EQUITY PERSONAL READING

28.08.19
NATURE AND DEVELOPMENT OF EQUITY
Snell & Kludze

According to Snell, equity is “a body of rules and principles which form an appendage to the
general rules of law, or a gloss upon them.” It is an attempt by the English legal system to
meet a problem common to most legal systems where a set of general rules instituted to ensure
fairness and consistency in the law, results in unfairness when unforeseen circumstances arise.

Equity does not destroy the law but rather assists it. Some authors view equity as a historical
accident.

How did Equity come about?

The common law first came into being shortly after the Norman Conquest and rapidly developed
from then till the reign of King Henry III in the 13th Century. The common law was administered
by 3 courts; King’s Bench, Common Pleas and Exchequer.

With the development of precedent and the passing of the Provisions of Oxford in 1258, the
common law became a rigid system which restrained the Chancellor from issuing writs of his
own initiative to deal with novel situations.

Where a plaintiff could not fit his cause of action within the available writs, the courts would
not hear his matter and grant him an appropriate remedy. Aside this, there were occasions
when a plaintiff would not receive the appropriate remedy due to the ability of the Defendant
to defy the court or even intimidate the jury.

Whenever this happened, the plaintiff would often petition the King in Council and plead for
the King to exercise his extraordinary judicial powers. As the custom developed, the King
delegated his power to the Chancellor to determine these matters. This custom was confirmed
by a royal order in 1349.

In 1474, the King passed a decree establishing the Chancellor’s authority to deal with these
petitions. And soon a court independent of the King and his council was established to decide
these petitions. This was known as the Court of Chancery.
The Chancellor had very wide but undefined powers, which were coextensive with the
particular facts that necessitated them. He decided petitions based on conscience. This
conscience, according to Snell, was not his private moral standards but rather in theory,
universal principles and principles of natural justice.

Over time, the Chancellors began systemizing the decisions taken and developing some form of
precedent. This led to rigidity once more in the Court of Chancery. However, Chancellors were
careful to apply the precedent they had set on a case by case basis.

Also, there was increasing rivalry between the common law courts and the Court of Chancery
due to the powers that each court had. The common law courts could grant damages and had
limited power to grant injunctions. The Court of Chancery could not grant damages but could
Commented [sb1]: In this case, there was a statute
(the Ecclesiastical Leases Act, 1571) that provided
that the conveyance of an estate by a master,
fellow or a college dean to anyone for a term less
than 21 years or 3 lives was utterly void.

grant equitable remedies like specific performance, etc. Not mindful of this, a college master and some
fellows sold their land to the Queen. The Queen in
turn granted the land to a Genoese merchant.
There were also situations where a judgment given by the common law courts could not be
The merchant thought that the fact that the grant
enforced due to a judgment given by the Court of Chancery. This deepened the hostility was from the Queen meant that the rule did not
apply to the transfer, and meant that he would
between both courts and in the Earl of Oxford’s Case, the King on the Attorney-General’s
have the new unimpeachable title of ownership.
advice, decreed that where there is a conflict between the common law and equity, equity
The merchant in turn sold the property to the Earl
will prevail. of Oxford, who built houses on it and leased them
out. One of the houses was leased to one John
Warren.
In 1854, the Common Law Procedure Act was passed which granted the common law courts
It turned out that the college master who had
the limited power to grant injunctions. The Court of Chancery was also given the power to initially sold the land to the Queen, decided in light
of the 1571 Act to lease the land to another person
award damages either instead of or in addition to an injunction or specific performance called John Smith. John Warren sought to eject
Smith and sued.
through the enactment of the Chancery Amendment Act in 1858 (commonly known as the
The jury held that Smith had taken possession of
Lord Cairns Act).
the land unlawfully because the sale to the Queen
in defiance of the Act had given rise to a good title.
Later the Judicature Acts 1873-1875 were enacted to unite both courts into one Supreme The King’s Bench overturned the jury’s verdict
saying that the Queen could not be exempted from
Court, with the power to administer both law and equity. the application of the statute, therefore Smith was
legally entitled to the property.

Section 25 of the Judicature Act, 1873 further consolidated the King’s decree in the Earl of The case was brought before the Chancery. The
Chancery granted an injunction prohibiting the
Oxford’s case and stated that where there was a conflict between equity and common law, enforcement of the common law order and granted
the tenants of the Earl of Oxford quiet enjoyment
equity should prevail. a of the land.

