HFC BANK GHANA LIMITED vs. NAASEI BOAKYE ENTERPRISE LIMITED [2018]DLHC3981

Date	2018-01-24
Suit No.	SUIT NO. MISC/07/2017
Citation No.	[2018]DLHC3981

DR. RICHMOND OSEI-HWERE JUSTICE OF THE HIGH COURT

SULLEYSAMBIAN FOR THE APPLICANT

DR. ERNEST OWUSUDAPAAH FOR THE RESPONDENTS

[2018]DLHC3981
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													<main id="main" class="content" style="min-height: 60rem" >HFC BANK GHANA LIMITED<o:p></o:p>vs.<o:p></o:p>NAASEI BOAKYE ENTERPRISE LIMITED<o:p></o:p>&nbsp;[HIGH
COURT (COMMERCIAL DIVISION), KUMASI]<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
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SUIT&nbsp;NO. MISC/07/2017&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; DATE: 24TH
JANUARY, 2018<o:p></o:p>

</div>COUNSEL
<o:p></o:p>SULLEYSAMBIAN FOR THE
APPLICANT<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
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</div>CORAM: <o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
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</div><o:p>&nbsp;</o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
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<p class="MsoNormal" align="center" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:center;line-height:115%;border:none;mso-border-bottom-alt:solid windowtext 1.5pt;
padding:0in;mso-padding-alt:0in 0in 1.0pt 0in">RULING<o:p></o:p>

</div>This
ruling seeks to determine the merits of the preliminary legal objection in
relation to a motion on notice for judicial sale of mortgage property. <o:p></o:p>The
said motion was filed on 10/11/2016 and the respondents filed an affidavit in
opposition to the motion as well as a supplementary affidavit on 22/11/2016 and
13/10/2017 respectively. Subsequent to the filling of the motion, several
attempts were made to settle the matter out of court but the efforts fell
through. When the motion finally came up for hearing on 23/10/2017, counsel for
the defendants/respondents raised a preliminary legal objection to the motion.<o:p></o:p>Counsel
for the respondents submitted that the preliminary legal objection is founded
on the ground that the non-registration of the deed of mortgage sought to be
enforced is contrary&nbsp; to the clear
provisions of the Mortgages Act,1972 (NRCD 96) particularly section 3(2) as
well as section 24(1) of the Land Registry Act, 1962 (Act 122). Counsel
submitted that a mortgage is an instrument affecting land and it is a statutory
requirement that an instrument affecting interest in land must be registered in
accordance with Act 122. He further submitted that the use of the word “may” in
section 3(2) of NRCD 96 should not to be interpreted to mean a permissiverequirement
since such interpretation will do violence to the object and purpose of
establishing a registration regime for instruments affecting interest in land.
Counsel submitted that a mortgage ought to be registered in order for it to be
accorded validity which is a prerequisite to the enforcement procedure under s
18 of NRCD 96. He emphasized that the power of the court to order a judicial
sale of mortgaged property relate to a valid mortgage.<o:p></o:p>Counsel
also submitted that the mortgage in contention being a contract of guarantee cannot
be enforced by a judicial sale and that the proper method for seeking redress
for the alleged breach ought to be by writ of summons and not by originating
motion. He cited Order 2 rule 2 of CI 47 as well as Order 59 rule 2 to buttress
the point.<o:p></o:p>In
response to the preliminary legal objection, counsel for the
plaintiff/applicant submitted thatthe legal objection is misconceived. He cited
Order 2 r 2 and stated that there is an existing enactment in the Mortgages Act
which makes provision for enforcement of mortgages by judicial sale so the
argument that they ought to come by writ of summons is untenable. He made
reference to s 3(2) of NRCD 96 and submitted that failure to register a
mortgage does not derogate the substance of the mortgage. Counsel cited a Supreme
Court decision in Anthony Wiafe v Dora BorkaiBortey and Victoria Amoo [2017]
104 GMJ 161 at 167 where it was held that non-registration of an instrument does
not derogate from the contract. Counsel emphasized that the fact of
non-registration does not affect the rights of the parties. He further
submitted that a non-registered mortgage may not meet the requirements of legal
mortgage but meets the requirements of an equitable mortgage which can also be
enforced. Counsel invited the court to dismiss the preliminary legal objection.<o:p></o:p>From
the foregoing, the issues for determination are: 1. whether the unregistered
deed of mortgage can be enforced by the court; and 2. whether a deed of
mortgage can be enforced by judicial sale.<o:p></o:p>A
mortgage is an instrument affecting land and as such falls within the ambit of
section 24(1) of the Land Registry Act, 1962 (Act 122) which provides for the
compulsory registration of instruments affecting land. Section 24(1) of Act 122
states:<o:p></o:p>“24.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to subsection (2), of this section, an instrument other than,<o:p></o:p>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a will,
or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <o:p></o:p>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a
judge’s certificate&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <o:p></o:p>