KUMASI - A.D 2018

DATE:  15 TH JANUARY, 2018


This ruling is in respect of an application for Judicial Sale of a mortgaged property filed by counsel for the Applicant Bank. The background facts are that sometime in the year 2007, the Applicant granted a loan of GHC 370,000.00 to the 1st Respondent, acting through the 2nd Respondent, to enable it put up a commercial property on plots numbered 1, 2 and 4 Block XV OTA Adum, Kumasi. Following a restructuring of the loan in the year 2010, and at a time when the debt was GHC 581,960.00, a restructured loan agreement and a mortgage deed were executed between the parties. After a series of negotiations, 1st Respondent paid an amount of GHC 600,000.00 to the Applicant to cover the principal sum and accrued interest. However, pursuant to further negotiations, the 1st Respondent was to pay an amount of GHC 100,000.00 in a single bullet payment by 31/07/2015 after which the bank was to release the mortgaged documents of the 2nd Respondent and discharge the Respondents accordingly.


The Respondents were unable to make this bullet payment but made a part payment. Then, on 28/07/2017, the instant application for judicial sale was filed because, according to the applicant, the entire amount due prior to the negotiations had become due as a result of the non- payment of the GHC 100,000.00 in the agreed manner. As at the time of the application, the alleged debit balance stood at GHC 927,438.65, and the Applicant sought to recover the same.


Order 19 rule (2) (1) of the High Court (Civil Procedure Rules) 2004, C.I. 47 provides that:


Applications to be made by motion

1. (1) Every application in pending proceedings shall be made by motion.

(2) Proceedings by which an application is to be made to the Court or a Judge of the Court under any enactment shall be initiated by motion and where an enactment provides that an application shall be made by some other means, an application by motion shall be deemed to satisfy the provision of the enactment as to the making of the application.

It is also provided under section 18 of the Mortgages Act 1972, NRCD 96 as follows:

18. Judicial sale


(1) On the failure of performance of an act secured by the mortgage, the mortgagee may apply to the Court for an order for the judicial sale of the mortgaged property, and on being satisfied as to the existence of grounds for the application, the Court shall, on the conditions that it considers just and equitable, grant an order for judicial sale of all or a part of the mortgaged property.


(2) In considering what conditions to attach to an order for judicial sale the Court shall consider what opportunity the mortgagee has afforded to the mortgagor or obligor or both of them to remedy the failure of performance.


By the combined effect of the foregoing provisions, an order for Judicial Sale can be sought by an originating notice of motion, supported by an affidavit and all relevant matters are to be disclosed in the affidavit.


On the face of the originating notice of motion filed by the Applicant herein on 28/07/2017, the Company seeks an order for Judicial Sale from this court. However, the body of the motion reads:

Motion On Notice by Sulley Sambian of Sambian & Co Solicitors for and on behalf of the Applicant herein praying the Honourable Court for an order for the immediate payment of an amount of Nine Hundred and Twenty Seven Thousand Four Hundred and Thirty Eight Cedis and Sixty Five Pesewas (GHC 927, 438.65) and or in the alternative, or both, Judicial Sale of the Respondents property described as Plots 1,2, and 4 Block XV OTA Adum, Kumasi which was used as mortgage for credit facilities granted to the 1st respondent upon the grounds set out in the accompanying affidavit.


After the motion had been moved, the court ordered both counsel to file their respective arguments by 27/12/2017. Counsel for the Respondents filed her submissions on 22/12/17, but checks from the Registry of this court as at 9am on 10/01/2018 revealed that counsel for the Applicant had not filed his arguments. Before then, the court notes that a document titled “SUPPLEMENTARY AFFIDAVIT IN OPPOSITION” was filed on 22/12/17 by the Respondents without leave of the court. Can this supplementary affidavit stand? There is no doubt that an originating notice of motion has been commenced before this court. Thus, whatever factual matters which the parties would want the court to consider must form part of that party’s affidavit and exhibits annexed thereto. That way, either party will have a fair opportunity to react to those facts or documents. In the present case, the filing of a supplementary affidavit without leave of this court is tantamount to amending the Respondents’ case without leave of the court. Since leave was not sought, the Applicant cannot respond to that irregular process so filed. In the circumstance, the court strikes out the supplementary affidavit in opposition filed without leave on 22/12/17 as not properly before the court. See Yapo Transport Limited v Ghana Oil Company Limited AND in the Matter of the Republic v Patrick Akorli & Anor Ex-Parte Yapo Transport (unreported)