The two courts had given conflicting judgments and

However, it must be noted that the rules of equity and the common law rules remain distinct for that reason, the Chancery referred the matter
to the King who referred the matter to the Attorney
from each other even though they are administered in the same court. The court has simply General, who decided that the decision of the
Chancery should prevail. And that in a situation
been vested with the power to administer both law and equity in every case, action or dispute where there was a conflict between equity and
common law, equity was to prevail.
before it. It is essentially a fusion of administration rather than principles. According to Lord
Cairns, “The court is not now a court of law or a court of equity; it is a court of complete
jurisdiction.”

What new things did Equity introduce?

1. Equity recognized the concept of trusts and gave beneficiaries the right to sue for the
protection of their interest in the trust property especially in cases where the trustee
was misusing the property.
2. It introduced the mortgagor’s equity of redemption to allow mortgagors to redeem their
property even after the contractual date for redemption had passed.
3. Equity introduced some new remedies for cases where damages alone weren’t enough.
E.g. specific performance, injunctions, rescission, rectification, the appointment of a
receiver, etc.
4. The Court of Chancery allowed for persons to be joined to actions.
5. The Court of Chancery could also compel the discovery of documents.
6. The Court of Chancery could subpoena persons to appear before it.

THE MAXIMS OF EQUITY

These are essentially principles that guide the courts in the application of the rules of
equity. They are not to be applied literally and relentlessly in their full width, but are to
guide the courts in their determination of matters. They are about 12 in number.

1. Equity will not suffer a wrong to be without a remedy.

What this means is that equity will not allow a wrong that is capable of being remedied
to go un-remedied.

This is because of the fact that under the common law, there were situations where a
plaintiff whose right has been undoubtedly breached would be turned away from the
court because of the fact that his cause of action was novel and as such could not fit
into any of the writs available.

An example of the application of this maxim is in the developments made in relation to

the law of trusts, by giving beneficiaries the legal right to sue to protect trust property.
It must be noted that the wrong talked about here must be a legal wrong and not a
moral wrong.

Day v. Brownrigg

In this case, the Plaintiffs sued the Defendants claiming that their property which was
called Ashford Lodge, had been so named for 60 years and that the adjoining house
which belonged to the Defendants had been named Ashford Villa for 40 years, after
which they changed it to Ashford Lodge. According to the Plaintiffs, the Defendants had
recently began calling their property Ashford Lodge, much to the Plaintiffs chagrin. The
Plaintiffs further alleged that the Defendants’ act had materially diminished the value
of the property and as such they claimed an injunction to restrain the Defendants from
continuing to use the name of their house.

The Court held that no identifiable legal right had been allegedly infringed. And for
that reason, the Plaintiffs were not entitled to the injunction that they were seeking.
According to James LJ, the Court “can only interfere where there is an invasion of a
legal or equitable right.”

Bank of Credit & Commerce International SA v. Ali

In this case, the respondent bank declared some of its employees redundant and invited
them to sign a form of release. This form of release contained a term to the effect that
any claim that the employees had or might have had against the bank had been fully
and finally settled. The following year, the bank collapsed and it became known that
the bank had been involved in many fraudulent and corrupt transactions.

A number of former employees in the bank who had been declared redundant, unaware
of the fraudulent dealings of the bank sued, claiming stigma damages for the loss arising
from the bank’s breach of an implied contractual duty of trust and confidence.

The bank contended that the employees could not institute such an action since they
had signed the form of release, in which they agreed that they had no further claim
against the company.

The question was whether the employees could obtain any relief in equity, especially as
they claimed that the fraudulent dealings of the bank made it difficult for them to find
other jobs as no one was willing to hire them due to the history of their previous
employers.

The court held that it would be unconscionable to allow the bank to rely on the
release form.

Tahiru v. Mireku & Anor.

In this case, the defendant had agreed to sell his house to the plaintiff. They both agreed
that payment was to be done in installments.

In accordance with this agreement the Plaintiff paid some amount to the Defendant.
Later when the plaintiff attempted to complete the payments, the Defendant refused
to accept the money, claiming that the Plaintiff had delayed in making payment and
for that reason he had sold the house to another person who had ready cash at the
time. The Defendant claimed that prior to the resale to the third party (who was the
co-defendant in this case), he had given notice to the Plaintiff.

It must be noted that the agreement for the sale was not in writing as the
Conveyancing Decree demanded. Based on this the co-defendant argued that since the
agreement between the Plaintiff and the Defendant was not in writing, it could not be
enforced.

The Court held that the requirement of writing had actually been satisfied, because the
Defendant had signed something that they referred to as a receipts and payments table
which included the property to be disposed of, the person to whom it was being
disposed and the purchase price. All of which were necessary to satisfy the writing
requirement.

Also, the court held that the doctrine of part-performance, as an equitable remedy
would apply even if the requirement of writing was not satisfied.

