty in the
trust instrument. In the absence of this, it will be cured by the maxim
‘equality is equity’ and each beneficiary will take equally.
If all the certainties exist but the beneficiary is uncertain, the trustee
will hold the trust property on a resulting trust for the testator.
Only in charitable trusts will be cy-pres doctrine be allowed i.e. the
court may order that the trust may be applied to the nearest object to
that indicated by the testator.
Implied Trust
It arises where there is a presumption that there is an intention to
create a trust even though there is no proof of the use of express words
to that effect and the formalities for creating a trust are lacking
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Authority
memory of his deceased daughter and told colonial secretary that he
would like to donate it to the maternity ward at the govt hospital in
Sekondi, he makes no provision for the trust fund in his will. Held;
an express trust has been created, bank must give the money to his
executors for them to realise his wish]
Gyasi v Quagraine
Lambe v Eames [testator gave property to his widow ‘to be at her
disposal in any way she may thing best for the benefit of herself
and family’ held to be an absolute gift.
Adams v the Kensington Vestry [testator gave property to his wife,
her heirs, executors, administrators and assigns ‘in full confidence
that she will do what is right as to the disposal therefore between
his children’ in her life time or by will after her death. Held to be an
absolute gift and no trust created]
Sey v Sey [testator bequeathed all his property to his wife and
children subject to certain legacies and proceeded to devise his
house to his brother and added that he is not to sell the house for
any reason that will lead the children to go astray. Children claimed
that created a trust and on death of uncle, property reverted to them.
Held; wrong interpretation]
Gyasi v Quagraine [no specific funds/property are directed by the
testator to be used in a particular way by the donee, there is no
trust]
S13(2) of Conveyancing Decree 1974 (NRCD 175) every
conveyance shall pass all interests and rights in the land which the
transferor has power to convey unless a contrary intention is
expressed.
Gyasi v Quagraine [objects were inter alia to embrace in love all
testator’s blood relatives, seek their interest and treat them well.]
Gyasi v Quagraine [‘blood relatives’ isn’t a term of art and too
wide to be ascertained]
Re Harwood [the testator chose a charity which never existed at all.
A general charitable intent was however inferred and the Cy-près
doctrine applied]
Re Ovey [the testator bequeathed a legacy to a hospital which had
ceased to exist at the date of the testator’s will. Held; that the trust
had elapsed and so the money could not be bequeathed Cy-près]
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Sometimes it arises as a result of failure to satisfy the necessary Akwei v Akwei [purported sale of family property by public auction
formalities for the creation of an express trust due to non-payment of rate; held at arbitration that buyer should re-
sell the property to the family; busy body father abusing litigation
process]

Ss1, 2, 3, Conveyancing Decree 1973 (NRCD 175)

Resulting Trust
Arises when owner of the property has conveyed it to another person Kwantreng v Amassah [father conveys property to daughter in
with the intention of creating a trust but the beneficial interest returns consideration for her love and affection, daughter mortgages
or ‘results’ to the transferor. property but gives loan to father who controls the property and
devises it in a will. Held; the presumption of advancement in favour
- If beneficiary doesn’t exhaust the trust property of a child is rebutted by the acts of control of the father and that
- If a remainderman pre-deceases the life interest holder daughter held the legal title on a resulting trust for him]
- If income is more than what is provided for in the trust
Cole v Cole [settlor conveys property to his brother while ill
thinking that he would die and asks him to give him a decent burial
Woodman’s Article (Purchase By A Husband In The Name Of His and look after his wife and kids, he doesn’t die and asks for account
Wife Deviousness Or Generosity?) of rents, brother refuses saying property is an absolute gift. Held;
the purpose for giving him the house hasn’t been fulfilled so he
The question of intention i.e. whether simple generosity or devious holds on a resulting trust for his brother]
self-interest activated the person, other than the express grantee, who
provided the consideration for acquiring the property to give the legal Ussher v Darko [presumption of advancement not available to a
interest to another person, may be established by recourse to paramour thus she held the property on a resulting trust for Sir
presumptions which arise in certain circumstances, and which may be Edward]
rebutted by evidence of the actual intention in a particular case.
Ramia v Ramia [presumption of advancement by wife can rebut the
When the circumstances give rise to a presumption, either of an presumption of a resulting trust]
intention to create a resulting trust or of an intention of advancement,
the onus shifts to the party disputing the presumption to show an Reindorf v. Reindorf [wife purchased property in the joint names of
actual intention to the contrary. herself and her husband. Held; the legal interest was held by them
jointly on a resulting trust for the wife alone as there could be no
The rule is that acts of a party done after the conveyance cannot be presumption of advancement by a wife in favour of her husband]
relied upon to that party's advantage. Otherwise there would be a
danger of self-serving conduct being used to attempt to change Sasu-Twum v. Sasa-Twum [a man had acquired two houses in the
retroactively the effect of the conveyance, whereas it is at the moment name of his son. It was held that the presumption of a resulting
of the conveyance that a resulting trust arises or is excluded. trust was rebutted by the presumption of advancement.]