Suit Number MISC/01/2017 Commercial Court Kumasi, 20th December, 2016.


 Now, in the submissions filed on behalf of the Respondents, their counsel quoted the relief sought by the applicant herein, and argued that it is essentially a liquidated claim with an alternative relief. Counsel’s contention is that section 18 of the Mortgages Act, 1972 NRCD 96 on which the present application is premised does not provide for the institution of an action for a liquidated claim by an Originating Notice of Motion. Citing Order 2 rules (2) and (3) of C.I. 47, counsel submitted that liquidated claims are to be commenced by a writ of summons which satisfies all the formal requirements before a court could have jurisdiction to make an order. In support of that contention, counsel cited and relied on the case of Ahinakwa II (substituted by) Ayikai v Okaidja III & Ors (2011) 1 SCGLR 205 to the effect that where the rules of court prescribed a particular mode of seeking relief the failure to initiate the proceedings for relief in accordance with the prescribed mode, is not an irregularity but raises an issue that goes to jurisdiction. Winding up her arguments on this point, counsel submitted that the aspect of the application relating to the order to compel payment of the sum stated therein should fail because evidence will have to be taken to determine the quantum of the alleged debt. And, since section 18 of NRCD 96 does not envisage such situations, no provision has been made to that effect.


 The court agrees with the submissions by counsel for the Respondents with regards to the liquidated claim which is being sought through an originating notice of motion. Indeed, that is procedurally wrong and incurably bad. In the Ayikai v. Okaidja case referred to, supra, Gbadegbe JSC, in delivering the judgment of the court at page 208 stated:


Where the rules of court prescribe a particular mode of seeking relief, the failure to initiate proceedings for relief in accordance with the prescribed mode, is not only an irregularity but raises an issue that goes to jurisdiction…. To hold otherwise would mean that every default of a rule of procedure is merely an irregularity that ought to be waived by the court, and have the effect of categorizing all procedural defects as irregularities and those based on statute as fundamental. Such an approach is not justified within the intendment of Order 81…”


His Lordship at the end of the judgment quoted with approval the statement of Atuguba JSC in


Oppong v Attorney – General (2000) SCGLR 275 at 280 thus:


Where the step by a party to proceedings before this court is fundamentally wrong, such error is not within the purview of the rule and cannot be waived.


It is approximately 2pm on 10/01/2018, the court’s attention has just been drawn to the submissions filed by counsel for the Applicant at 12:40pm today. Counsel is reminded of his duty as an officer of the court to adhere to the strict time lines set by the court, this practice of filing submissions at the eleventh hour is frowned upon. Be that as it may, the court will now consider counsel’s belated arguments.


On the issue under consideration, counsel for the applicant has a contrary view, his argument being that as far as judicial sale is concerned, a party can choose to come by writ or by an application. Order 2 r 3(3) and Order 19 r 1 (2) cited. This court is of the opinion that within the meaning of the foregoing provisions, if a person opts to issue a writ for an order of Judicial sale instead of an originating notice of motion, the consequence is not fatal. But then, why would a person issue a writ with its cumbersome procedure for an order for judicial sale whilst the same result can be achieved faster through an originating notice of motion? Since the rules of court clearly state the mode of instituting an action for a liquidated claim, that rule cannot be circumvented. The court also brings to the attention of counsel for the Applicant the Civil Proceedings (Fees and Allowances) (Amendment) Rules, 2014, C.I. 86. The filing fees for the High Court (Commercial Division) are clearly stated in the second schedule. For a claim that exceeds GHC 500,000.00 but does not exceed GHS 1,000,000.00, the applicable fee is GHC 3000.00.However, since the Applicant chose to come through the “back door” in seeking a liquidating demand by an originating notice of motion, the Bank paid a filing fee of GHC 50.00 for the application itself and GHC 100.00 for the exhibits. If care is not taken, court users who wish to pay lesser filing fees will circumvent the rules and end up depriving the State of huge revenue. That practice must stop! In short, liquidated demands cannot be brought by originating notice of motion.


