Thomas Pinnock V. G. B. Ollivant & Co., Ltd. & Ors (1934)

LawGlobal Hub Judgment Report – West African Court of Appeal

Sale under Mortgage Deed—Damages for terongful sato—Lapse of time between expiration of notice and sale–Money received on account of Mortgage debt after sale—-Surety-Mortgagor entitled to notice of exact amount owing by Principal Debtor before sale—Sale by private treaty to Auctioneer’s client at one-third market value—Equity will protect Mortgagor from unreasonable treatment.

Held: Appeal allowed.

Divisional

Court.C. C. Lokko for Appellant.

Frans Dove for Respondents.

The following judgments were delivered:—GRAHAM PAUL, J.

The claim in this suit was to set aside a sale made by the first defendants G. B. 011ivant & Co., Ltd. as Mortgagee-Vendors to the second defendant, ope Fred Khoury, of certain land at Nsawam under the power of sale in a Deed of Mortgage granted by the plaintiff to the first defendants; and for redemption.

The ground upon which the claim was based was that the sale was effected without one calendar month’s previous notice being given to the plaintiff of the intention to exercise the power of sale as stipulated in the Deed of Mortgage.

The claim in the original writ was later amended by the addition of an alternative claim as against the first defendants only, for £300 damages for wrongful sale.

At the close of the plaintiff’s case, in view of the usual clause in the Deed of Mortgage protecting purchasers at a sale under the power of sale, the plaintiff was non-suited in regard to the second defendant with costs and there is no appeal before us as regards the second defendant. It is clear that at that stage the learned Judge should also have entered a non-suit as against the first defendants in regard to the claim to set aside the sale and for redemption. He omitted to do so and the trial proceeded thereafter ex facie on a claim to set aside the sale and for redemption as well as on the alternative claim for damages against the remaining defendants.

At the close of the trial the learned Judge- gave jud_gment Thomas non-suiting the plaintiff in-regard to his action as against the first. Plume& defendants. Against that judgment-the plaintiff has appealed to- j. this -Court. Counsel for the appellant before this Court made-it^–

clear that his client was not appealing against the judgment in soLtd

_n.^van‘

far as it affected the claim to set aside the sale or for redemption. ;_or_s^.‘ – • His contention was solely that the learned Judge in the Court•
below was wrong in not awarding damages to the plaintiff under G_rah_am

his alternative claim.Paul, J.

In this Court, on the motion of the plaintiff-appellant, G. B. 011ivant, Ltd., as attorneys of ^S the liquidators of L. C. Limited in voluntary, liquidation were substituted_ for, G. B. 011ivant & Company, Limited as defendants in this suit” L. C. Limited” being the changed name of G. B. 011ivant

Company, Limited.

On the evidence before him the learned Judge found that the plaintiff had received the notice a copy of which was tendered in evidence and admitted without objection as Exhibit “C” in the case. It is clear from the record that the fact of the receipt of this notice was not contested by plaintiff’s counsel in the Court below. He addressed himself to the Court below on the footing, and maintained only as matter of law, that the sale which took place was not a sale justified under tits power of sale in the Deed. of Mortgage by the particular terms and date of the notice given.

The date of the notice given, was 21st April, 1927. The date of the actual sale by the auctioneer on behalf of the mortgagees does not appear specifically in the evidence but it appears that the Indenture giving effect to it was dated Oh May, 1933—s.e. over six years after the notice given. It also appears from the evidence that between the date of the notice and the date of the sale about six years later certain payments were accepted by the mortgagees from the secured debtor on account of the amount due under the Deed of Mortgage.

It is relevant to _note at this stage that the Deed of Mortgage was granted by the mortgagor to secure the fidelity guarantee given by him to G. B. 011ivant & Co., Ltd. in respect of his brothers’ dealings with that firm. The Deed of Mortgage, which was an exhibit at the trial, was taken away afterwards by the second defendant, to whom it belonged, as a step in his title as purchaser from the mortgagee; and it has now apparently been, lost. Fortunately, however, the learned Judge in his judgment quoted in eztenso the relevant clause of the deed, and counsel agreed that the arguing of the appeal should proceed on that quotation.

Counsel for the appellant argued at length that by the receiving of payments on account of the mortgage debt after the notice had- been given and/or by the mere lapse of six years a mortgagee in law waived the notice, and for that reason could not

sell under the power of sale without a freak notice; and that therefore a sale without fresh notice was a breach of the contract between mortgagor and mortgagee for which. the _mortgape -was liable in damages.