Constructive Trust
Arises by operation of law. It is imposed by equity irrespective of the
intention of the legal owner. Hence, it’s imposed when the
circumstances are such that equity would consider it an abuse of
confidence for the owner to hold the property for his own benefit.

- Where a trustee obtains a renewal in his own name of a lease held

by him as trustee
- Where a trustee has made a profit, however innocently, through
his office

A constructive trust will arise where a trustee makes an unauthorised
profit
Eboe v Eboe [refusal of re-entry visa to Lebanese business man, his
brother sells all his businesses and uses the profit to start a
business. He claimed the profit from the sale had been lost and all
subsequent businesses belonged to him. Held; D was a trustee
holding all property in trust for P and was liable to account. Action
thrown out on appeal though because didn’t have jurisdiction (D
was domiciled in Nigeria)]

Keech v Sandford [a lessor refused to renew a lease held in trust for

an infant by D but was happy to renew it ifo D in his personal
capacity. Held; trustee not to benefit from his position thus D held
the lease on a constructive trust for the beneficiary]

Dzidzienyo v Dzidzienyo [gov’t exercised right of re-entry iro a

lease held by the deceased but re-offered it to him. He died before
he could accept the offer and his administratrix accepted it qua
administratrix but it was conveyed to her in her personal capacity.
Held; since it was granted to her qua administratrix, she held the

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A constructive trust will be imputed where a third party knowingly
deals with trust property
A constructive trust will be imputed where it will serve the ends of
good conscience and it is just so to do
Charitable Trusts
It’s a trust whose primary object is the promotion of a public welfare,
notwithstanding that an individual or class of individuals may
incidentally benefit from it
Categories for a charity;
- Relief of the aged, impotent and poor
- For the advancement of education
- For the advancement of religion
- Other purposes beneficial for the community
Relief of the aged, impotent and poor
It’s not always that a charitable gift must be made from bounty. In
some cases, the beneficiary may be required to contribute towards its
cost
Advancement of education
Advancement of religion
Other purposes beneficial to the community
Cy-près doctrine applied where there is a general charitable intention
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Authority
lease on a constructive trust for the beneficiaries of the estate of the
deceased]
Karak Rubber Estate v Burden [take-over fraud assisted,
unknowingly by Barclays Bank. Held; Barclays imputed with
constructive notice of the takeover and failed to exercise reasonable
care in dealing with Karak’s account]
Ramia v Ramia [the property was given to the wife as an absolute
gift and not on a resulting trust]
Reindorf v. Reindorf [just because the husband provided the initial
capital for the wife’s trade doesn’t mean that proceeds from the
trade used to build the house were jointly owned. Although
property in joint names, beneficial interest is solely wife’s because
she provided the money to buy the land and build and she did not
intend to make a gift of it to her husband]
Sasu-Twum v. Sasa-Twum [a man had acquired two houses in the
name of his son. It was held that the presumption of a resulting
trust was rebutted by the presumption of advancement.]
CIT v Pemsel as set out by Lord Macnaughten
Scottish Burial Reform and Cremation Society v Glasgow Corp
[object of promoting inexpensive and sanitary methods of disposal
of the dead held to be for the benefit of the community and hence a
charitable purpose notwithstanding the payment of a small fee]
Joseph Rowntree Mem. Trust v A-G [since the provision of special
accommodation relieved a particular need of the elderly, whether
poor or not, the scheme was within the scope of a charitable
purpose]
Joseph Rowntree Mem. Trust v A-G [the elderly were required to
make payments towards the housing scheme]
Incorporated Council of Law Reporting for England and Wales v
A-G [publication and dissemination of reports are for a purpose
beneficial to the community, alternatively, for the advancement of
education]
IRC v McMullen [youth football association held to be a charitable
trust]
Oppenheim v Tobacco Securities Trust [gift for the advancement of
education of children of employees of a company held not to be a
charitable trust because beneficiaries didn’t make it of a public
character and also it was void for perpetuity]
Re South Place Ethical Society [religion is man’s relationship with
God and ethics, man’s relationship with man, they are not the
same]
Scottish Burial Reform & Cremation Society v Glasgow Corp
Nat. Anti Vivisection Society v IRS [lobbying for amendment of
legislation iro cruelty to animals is not a charitable purpose]
Re Lysaght [scholarships which discriminated against Jews were
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and where there is impossibility of performance administered Cy-près without discrimination on grounds that the
paramount intention was to provided scholarships, whatever the
reason behind it may have been]