So, the Applicant did not have the option to come by motion as far as the liquidated claim for the sum of GHC 927,438.65 is concerned. Having failed to properly invoke the jurisdiction of the court with respect to the claim for GHC 927,438.65, including non-payment of the requisite filing fees, that relief is struck out.


Issue of Non-Registration of the Mortgage deed.


Section 24(1) of the Land registry Act, Act 122 states that:


24. Registration necessary for validity

(1) Subject to subsection (2), an instrument, other than a will or a judge’s certificate, first executed after the commencement of this Act, shall not have effect until it is registered.

(2) A provision of this Act shall not operate to prevent an instrument which, by virtue of an enactment, takes effect from a particular date from so taking effect.

It is further provided under section 72 (1) of the Land Title registration Law, 1985, (PNDCL 152) that:

72. Form and effect of mortgages

(1) A mortgage created after the commencement of this Act shall be in the prescribed form and shall not have an effect unless it is registered in accordance with this Act.


In her submissions, counsel for the Respondents referred the court to: (i) section 24(1) of the Land Registry Act 1962 (Act 122)which provides that apart from a WILL and a Judge’s Certificate, any instrument affecting land executed after the coming into force of the Act shall be of no effect until it is registered; and (ii) section 72 (1) & (2) of the Land Title Registration Act 1985, PNDCL 152 which makes it mandatory for mortgages created after the commencement of the Act to be registered in the form prescribed by the Act, after which it shall be filed in the Registry.


Counsel submitted that a mortgage is an instrument affecting land within the meaning of section 3(4) of the Mortgages Act, 1972 NRCD 96 and the same becomes a registrable instrument. So, to the extent that the Mortgage Deed which the Applicant herein has exhibited as exhibit ‘DO2’ as forming the basis of its application has neither been registered nor filed at the Deeds Registry of the Lands Commission, it has no legal effect. Asare v. Brobbey & Anor (1971) 2 GLR 331, CA; Nartey v Mechanical Lloyd Assembly Plant Limited (1987-88) 2 GLR 314; Hammond v Odoi (1982-83) GLR 1215 SC; West African Enterprises Limited v Western Hardwood Enterprises Limited (1995-96) 1 GLR 155, among other cases were cited and relied on by counsel. As to be expected, counsel for the Applicant held a contrary view. He argued that the requirements for a valid and effective mortgage are contained in sections 3 and 4 of NRCD 96 thus:


3. Mortgages evidences by writing


(1) A mortgage is not enforceable unless

(a) it is evidenced by a writing signed by the mortgagor or by the agent of the mortgagor authorised by the mortgagor in writing to sign, or

(b) it is excused from the necessity of a writing by the operation of the rules of equity, including the rules relating to fraud, duress, hardship, unconsciousnability and part performance, or

(c) it is excused from the necessity of a writing by an enactment, in the case of a customary law transaction.

(2) A writing evidencing a mortgage is, for the purpose of this Act, an instrument which may be registered in accordance with the Land Registry Act, 1962 (Act 122).


 It is the contention of counsel for the Applicant that for all intents and purposes, the requirements of a valid Mortgage under NRCD 96 have been satisfied, and the argument by counsel for the Respondents that the mortgage deed is unenforceable by reason of non-registration is misconceived. Another argument proffered by counsel is that if Registration is a prerequisite for validity, the absence of Registration places the mortgage in the category of an equitable mortgage which is still enforceable, and the same can be realized upon express orders of the court. Gurumah v National Investment Bank (1979) GLR 193 cited.