No authority really supporting that general argument was produced by appellant’s counsel, and I know of none and can find none. The deed provided not for a notice of sale to be given but only for a demand notice being made by the mortgagees to the mortgagor for payment of the amount due by the mortgagor’s brother to the mortgagees. Thereafter in default of payment for the space of one calendar month next after the giving of the notice the mortgagees could exercise their power of sale either by public auction or private contract. In fact, about six years after the demand notice the mortgagees, without any further notice to the mortgagor, instructed a licensed auctioneer to sell the property under the mortgage and he did so by private contract for 240. There was no notice given either to the public in general or to the mortgagor in particular of this proposed sale. I think that the most important point of the appellant’s case was not put forward by his counsel.

In my view it is a most important consideration in the application to this case of the principles of what is known as the equity of redemption that the mortgagor in this case is a ‘surety-mortgagor. Before any Court of Equity would allow a mortgagee, by the exercise of his power of sale, to deprive a surety-mortgagor of his opportunity to redeem his property, the Court in my opinion must be satisfied that the mortgagee has given_ reasonable notice to the surety-mortgagor of the amount which, as a result of dealings between the mortgagee and the principal debtor, is actually due under the mortgage at the time of the exercise of the power of sale. On the evidence in this case it is clear .that no such notice was in fact given. The notice upon which the sale proceeded was a six-year-old one in which the mortgagees notified the surety-mortgagor that the amount he had to pay in order to prevent the sale and redeem his mortgage was 275 14s. That notice at the date of the sale supposed to be made on it no longer represented the true position.

If before the sale the respondents had notified the appellant that the original notice no longer held good and that they proposed to exercise their power of sale unless they were paid the sum of £35 9s. fid., or some such amount, being the balance reduced owing to subsequent transactions between them and the principal debtor, I think there is no doubt on the evidence that the appellant would have exercised his right to redeem at that amount. He ought to have been given the opportunity to do so.

The evidence of the auctioneer who sold the property on the instructions of the defendants reveals what I think is a most significant—not to say sinister—aspect of the transaction. He

says that he received instructions from Khoury (originally the ItoInas second defendant in. this suit) to sell the appellant’s brother’s Num* property at Nsa^–wam. ;^—That property was the front part of the°-
house, the bedrooms and offices of which constitute the property 6′ ll a

in question in this suit. On getting these instructions Ur** ^°_a^ivant_Ltd Khoury to sell the front part of the house under a mortgage lea”

by Khoury the auctioneer-naturally realised that no decent price

could be got for the front door and entrance hail of a house-._ G_rah7; without the other part of the house. He therefore approached p_m* J. G. B. 011ivant & Co., 1441., apparently knowing of the mortgage

held by thew over the other part of the house. It was in the interests of his client Kloury that he so approached Messrs. G. B. 011ivant & Co., Ltd., and as a _result he obtained from them, instructions to sell the, back part of the house. He then proceeded, without any -advertisement to test the market value and without notifying the mortgagor, to sell on behalf of the respondents the back part of the house to his own client at £40. This was less than one-third of the market value of the property according to the defendant’s own expert witness Isaac Akwei. Isaac Akwei was specially instructed, by the defendants to examine the property and report on its market value, and, in his report and in his sworn evidence, he says that the market value, of that

operty was £140. I regard. that evidence as conclusive against the defendants, and in the absence of any satisfactory evidence for the plaintiff to the contrary. I accept that evidence as to the market value of the property as at the date of the sale. I am somewhat amazed at the calm, naive, and unashamed way in which a licensed auctioneer disclosed to the Court what I can only describe as an utterly discreditable transaction.

I am clearly of opinion, that in all the circumstances disclosed. by the evidence the sale in question was a wrongful sale in respect of which the appellant is entitled to recover damages in this Court from the respondents.

The measure of damages to which the appellant is entitled is, I think, the difference between i40 and the actual sum due by the principal debtor to the respondents at the date of the sale. The exact amount of the latter sum does not appear definitely in the evidence, and I am of opinion that this-Court should make an order allowing ^–this appeal so far only-as the non-suit of the alternative claim for damages is concerned and remitting the case to the Court below to ascertain, either by consent of parties or by evidence, what was the amount due to the respondents by the secured debtor at the date of the sale; and thereafter to enter judgment for the appellant against the respondents for the difference between £140 and that amount. Any costs involved in, the ascertainment of the amount due by the secured debtor should, in my opinion, be borne by the respondents, but the proper course for this Court is, I think, to leave the question of such costs to the discretion of the Court below.