Re Harwood [a gift to a peace society which didn’t exist was

administered Cy-près as a general charitable intention existed]

Re Ovey [the testator bequeathed a legacy to a hospital which had

ceased to exist at the date of the testator’s will. It was held that the
trust had elapsed and so the money could not be bequeathed Cy-
près]

The Position of the Trustee

Formal Requirements for the Creation of a trust

- There are no formal requirements Francois v Bank of West Africa

- If the subject matter is immovable property, the transfer must be Ss1 & 2 NRCD 175
in writing and signed by the transferor or his agent in writing; the
contract must contain the names of the parties, a description of
the property, the purchase price and signed by the transferor or
his agent in writing [unless relieved against the need for writing]

- A will must be in writing, signed by the testator or his agent at S2 Wills Act, 1971 (Act 360)
his direction and witnessed by two persons

Appointment of a Trustee

1. Express provision Letterstedt v Broers [the testator named the trustees of his estate]
This may be provided by the trust document itself. If no trustees
are appointed under a will, the executors will hold the property Francois v Bank of West Africa [executors held to be trustees of the
under the terms of the trust trust fund]

2. Appointment by the court Letterstedt v Broers [P prayed the court to appoint new trustees
Unless provided for in the trust instrument, the settlor or since Board failed to appoint new ones since the other 2 died]
administrators have no power to appoint new trustees, the court
however has an inherent power to appoint new trustees

3. Appointment by trustees Trustees Act 1860

The existing trustees may appoint additional trustees where there
is no contrary indication in the trust instrument

Vesting of Trust Property

Vesting might require registration at the lands registry in terms of Khoury v Jojo [executor conveyed property to the 3 trustees in
land, notification to tenants iro houses which have tenants in them, order for them to deal with the trust property; D given possession of
taking possession of movable properties, etc. If there are any steps valuable trinkets]
required to perfect the title of the trustees, these have to be done.