The court held per curiam that equity recognizes that it would be fraudulent to allow
a party to take advantage of the absence of a signed agreement if that party stood
by and allowed the other party to alter their position for the worse by carrying out
acts in performance of the agreement.
Redco Ltd. V. Sarpong

In this case, the respondent agreed to purchase a flat from the appellant company for
an amount of 72,000 cedis. The respondent made a down-payment of 19,000 cedis, with
the remainder of the money to be paid upon completion. The appellant informed the
respondent that the flat would be ready in December and so he had to make another
payment of 31,400, which the respondent readily paid up with extra even.

7 years later, the appellant company then informed the respondent that the flat now
cost 3 million cedis, and that if he still wanted the flat he was to pay the balance of
that amount as against the previous payments he had already made.

The respondent on hearing this, sued and claimed specific performance on the ground
that although under the old agreement an amount of 21,000 cedis was outstanding, the
payments he had made so far constituted part performance to warrant the award of an
order of specific performance.

The appellant company in its defence, pleaded that there were some extraneous
circumstances which occurred and militated against the completion of the flat by the
agreed date.

The respondent moved the court for a judgment that the appellant’s defence disclosed
no reasonable defence and that it only served to delay the trial. The High Court granted
judgment for the respondent and the appellant appealed it.

The Court of Appeal held that there was no rule that stated that where a statement of
defence was to be struck out under Order 19 r.29 of the High Court (Civil Procedure)
Rules, 1954 (L.N.140A) for failure to disclose a reasonable defence or for being
embarrassing, that step could be taken only on formal evidence.

The Court of Appeal further held that the basis upon which the remedy of specific
performance will be granted in equity is settled. It will be granted in respect of contracts
where time is of the essence and a mere award of damages would not be enough.
Example in this case where the house was required for immediate residence, a delay
for 7 years without explanation cannot be compensated for by mere damages,
especially where the respondent has paid a substantial purchase price.
Also, the respondent had substantially fulfilled his obligations under the agreement
which in equity would entitle him to the equitable remedy of specific performance.

Adjei v Foriwaa

The plaintiff and the defendant were married at customary law. The plaintiff wife sued
seeking a declaration that their marriage still subsists and an order directing the
defendant husband to make certain reasonable provisions for her and the children with
him, as well as an injunction to restrain the husband or his agents, assigns, servants or
workmen from ejecting her from their matrimonial home.

The husband too instituted a suit in the Magistrate Court against the wife seeking a court
order to compel the wife and her parents to take the necessary steps according to
customary law to dissolve the marriage or an order from the court dissolving the
marriage and an order ejecting the wife from the matrimonial home and restraining her
from ever entering the home.

With regard to equity, the Court that finally decided the matter, stated that where an
application was made to the court for an equitable relief, the court is not restricted to
only granting or refusing to grant the specific remedy sought, but has the authority
to make any such order as conscience and the justice of the case demanded.

Ramia v Ramia

In this case, the couple had first been married under customary law for 3 years, after
which they were married under the Marriage of the Mohammedans Ordinance, Cap 129.
They had 5 children. Earlier in the marriage the husband acquired a lease of land and
registered the lease in the wife’s name and put up a building on a plot of land with the
wife’s name registered as the owner of that plot.

Later, the husband claimed that his wife had deserted him and as such sued for the wife
to convey the house back to him, on the ground that he retained the beneficial interest
in the property while his wife held the legal estate in trust for him.

The wife on the other hand claimed that there was no such trust relationship and that
the husband had made an outright gift of the property to her and her children and urged
the court to apply the equitable principle of advancement in her favour.
 The Court held that this equitable doctrine of advancement is not based on the type of
marriage contracted (i.e. monogamous or polygamous) but rather on the recognized
legal relationship subsisting between the one providing the money to acquire the
property and the one in whose name the property is taken. The court went ahead to
apply the principle in the wife’s favour, since the intention to benefit her and her
children was proven.

2. Equity follows the law (but not slavishly, nor always)

This means that where the common law rules are direct and govern a case with all its
circumstances, or that particular point alleged by the plaintiff, then equity is bound. It
is only when there is an important circumstance which common law has disregarded,
that equity will interfere.

According to Snell, equity does not interfere with a man’s legal rights unless it would
be unconscionable on his part to take advantage of them.

This maxim is also captured in Latin as aequitas sequitur legem, meaning, “Equity will
not allow a remedy that is contrary to the law.”

