HFC BANK GHANA LIMITED vs. NAASEI BOAKYE ENTERPRISE LIMITED AND NAASEI BOAKYE [2018]DLHC9940

Date	2018-01-24
Suit No.	SUIT NO. MISC/07/2017
Citation No.	[2018]DLHC9940

HIS LORDSHIP JUSTICE DR. RICHMOND OSEI-HWERE

SULLEYSAMBIAN FOR THE APPLICANT

DR. ERNEST OWUSUDAPAAH FOR THE RESPONDENTS

[2018]DLHC9940
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													<main id="main" class="content" style="min-height: 60rem" >HFC BANK GHANA LIMITED<o:p></o:p>(APPLICANT)<o:p></o:p>vs.<o:p></o:p>NAASEI BOAKYE ENTERPRISE LIMITED AND NAASEI BOAKYE<o:p></o:p>(RESPONDENTS)<o:p></o:p>[HIGH COURT, KUMASI]<o:p></o:p><div style="border-top: none; border-right: none; border-left: none; border-image: initial; border-bottom-width: 1.5pt; border-bottom-color: windowtext; padding: 0cm 0cm 1pt;">

<p class="MsoNormal" align="center" style="margin-bottom:0cm;margin-bottom:.0001pt;
text-align:center;line-height:normal;border:none;mso-border-bottom-alt:solid windowtext 1.5pt;
padding:0cm;mso-padding-alt:0cm 0cm 1.0pt 0cm">SUIT 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DATE:
24THJANUARY, 2018<o:p></o:p>

</div>COUNSEL:<o:p></o:p>SULLEYSAMBIAN
FOR THE APPLICANT<o:p></o:p><div style="border-top: none; border-right: none; border-left: none; border-image: initial; border-bottom-width: 1.5pt; border-bottom-color: windowtext; padding: 0cm 0cm 1pt;">

<p class="MsoNormal" style="margin-bottom:0cm;margin-bottom:.0001pt;text-align:
justify;line-height:normal;border:none;mso-border-bottom-alt:solid windowtext 1.5pt;
padding:0cm;mso-padding-alt:0cm 0cm 1.0pt 0cm">DR. ERNEST OWUSUDAPAAH FOR THE RESPONDENTS<o:p></o:p>

</div>CORAM:<o:p></o:p>HIS
LORDSHIP JUSTICE DR. RICHMOND OSEI-HWERE<o:p></o:p><div style="border-top-width: 1.5pt; border-top-color: windowtext; border-left: none; border-bottom-width: 1.5pt; border-bottom-color: windowtext; border-right: none; padding: 1pt 0cm;">

<p class="MsoNormal" align="center" style="margin-bottom:0cm;margin-bottom:.0001pt;
text-align:center;line-height:normal;border:none;mso-border-top-alt:solid windowtext 1.5pt;
mso-border-bottom-alt:solid windowtext 1.5pt;padding:0cm;mso-padding-alt:1.0pt 0cm 1.0pt 0cm">RULING<o:p></o:p>

</div><o:p>&nbsp;</o:p>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 first executed
after the commencement of this Act shall be of no effect until it is
registered.”<o:p></o:p>In
Asare v Brobbey [1971] 2 GLR 331 at 337, CA, the Court of Appeal delved into
the legal effect of s 24(1) of Act 122, it observed in its judgment as follows:
<o:p></o:p>“It follows therefore that
when section 24(1) of the Land Registry Act, 1962 provides that a document
shall be of no effect until it is register</main>