Determination of the Trust

1. Disclaimer: person appointed as trustee may refuse the office any

time before acceptance. Acceptance may be express or implied
by conduct. Once accepted, office can’t be disclaimed

2. Retirement: this may be done with the consent of all the

beneficiaries if they are adult and sui juris or by court order on
application to court

3. Removal: court has inherent jurisdiction to remove trustees if Ss2 & 11 of Trustee Act 1860
continued holding of office is not in the best interest of the trust Letterstedt v Broers
estate or the beneficiaries

4. Death: presumption that trust property is held jointly by trustees

thus right of survivorship applies; the last surviving trustee may
devolve the trust property by will or inter vivos but his personal

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rep only steps in as trustee
Duties of Trustees
On becoming a trustee, the trustee has a duty to acquaint himself with Lewis v Nobbs [runaway co-trustee; trustees were under a duty to
the trust document, have the trust property vested in him, take custody vest the trust property in their joint names not separately]
of the trust property, perfect the title and ensure its protection
Trust assets are to be invested in order to protect the asset and have it
benefit the beneficiaries in accordance with acting as a prudent
business man/woman. This is an implied condition and need not be
made express. Failure to invest is a breach of duty which will lead to
liability and payment of compensation to the estate.
The areas of investment are typically provided by the trust or by
statute. The trustee is under a duty not to take unreasonable risks with
the trust property
The trustee has a duty to act impartially
Where no portions are indicated, the beneficiaries must take equally.
The trustee must not favour any beneficiary to the detriment of others.
The trustee has a duty to keep an accurate record of the estate account
and must make it available when the beneficiaries make a reasonable
request. Give beneficiaries info on the state of the trust. Beneficiaries
also entitled to inspect documents relating to the trust.
The trustee has a duty not to benefit from any profits arising from the
trust estate. There’s also a duty not to derive any indirect benefits
The only thing a trustee is entitled to is actual expenses, properly and
reasonably incurred in the administration of the trust
Exceptions
1. Where the trust itself provides for remuneration of the trustee
2. The courts have an inherent jurisdiction to authorise the payment
of remuneration to trustees.
a. Where the circumstances of the case raise an implied
promise to pay by the beneficiaries.
b. The court may authorise payment where it’s necessary
to obtain the services of a particular individual trustee
whose services are of a special value or expertise
The trustee also has a duty not to delegate powers. However where
specialist expertise or knowledge is required, the trustees may
delegate in that regard only. In choosing agents or experts, the trustee
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Authority
Learoyd v Whiteley [trustees gave part of trust money as loan but
mortgaged property was useless. Held; they were not reasonably
prudent so liable cuz they should have sought advise on things they
knew nothing about, honesty and sincerity not same as prudence
and reasonableness]
Speight v Gaunt [broker appointed by trustees dishonestly
appropriated it. Held; trustees had acted as reasonably prudent men
would have and so not liable for the loss]
Khoury v Jojo [co-trustee was under a duty to insure the trinkets
esp since he insured the goods in his own shop]
Learyod v Whiteley [the investment which the trustees put the trust
money too was too risky. Hence they were liable for any losses to
the trust estate]
Trustee Act [investment areas are government bonds and treasury
bills]
Howe v Earl of Dartmouth [testator gave life interest in his estate to
his wife and upon her death, to his sister for her life and then the
remainder to several people. Held: where there are successive
interests in relation to the trust fund, the trustee must seek to strike
a fair balance between the rights of the life tenant and the
remaindermen; trustee must convert and reinvest authorised
investments in the trust fund to maintain fairness between the life
tenant and the remaindermen]
Letterstedt v Broers
Boardman v Phipps [solicitor of a family trust bought shares in a
company by coming into information qua solicitor of the trust but
with consent of the trustees and not all the beneficiaries. Held;
although the trust did not have any intention of buying the extra
shares itself, B held the shares in trust for the beneficiaries of the
trust. He was however entitled to remuneration]
Williams v Barton [co-trustee made a commission on giving the
business of the trust estate to his employers for a commission.
Held; the money he held were on constructive trust for the estate]
Letterstedt v Broers [the trust deed provided that The Board should
be given an annuity for its trouble and the trustees should be paid
per day when they inspected the breweries and accounts]
Re Gee [beneficiaries have power to provide remuneration for
trustees]
Re Duke of Norfolk Settlement [the court has jurisdiction to
authorise payment of remuneration to trustees]
Learoyd v Whiteley [although the trustees engaged valuers to
determine if the mortgaged property was valuable, they were still
held responsible for not seeking further advice after they received
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Principle Authority

must exercise DD because the fact that certain functions are delegated the valuation report which they didn’t understand]
does not absolve responsibility to generally supervise these agents