Tulk v. Moxhay

The Plaintiff being the owner of a piece of land sold the land to one Elms. In the deed
of conveyance, there was a covenant by Elms for himself, his assigns and heirs, that
they would not use the land for anything else other than a square garden. Elms sold
the land to someone and the land was conveyed in this way until it was bought by the
Defendant, who then wished to alter the nature of the land.

The Plaintiff then filed for an injunction to prevent the Defendant from converting the
land into something other than a square garden, as this was in breach of the covenant
with Elms.

The Defendant’s deed of conveyance did not contain this covenant, but he had notice
of the covenant in the deed signed between the Plaintiff and Elms.

According to the court, “For if an equity is attached to the property by the owner, no
one purchasing with notice of that equity can stand in a different situation from the
party from whom he purchased.”
The court allowed for a restrictive covenant to be enforced against a purchaser, once
the purchaser bought the property with notice of this covenant. This departed from
the common law rule that such covenants did not run with the land and as such could
not bind the purchaser who was not the initial covenantee.

Under common law, where there is a breach of such a contract, damages are awarded.
Equity however introduced specific performance in such cases, since the contract in
equity, creates an equitable interest in the property. This equitable interest is
enforceable against 3rd parties, except where the 3rd party is a BONAFIDE PURCHASER
FOR VALUE WITHOUT NOTICE. But even with this, where the equitable owner registers
his interest, the bonafide purchaser would be deemed to have notice.

Equity also refuses to follow the law by establishing the mortgagor’s right of
redemption. Under the common law, a mortgage involves a debtor conveying his
property to his creditor as security for a loan.

In the mortgage agreement, there is a specified date by which the debtor is to pay the
loan and then redeem the mortgaged property. Where the debtor is unable to pay by
that date, the creditor was entitled under common law to keep the property as his
forever since the debtor would have lost this right to redeem the property.

With equity however, the debtor doesn’t lose his right to redeem the property even
after the contractual date of redemption is past.

Amuzu v. Oklikah

The appellant in this case agreed to purchase a piece of land with an uncompleted
building on it from a vendor on behalf of his principal. The parties agreed that an initial
deposit was to be made, which would be used to complete the building on the land. The
balance was to be paid on the completion of the building, after which the property
would be transferred to the appellant’s principal. The agreement was put into writing
and the deposit was paid.

The vendor failed to complete the building and for that reason the appellant took
possession of the land and completed the building at his own expense. While the
appellant was still in possession of the land, the vendor covertly granted the same piece
of land to the respondent in the case and executed a deed of conveyance for the
respondent. The respondent then stamped and registered it with the Lands Registry and
attempted to take possession of the land. He was resisted by the appellant and the
appellant sued.

It turned out that the respondent was a friend of the appellant’s principal and had full
knowledge of the fact that the land was to be sold to the appellant. He had even sought
the appellant’s help earlier to purchase a plot next to the disputed one. He was also
aware that the appellant had taken possession of the uncompleted building on the land
and was carrying out further construction to complete it.

The High Court gave judgment for the respondent due to the fact that the respondent
had registered his deed with the Lands Registry and could fully prove his root of title
through the registered deed, whereas the appellant’s document did not describe his
root of title and had not been registered with the Lands Registry. The Court of Appeal
upheld this decision. The appellant appealed to the Supreme Court.

The Supreme Court held that equity would not permit a statute to be used as an
instrument of fraud or inequitable conduct. Therefore section 24(12) of the Land
Registry Act, 1962 (Act 122) was not to be interpreted in a way that facilitates fraudulent
conduct as in this case. As such, a later executed document in relation to the sale and
purchase of land would only gain priority over an earlier one by registration only if
that later one was obtained without fraud and without notice of the earlier
unregistered instrument.

Ackah v. Pergah Transport Ltd.

In this case, the 3rd Defendant (SGSSB) offered its property to the Plaintiff for sale. After
the Plaintiff agreed to buy the house, he was introduced to the 2nd Defendant who was
the managing director of Pergah Transport who was occupying the building as the
licensee of the MD of the Bank.

The 2nd Defendant and the Plaintiff mutually agreed that the Plaintiff would buy the
house in the name of the 1st Defendant in order to help the 1st Defendant meet the terms
and conditions of a bid put out by the Ghana Commercial Bank by boosting its asset
base. They further agreed that after the 1st Defendant had won the bet, it would transfer
the house back to the Plaintiff. The 1st and 2nd Defendants claimed that there was no
such agreement between them and the Plaintiff and that the Plaintiff merely offered
financial assistance to purchase the house.

The evidence that was led in the trial at the High Court supported the Defendants’ claim
better.