Moving on, counsel for the Applicant robed in the Home Mortgage Finance Act, 2008, Act 770, section 7(1) of which places the burden of registration of the title and mortgage deeds as well as stamping of the same on the borrower; and section 7(2) which is to the effect that an unstamped and an unregistered mortgage made under this Act is valid only between the original parties to the mortgage. Reference was also made to section 2(2) of Act 770 to the effect that where there is an inconsistency between the Mortgages Act and Act 770, the provisions of Act 770 shall prevail.


The court has looked at the application of the Home Finance Mortgage Act, 2008, Act 770, and it is as follows:


1. Application

This Act applies to transactions between financial institutions and their customers for the provision of finance for

(a) the construction or purchase of a residential property,

(b) the completion of a residential property;

(c) extension to or renovation of a residential property;

(d) improvement to a residential property for ownership,       sale or rental;

(e) construction of residential properties for sale or rental;    or

(f) purchase of fixtures and chattels related to residential properties.


 The arguments based on the Home Finance Mortgage Act, Act 770, seems to be misplaced. Why is it so? From the Applicant’s exhibit ‘DO’ which is the loan agreement executed on 23/10/2007 , the purpose for the loan was stated in these words: the loan will be used to undertake construction of commercial building on Plot 1,2 & 4 block XV, O.T.B. Adum, Kumasi. (Emphasis mine). When the 1st Respondent failed to liquidate its indebtedness within the agreed 24 months period, the loan was restructured culminating in the execution of exhibit ‘DO 1’ on 30/08/2010, followed by the execution of the mortgage deed, exhibit ‘DO 2’, on 01/09/2010, for the due repayment of the loan. For all intents and purposes, the loan for which the mortgage was executed did not relate to a RESIDENTIAL property or properties, their construction, refurbishment, renovation, extension etc, for sale or rental. The transaction related to the construction of a COMMERCIAL PROPERTY to the knowledge of the parties thereto. Within the intendment of section 1 of Act 770, a mortgage executed in respect of a Commercial Property is not covered by that Act. As such, parties to such mortgage agreements will be bound by the provisions of the Mortgages Act primarily, and any other applicable enactment, but certainly not the Home Mortgage Finance Act.


On the question of non-registration of the mortgage deed, exhibit ‘DO 2’, the law is that with the coming into force of the Land Title Registration Act, 1986 (PNDCL 152), an unregistered mortgage will not have any effect until it is registered under the Act. So, the arguments by counsel for the Applicant that exhibit ‘DO 2’ ought to be treated as an equitable mortgage will not hold in the face of an express statutory requirement. The case of Asare v Brobbey (1971) 2 GLR 331 throws more light on the necessity for registration of a mortgage. This was a case in which the mortgagor sought to set aside the sale of a mortgage property. It turned out that at the time of the sale the mortgage had not been registered. It was held (head note 2) that:


“Since the mortgage deed was not registered at the time the power of sale was exercised, the document itself was ineffective and invalid to confer the rights and to impose the obligations stipulated in the mortgage deed. Consequently the first respondent did not have any power of sale at the time the house was sold by auction, and therefore had no title to transfer the property to the third respondent.” See also Amuzu v Okhlika (1998-99) SCGLR 142; Dennis Dominic Adjei (2015) Land Law, Practice and Conveyancing in Ghana at page 228.


The rationale for this position is that even though the mortgage deed is not void, it is invalid and ineffective; the rights of the mortgagee would not have crystallized under the document. At the same time, the mortgagor is to note that Registration can always be effected when all statutory requirements are met, so it is just a matter of postponing the possible obligations of the mortgagor under the mortgage deed. For these reasons, the instant application for Judicial Sale under section 18 of the Mortgages Act, NRCD 96, cannot be granted.


Cost of GHS 3000 is awarded against the Applicant.