Power of Trustees
Power of sale. Khoury v Jojo
- may sell all or part of the trust assets in accordance with the
proper administration of the trust estate
- must get the best price possible for the trust.
- may sell by private treaty or public auction.
- liable for making up the difference lost to the trust estate

Power of maintenance
- make periodic payments to a beneficiary before the time when
the trust property is to vest in the beneficiaries. E.g. minors and if
B is to get the property by a certain age

Power of advancement i.e make a one-off lump sum payment

intended to set up the beneficiary in life before the time when the trust
property is to vest in the beneficiary

Power to delegate where there’s a requirement for specialised skills Re Gee

iro the trust property

Power to insure using proceeds from the trust property Khoury v Jojo

A power can be exercised unlawfully. If the trustee doesn’t exercise

DD or exercises a power not in the best interest of the trust or the
beneficiaries, such exercise of power is unlawful

Breach of Trust
- failure to perform an obligation or to discharge a duty

- where the trustee doesn’t exercise a power conferred by the trust

instrument or by the general law in circumstances when he
should have

- when trustee does something which isn’t allowed by the trust

instrument or the general law

- where the trustee doesn’t act with DD when exercising a power

or performing a duty; in such a case fraud is irrelevant, intention
is also not a prerequisite and acquittal on charges of fraudulent
breach of trust is no defence

Liability is personal i.e. each trustee is responsible for his own breach

A breach which doesn’t occasion loss to the trust estate will not lead
to an obligation to pay; however , a trustee cannot offset a loss in one
transaction against a gain or benefit in another

Where two or more trustees are in breach of trust, the liability is joint
and several. The exception to this is where there has been fraud, in
which case only those who have been fraudulent who will have to pay

Where a beneficiary-trustee is involved with other trustees in a breach Chillingworth v Chambers [

of trust, then although all the trustees are in breach of trust, in paying
for the breach, the interest of the beneficiary-trustee (in the whole trust
fund) will have to be exhausted before the other trustees can be called
upon to contribute

Defences
Acquiescence or release by beneficiaries after the breach occurs either
expressly or by conduct

Consent or participation by the beneficiaries who are sui juris during Re Gee [beneficiaries agreed to pay trustee/MD remuneration]
or after the breach either expressly or by conduct

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Chillingworth v Chambers [beneficiary was part of the activities

which occasioned the loss to the trust estate]

Lapse of time S15 of Limitation Decree [6 years after cause of action arose,
however 6-yr limitation doesn’t apply where the trustee has been
fraudulent or has fraudulently concealed the breach of trust]

S22 of Limitation Decree [in case of concealment of fraudulent

breach of trust, time only begins to run out after the breach has
been discovered]

Bankruptcy S34, Insolvency Act 2006 (Act 708) [discharge of a bankrupt shall
release that person from any provable debts]

Karak Rubber Estate v Burden [B was discharged from the suit for
bankruptcy]

Remedies
- tracing
- injunction
- damages

Where damages are inadequate, tracing may be resorted to, especially Re Diplock
where remedies in personam may not be appropriate
- the property must be traceable
- there must be an equity to trace
- tracing must not produce an inequitable result

common law remedy of ‘following’

- the legal owner of property can recover the property from
whoever is unlawfully holding that property
- available only where the subject matter/property was physically
identifiable.
- Only available to holders of a legal right.
- Does not lie where the property had been mixed with other
properties or funds.

Where the funds/assets have been mixed with other funds/assets,

election may be resorted to in order to determine which are trust
funds. The following rules of election are applied depending on the
facts;
- The rule in Clayton’s case
- The rule in Re Hallet’s case
- The rule in Re Oatway

‘First in, first out’. Where withdrawals are made out of mixed funds, Clayton’s Case
the first amount of money paid into the account will be the first to be
withdrawn.