The Supreme Court held that even though the defendants’ story was more credible, it
was clear that the loan taken by the Plaintiff for the purchase of the house was to the
benefit of the Defendants, as such they were to indemnify the Plaintiff with the same
conditions attached to the loan. Because equity follows the law, the court held that the
Plaintiff was to have a lien over the disputed property until he received the final
payment from the 1st and 2nd Defendants.

Western Hardwood Enterprises Ltd. & Anor. v. West African Enterprises Ltd.

The land in dispute in this case belonged to the Apowa Stool initially. The stool leased
the land to the Takoradi Brewery who later had to sell the land to West African
Enterprise due to a judgment debt obtained against it. West African Enterprise bought
the right, interest and title of the Takoradi Brewery and was issued with the appropriate
certificate of purchase to evidence this.

Some years later, Western Hardwood, claiming that it had title to the land due to a 50
year lease between it and the Apowa Stool, entered the property and took possession.
West African then sued. West African claimed that as soon as it took over the property
it paid the rents legally due to the Lands Registry and entered into possession for almost
10 years before Western Hardwood interfered.

In its defence, Western Hardwood admitted that the land in dispute had initially been
leased by the Stool to Takoradi Breweries but a search at the Lands Registry revealed
that their lease had not received the concurrence of government which was a
requirement under the Land Registry Act, 1962 (Act 122). Also, Western Hardwood
claimed that the Apowa Stool had re-entered the land due to the failure of TBL to
develop the land in accordance with the terms of the lease agreement. And for that
reason, Western Hardwood entered into an agreement with the Stool to purchase the
buildings on the plot and had even spent an amount of money rehabilitating some of
them.

The trial judge found that the lease agreement between the Stool and Takoradi
Breweries had not been registered and stamped and for that reason, Takoradi Breweries
had no valid title to confer on the Plaintiff. Also, the court held that at the time Western
Hardwood acquired the land from the Stool, the land had been abandoned by Takoradi
Breweries, and that upon entry Western Hardwood informed the Plaintiff properly.

The Court of Appeal judge held that at the time the Stool wrote to Takoradi Breweries
to inform them of the decision of the Stool to exercise its right of re-entry, it was aware
of the fact that the Plaintiff had purchased the interest in the land from Takoradi
Breweries. Because of this, the Court of Appeal held that the re-entry by the Stool was
in breach of Section 29(1) of the Conveyancing Decree.

The Supreme Court held that the fact that it seemed as if the minister’s concurrence
had not been given to the lease between the Stool and Takoradi Breweries did not mean
that the disposition was void.

The only grounds on which such a disposition would be void would be where the
transaction was entered into purposely to evade the requirement of the minister’s
concurrence.

Also, to exercise the right of re-entry, Section 29 required the lessee to be served with
notice of the breach complained of before a right of re-entry could be enforced. In
addition, the right of re-entry was to be enforced by an action in court. As such, the
Stool did not properly exercise its right of re-entry and for that reason, the lease to
Western Hardwood was illegal and unenforceable.

Western Hardwood could also not be deemed as a bonafide purchaser for value without
notice since they had actual notice that there was an encumbrance on the property they
sought to obtain. Due to this actual notice, they would also be deemed to have had
constructive notice of the fact that the buildings on the land were not put up by the
Stool but by the Plaintiff. Equity would impute to them a knowledge of all other things
that a prudent purchaser would have discovered.
Finally the court held that, a later instrument which is registered may obtain priority
over an earlier instrument if only that later instrument had been obtained without fraud
and without notice of the earlier unregistered instrument.

Maddison v. Alderson

An intestate induced a woman to serve him as a housekeeper without pay for many
years and convinced her to give up other life opportunities in life. In exchange, he
made a verbal promise to her that on his death, he would make a will in which he would
leave her a life estate in his land. Afterwards, he signed a will in which he left her the
life estate. This will was however not attested to.

The woman brought the action after the death of the man to enforce the will. The Court
had to examine the law of equity in relation to part performance of parole contracts.

The Court held that there must have been some evidence to connect the alleged part
performance to the alleged agreement.

Acts done in part-performance must be done unequivocally and referable to the

alleged agreement. Since there was no contract between her and the deceased, neither
was there anything to prove that her services were unequivocally done as a result of any
promise. It is good to note that at the time of this case, it was a rule of contract law
that extrinsic oral evidence was not admissible in the determination of a matter founded
in a contract.

Wakeham v. Mackenzie

The Plaintiff in this case was a widow. She began visiting her friend after his wife died
and took care of him as his health was deteriorating. He promised her that he would gift
her his house and everything in it if she would move in with him and look after him and
the house for the rest of her life. She agreed and moved in.