The trustee is presumed to not touch the beneficiary’s funds until he’s Re Hallet’s case [solicitor holding client’s money which was
used his own funds and is used where applying Clayton’s case will be deposited first but where balance in account was sufficient to repay
unfair her]

Where the withdrawal is invested and yields profit, Re Hallet will not Re Oatway [he used his own funds to acquire shares which yielded
be applied and any profit yielding venture will be deemed to be the profits]
beneficiary’s.
MORTGAGES
At common law, a mortgage is a conveyance of land or an assignment Santley v Wilde [a covenant to pay a share of profits to mortgagee
of chattels as security for the payment of a debt or the discharge of an even after the date of redemption held not to be a clog on equity of
obligation redemption]

A mortgage is a contract charging immovable property as security for S1, Mortgages Act, 1972 (NRCD 96)
repayment of a debt or the performance for some other obligation for
which it’s given.

A mortgage may be created on any interest in immovable property

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which is alienable

Statute Common Law

Mortgages relate to only immovable property Involves both immovable property and chattels
It’s not a conveyance but a charge/encumbrance on the property It’s a transfer of ownership of the property
It is necessarily a contract
More than one charge may be created on the property
No clogs on redeemability

Every transaction which is in substance a mortgage will be governed S2, NRCD 96

by NRCD 96

The element of redeemability is key to every mortgage. Once a
property has been mortgaged, the mortgagor has a right to recover the
property once the obligation for which the mortgage is granted has
been discharged
Seton v Slade [in equity, time is not essential to redeemability of a
mortgage as long as the mortgagor is prepared to pay the amount
due + interest and the property has not been realised]
Noakes & Co v Rice [mortgagor’s covenant not to sell any malt
liquors except that which is supplied by the mortgagees held to be a
fetter on the equity of redemption when mortgagee refused to
release him from the covenant even after the mortgage has been
paid off]

A mortgage must be in writing, stating the names of the parties, the S3 NRCD 96
nature of the mortgagor’s interest, description of the mortgaged
property, states date on which payment is due and the principal sum S1, Conveyancing Decree, 1973 (NRCD 175) [every transfer of an
lent, signed by the mortgagor or his agent authorised in writing to sign interest in land must be in writing]
on his behalf

Every mortgage deed must be registered at the Collateral Registry

An equitable mortgage may be created when the need for writing is

excused by the operation of the rules of equity including the rules
relating to fraud, duress, hardship, unconscionability, part
performance or by an enactment as in the case of a customary law
transaction. It may be created as follows;

- Deposit of title deeds alone without a written agreement where Russell v Russell
the deposit constitutes part performance to give security
- Written agreement signed by the mortgagor which isn’t S3, NRCD 96
accompanied by deposit of title deeds or which is expressed as an
equitable mortgage
- Combination of the two i.e. deposit of title deeds + written
agreement expressed as an equitable mortgage

Mortgagor’s Equity of Redemption

The equity of redemption is inviolable Khoury v Mitchual [M claimed that he was entitled to another 40
years when first 40 year lease elapsed. Held; property became
redeemable at the end of the first lease]

The equity of redemption is a proprietary interest in land and may

therefore be alienated

There should be no clogs or fetters on the equity of redemption. The
mortgagee must not attempt to exclude the right to redeem e.g. an
option to purchase a mortgage property contained in a mortgage deed
even if the option constitutes a perfect bargain
Samuel v Jarrah Timber & Wood Paving Corp. [debenture stock
used as security, mortgagee given option to purchase it at 40% of
face value within 12 months, provision held to be invalid]
Jones v Morgan [a subsequent agreement, following default of M
provided that a half interest in certain property were to be conveyed
to J, mortgagee. Held: 2nd agreement is distinct from the mortgage
contract hence altho it put a fetter on mortgagor’s equity of
redemption, it didn’t render it unenforceable]

An option to purchase a mortgaged property may be valid if granted Reeve v Lisle [an option to purchase the mortgaged property made
after the mortgage days after execution of the mortgage deed held to be valid]

There should be no unreasonable postponement of the mortgagor’s Fairclough v Swan Brewery [a provision requiring the mortgagee’s

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right to redeem his property consent before mortgagor can redeem the property before the
expiration date held to be invalid]

A postponement will however be held to be enforceable where the Knightsbridge Estate Trust v Byrne [
parties are commercial and are of equal bargaining power; both acting
under expert advise and dealing at arm’s length

Redemption must be free from collateral advantage or conditions i.e. Biggs v Hoddinott [a covenant by mortgagor to buy beer from the
an agreement contained in the mortgage which does not relate to the mortgagee during the continuance of the mortgage held to
mortgage but confers some advantage on the mortgagee. reasonable]

However, if the collateral advantage is neither unconscionable nor in

restraint of trade, then they are enforceable if designed to end or cease
with redemption

The terms of the mortgage must not be oppressive and Cityland & Property v Dabrah [court reduced interest rate which it
unconscionable. deemed unconscionable]

On the other hand, however unconscionable or harsh a term may be, Multiservice Bookbinding v Marden [capital repayments on
same may be allowed when businessmen are dealing at arm’s length mortgage which were tied to decrease in value of GBP held to be
binding despite enormous fluctuations which led to very high
balance due]

Where provided in the mortgage agreement, the mortgagee may alter Paragon Finance v Nash [although variation of interest is not
interest rates as long as he does so in good faith for valid commercial completely unfettered, it’s not a clog on equity of redemption if
reasons and not for invalid purposes exercised honestly]

The equity of redemption can be lost by the effect of a judicial sale, S18, NRCD 96

or if mortgagee has been in possession for 12 years or more of the S12, NRCD 54
mortgagor’s property

Rights Available to Mortgagee in Event of Default

Right to sue on personal covenant S6, NRCD 96
S12, Act 770
The mortgagee may proceed against the mortgagor exclusively for the
repayment of the debt or may proceed against the mortgagor when the
proceeds from the realisation of the mortgaged property are not
enough to discharge all the mortgagor’s obligations. Accordingly,
other properties of the mortgagor which do not form part of the
mortgaged property may be sold to settle any obligations of the
mortgagor

Right to appoint receiver S16, NRCD 96

- Application to court to appoint receiver when mortgagor fails to
perform obligations under mortgage; extra-judicial appointment
is void and of no effect
- Court mandated to appoint receiver unless satisfied that no
grounds for appointment exists
- Receiver to take possession and collect all income and do all acts
necessary for the management of the property including repairs
and improvements but these must be sanctioned by the court
- Income received must be applied as ffs;
o Payment of rents, rates, taxes and relevant outgoings
o Payment of annual sums due to prior mortgagees
o Remuneration of receiver, payment of insurance premiums,
repairs, etc
o Payment of interest due on all principals
o Payment of principal
Any balance left will be given to mortgagor or the person
entitled to receive it

Variation/HMFA
- Mortgagee entitled to appoint receiver without recourse to court S14, HMFA, 2008 Act 770
and the receiver is mortgagee’s agent.
- Mortgagee may direct receiver to insure the property
- Receiver entitled to not more than 5% of gross income received S16, Act 770

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as commission if stated in the appointment. If not stated, entitled

to 2.5%.
- Obstruction of receiver is an offence liable on summary S17, Act 770
conviction

Variation/BLA
- Mortgagee may appoint with or without recourse to court but if S29, BLA 2008 Act 773
without recourse to court
- Mortgagee must notify the court within 10 days of appointment

Right of possession S17, NRCD 96

- Arises on default of mortgagor to perform acts secured by the
mortgage Fourmaids v Dudley Marshall [the mortgagee may go into
- If it’s for non-payment, 30 days’ notice required possession before the ink is dry on the mortgage unless he
- May be done without court order if it can be done peaceably expressly or impliedly contracts himself out of the right]
- If can’t be done peaceably, apply to court for right of entry
- Mortgagee to collect income but liable for account for all income
received and would have received if no wilful default and to pay
excess to mortgagor
- Liable for any failure to realise sums due under the mortgaged
property
- Liable to pay rent if he’s in physical occupation
- Liable for any unreasonable injury to the mortgaged property
- Not entitled to remuneration for managing the property