They discussed this offer on several occasions and agreed that the Plaintiff would have
a room to herself and that the man would pay for her food and fuel and she would not
receive any wage or salary.
Later when the man died, he made no provision for her in his will. She sued the
executor of his will for specific performance.

The Court held that the position of the law is that the acts in question must be referred
to some contract and must prove the existence of some contract and are consistent with
the contract alleged. In this case, the Plaintiff by moving into the man’s home, looking
after him and the house and occasionally contributing to the common pot, earned some
rights in equity. All these acts were in reference to the contract that she had entered
into with the man. To allow the argument that the agreement had been repudiated for
want of writing would be fraudulent. And for that reason, the woman was granted
specific performance.

Djan v. Owoo

In this case, the first defendant and the plaintiff entered into an oral agreement for
the sale and purchase of the first defendant’s house.

The Plaintiff paid initially paid a deposit and was given two receipts by the first
defendant. The receipts contained a description of the property to be sold as well as
the names of the parties to the sale.

The house to be sold had been mortgaged by the first defendant to the second
defendant. And the plaintiff, on being made aware of this fact, made payments to the
second defendant in order to redeem the property so the first defendant could freely
convey it to him.

The Plaintiff then made full payment for the house but the first defendant refused to
convey the house to him.

The Court held that according to Section 2 of the Conveyancing Act, for a contract for
the sale of land to be valid, the contract had to contain the following:
• The names of the parties
• The property to be transferred
• The purchase price of the property, and
• The signature of the defendant (i.e. the one conveying the property)
 In this case, all these requirements were present except the third (i.e. the purchase
price of the property).

The receipts only stated the part payment made by the Plaintiff. The Court held that
the rationale behind this was probably the fact that the price in a contract is a material
term in every contract of sale without which the contract cannot be enforced.

Also, the receipts were not registered in accordance with section 24 of the Land
Registry Act. And for that reason, the Plaintiff could not claim any rights under them.

However, Section 3(2) of the Conveyancing Act provides that the requirements stated
are to be subjected to the rules of equity, including those relating to fraud,
unconscionability, duress and part-performance.

Due to this rule, the court awarded specific performance. This was because the terms
of the agreement were certain and the payments made by the plaintiff were clearly in
accordance with an earlier agreement between him and the first defendant.

The Court held that equity would decree specific performance where the payment of a
price in pursuance of a contract was done with the concurrence of the defendant. And
to allow the defendant to resile from the contract due to the absence of a properly
executed instrument of conveyance would be fraudulent.

So in this case, equity did not necessarily follow the law.

3. Where there is equal equity, the law shall prevail.

Jared v. Clements

In this case, the plaintiff was the equitable mortgagee of the property in question. It
turned out that the mortgagor of the property had also purported to sell the property
to the defendant.

The defendant accidentally gained knowledge of the existence of the equitable

mortgage before the completion of the purchase, but took the vendor’s solicitor’s
word that the mortgage had been paid off. On completion of payment, the defendant
was given a forged receipt indicating that the mortgage had been paid off as well as the
title deeds to the property.

The Court held that the defendant, as the purchaser, upon finding out that there was
an encumbrance on the property, should have done something to ensure that this
competing interest is destroyed or even found out who the equitable mortgagee is
and attempted to join him to the conveyance.

By leaving matters in the hand of the vendor, the purchaser must suffer for the failure
of the vendor to ensure that the competing interest is destroyed.

As such a purchaser, who has before the completion of a purchase, received notice of
an outstanding equitable interest must ensure that that interest is destroyed.

Adu-Sarkodie v. Karam & Sons

The Plaintiff in this case purchased a house for his infant daughter. After the purchase,
he found out that the defendants had been in occupation of the house at the time of
purchase.

He invited them to attorn tenant to him but they refused to do so due to the fact that
their lease agreements with the previous owner of the property had not expired and
that they had paid their rent. For that reason, the defendants did not deem it necessary
to negotiate a new tenancy agreement with the Plaintiff.

The Court held that the Plaintiff as a purchaser should have found out from the
defendants prior to the completion of the purchase, the nature of their interest in the
property.

However the defendants, who adduced certain letters embodying the terms of their
lease with the former owner of the property, were found not to have any valid rights in
the lease agreements since the letters containing the terms of the agreement had
not been registered and were therefore of no effect according to section 24(1) of
the Land Title Registry Act, 1962 (Act 122).

This meant that the tenancy was terminated by the operation of law and therefore the
defendants had become statutory tenants who could only be ejected under an action
 brought under Section 17(1) of the Rent Act. As such, the plaintiff’s ejectment action
failed.