Variation
No need to apply to court for possession. If unable to peaceably enter, S34 BLA, 2008 (Act 773)
apply for a warrant to use the police S13, HMFA, 2008 (Act 770)

Judicial sale S18, NRCD 96

- Application to court for judicial sale upon default of mortgagor to
perform obligations
- Court will only make the order of sale if satisfied that the
grounds of the application are just and equitable
- Judicial sale is by public auction unless a private sale is agreed to
by mortgagor and all encumbrancers subsequent to the mortgagee
requesting the sale of whom mortgagee had notice
- Mortgagee shall give notice of the sale to the mortgagor and all
subsequent encumbrancers but failure to give notice will not
render the sale void, rather, mortgagee will be liable for any loss
caused thereby
- The mortgagor and other encumbrancers are not precluded from
purchasing the mortgaged property but the mortgagee who
requested the sale must seek permission of the court if intending
to purchase
- The purchaser takes the property free from all interests of the
mortgagee who applied for the sale but subject to all interest with
priority over that mortgagee
- Proceeds from the sale will be deposited with the court or held in
trust for distribution by mortgagee who applied for sale
- Distribution
o Payment of expenses resulting from the judicial sale
o Payment of sums prior to or with same priority as mortgagee
who applied for sale
o Payment in order of priority of encumbrancers subsequent to
the mortgagee who applied for sale and the residue to the
mortgagor or his successors in interesr

Variation/HMFA
- Right of sale may be exercised without recourse to court S20, Act 770
- Sale may be by either private treaty or public auction
- If by private treaty, mortgagor as well as all subsequent
encumbrancers of whom seller has notice must be given 14 days’
notice
- Auctioneer’s fees shall not exceed 3% of gross amount
- The mortgagor and other encumbrancers may purchase

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- The mortgagee-seller may not purchase unless sale is by public S21, Act 770
auction or with approval of mortgagor and all subsequent
incumbrancers if it’s by private treaty S22, Act 770
- Distribution is same as supra

Priority of Mortgages
The first in time prevails S19, NRCD 96

No tacking shall be allowed, except that a mortgage expressed to

secure further advances shall have priority to the full extent of the
advances secured over any subsequent encumbrancer unless that
encumbrancer was a purchaser for valuable consideration without
notice of the prior mortgage.

Tacking is a process by which a first lender on a mortgage could hold

on to (tack) his first loan subsequent advances made to the mortgagor
so as to obtain priority over a mortgage intervening between the first
and the subsequent advances made to the mortgagor by the first
mortgagee

Consolidation refers to the practice where a mortgagor who has 19(4), NRCD 96
entered into more than one mortgage transaction with a mortgagee is
compelled as a precondition to redeeming a particular mortgage, to
also redeem any other mortgage s/he may have made. This has been
abolished by NRCD 96

Home Mortgage Finance Act, 2008 (Act 770) applies to transactions between financial institutions and their customers for
the provision of finance for the following;

- The construction or purchase of residential property

- The completion of a residential property
- Extension to or renovation of residential property
- Improvement to a residential property for ownership, sale or rental
- Construction of residential properties for sale or rental
- Purchase of fixtures and chattels related to residential properties

Where there is an inconsistency between NRCD 96 and Act 770, the provisions of Act 770 will prevail – s2, Act 770

Where a mortgagor fails to make an instalment payment within 14 days after the due date for the payment, the mortgagee
shall notify the mortgagor in writing of this fact and request the mortgagor to take urgent steps to pay the amount due as
agreed by the parties – s11.

Per s12, where a mortgagor fails to perform an act secured by the mortgage, the mortgagee may do one of two things;

- Sue the mortgagor on any personal covenant to perform

- Realise the security in the mortgaged property or by any of the processes provided under Act 770

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