Cave v. Cave

In this case, the sole trustee of a marriage settlement breached a trust by taking the
trust funds and using it to purchase land. He took the conveyance in the name of his
brother. His brother created an equitable mortgage in one party’s favour and a legal
mortgage in another’s favour. None of the mortgagees had any idea that the land had
been acquired in breach of a trust.

The Court in this case held that the legal mortgage had priority over the equitable right
of the beneficiaries of the trust, however, the equitable right of the beneficiaries had
priority over the equitable mortgage.

4. Where the equities are equal, the first in time shall prevail (Qui prior est tempore
potior est jure)

There are 2 rules to note here:

Rule 1: Competing interests rank prima facie in the order in which they were created.
Certain exceptions to this may apply here to change the order, these may include: the
principle of bona fide purchaser for value without notice, fraud, estoppel or gross
negligence, registration and over-reaching. Commented [sb2]: Section 25 of the Land Registry
Act, 1962 (Act 122).

Bona fide purchaser for value without notice

The rule is that a purchaser who offers valuable consideration to obtain a legal estate
in good faith and has no notice of an already existing equitable right is entitled to the
estate. His interest takes priority over any other equitable interest which might have
already been created before his interest.

According to Kludze, the rationale of this rule is that the conscience of this bona fide
purchaser is not in any way affected by an equitable right of which he has no notice. It
must be noted that equity acts on the conscience.

Purchaser
The word purchaser for the purposes of this rule is a technical expression. It means any
person who obtains an interest in the property by any means other than inheritance.
A purchaser may therefore include a mortgagee or a tenant.

The purchaser must have given consideration for the property. This is what constitutes
the value. It need not be adequate. Equity will not intervene where no value has
been given. This is because equity does not assist a volunteer or a squatter.

Another thing to note is the fact that the purchaser should have acquired the legal
interest in the property and not another equitable interest.

Where the purchaser seems to have acquired another equitable interest, then the initial
rule of where the equities are equal, the first in time prevails, will come into play.
There are exceptions to this rule as well.

In the event that there is a trust relationship where the purchaser obtains an equitable
interest and the legal title to the property is vested in a trustee for the benefit of the
purchaser alone, and neither party has notice, the purchaser with the equitable interest
will have his interest prevailing over that of the trustee because he has the power to Commented [sb3]: The Rule in Saunders v. Vautier
terminate the trust and order the trustee to convey the legal title to him independently.
Essentially he is the holder of the legal estate even though the legal title to the estate
is not vested in him.

Another exception to the rule is where the purchaser of the equitable interest without
notice subsequently acquires the legal interest in the property.

The last case which is an exception to the rule is where there are mere equities. An
equitable interest will prevail over mere equities. Mere equities here refers to the right
to set aside transactions on grounds of fraud or undue influence, or even to obtain an
order of rectification for mistakes. So in this case, a bona fide purchaser for value who
obtains an equitable interest in a property will have his interest prevail over that of
another seeking to set aside the conveyance because of fraud.

Notice
As already stated, equity acts on conscience. As such where the purchaser acquires the
property despite being served with notice of an already existing interest, then equity
will not avail such a purchaser.

Notice may be actual, imputed or constructive.

Actual notice: Clear, distinct, direct information given to a party. The cases have
established that a purchaser is not bound by vague rumors or statements from mere
strangers. For notice to be actual, it must proceed from some person interested in
the property and must be given in the course of negotiations. This is not to say that
the purchaser is not to consider information from any other source as this might amount
to constructive notice.

Constructive notice: This is information that the purchaser, if he had acted as a

reasonably prudent purchaser would have discovered. The purchaser will be deemed
to have knowledge of any such information even if it was not actually brought to his
attention. The test applicable here is the objective test, taking into consideration the
reasonable man standard. Constructive notice may arise for failure to investigate what
a reasonably prudent purchaser should have investigated.

Massey v. Midland Bank PLC

Miss Massey had a relationship with one Mr. Potts. They never lived together but had
children and strong emotional ties. She bought a home, raising a great part of the
purchase money by way of a mortgage. Mr. Potts was involved in a business venture of
some kind and required a loan from Lloyds Bank. Miss Massey agreed to use her house as
a guarantee for the loan. This business venture collapsed but the bank delayed in coming
after Miss Massey and her property. Mr. Potts began a new venture and sought another
loan from the plaintiff bank and asked Miss Massey to use her house as a guarantee
again. To convince her, he misrepresented to her that should she agree to do so, Lloyds
Bank would drop the charge over her house. They both went to the bank and at a
meeting with the bank agreed that Miss Massey should be independently advised before
the transaction would proceed. This was arranged for but Mr Potts accompanied her to
the interview. And the bank proceeded with the transaction after they were satisfied
that Miss Massey understood the effect of creating a second charge over her property.
Later when this new venture by Mr Potts failed and went into voluntary liquidation, the
bank served a demand on Miss Massey. She claimed that she had been unduly influenced
by misrepresentations made by Mr Potts. She further counterclaimed damages for deceit
against Mr Potts and for a cancellation of the charge.

The trial court granted her damages for deceit but refused to cancel the charge. She
appealed the decision.

To determine whether the charge should be cancelled the Court of Appeal considered
the question of whether the bank had any notice of the fact that Mr Potts made any
misrepresentations to or exerted undue influence on Miss Massey.

The Court of Appeal held that the bank could not be fixed with constructive notice since
it took the reasonable step of requiring that she be independently advised before going
through with the process to ensure that Miss Massey fully understood the import of her
actions. And the solicitors that advised Miss Massey confirmed to the bank that she fully
understood the import of her actions. As such, the bank could not be fixed with
constructive notice of the undue influence and misrepresentations made by Mr Potts.

Ussher v. Darko

A lawyer who was married under the Ordinance, had a paramour with whom he had 6
children. He bought a piece of land in her name and gave her the title deeds. He built
a house on the land and put it up for rent.

He treated the property as his own and enjoyed the rents and the profits accruing from
the rent, giving his paramour an amount he deemed fit. He exercised the property rights
of an owner in possession. Later the paramour purported to sell the house to the plaintiff
without the consent of the

Before the sale could be effected, the plaintiff went to inspect the property and met
the tenants on it. The paramour told the Plaintiff that she did not know the tenants
and she did not put them on the premises, however, they were not trespassers. The
Plaintiff failed to ask who put the tenants there and who they had been paying their
rent to. He was however prepared to keep the tenants on the land as long as they
attorned tenant to him and paid him the rent.
The tenants refused to do so and contended that the lawyer was their landlord.

The Plaintiff then sued for an order of possession and mesne profits. On hearing of the
proceedings, the lawyer applied to be joined as a co-defendant, alleging that he was an
equitable owner of the property and that the paramour was merely a bare trustee of
the house with no beneficial interest. His application was refused and the judge ordered
for the ejectment of the tenants. The trial court also held that the purchase of the
property in the name of the paramour was an intention to make an advancement and
therefore the presumption of advancement was not rebutted. The tenants who were the
defendants appealed.

The Court of Appeal held that the refusal of the application for joinder was wrong. This
was because the reasons given by the judge were insupportable, having regard to the
facts and circumstances of the case. According to the trial judge, the grant of the
application for joinder was belated, it would unduly prolong the trial, and embarrass
the plaintiff. There was nothing to prove that the lawyer had knowledge of the suit and
delayed in asking to be joined. Neither was there any proof of the fact that to join him
to the action would unduly prolong the trial.

The Court of Appeal further held that there was a presumed resulting trust arising due
to the fact that the property had been bought in the name of the paramour but the
lawyer was the one enjoying the benefit of the property.

This presumed resulting trust had not been rebutted by the presumption of advancement
simply because the lawyer and the paramour were not man and wife.

The paramour had mere legal title to the property, while the lawyer had the beneficial
interest in it. As the beneficiary in this trust relationship, the lawyer had the power to
compel the trustee (the paramour) to convey the property in the manner which he
directed. Therefore the paramour had breached the trust by purporting to sell the
property without the knowledge and consent of the lawyer.

The document conveying the legal title to the plaintiff had not been registered so even
though the document complied with the other requirements, it was not valid. Therefore,
rather than conveying the legal title in the property to the plaintiff, the document
had conveyed an equitable title in the property to the plaintiff. Where the equities are
equal, the first in time prevails.

With regard to the doctrine of constructive notice, the Court mentioned that, the
plaintiff’s failure to inquire from the tenants who their landlord was and whom they
were paying rent to, was enough to fix him with constructive notice of the beneficial
interest of the lawyer. Ordinary prudence required him to inquire after the landlord
of the tenants; and had he done so, he would have found out that the beneficial interest
in the property lies in the lawyer.

Imputed notice: This is usually notice acquired indirectly through an agent, such as a
solicitor or counsel, and other agents. Notice acquired by an agent in a previous
transaction might be notice to the principal, if it can be shown to be a recent knowledge
still fresh in the mind of the agent. Under the English Law of Property Act, 1925, this
rule was reversed to limit the notice to information obtained by the agent in the same
transaction. No statute in Ghana has yet reversed this rule, so it is still the position of
the law in Ghana.

In the event that the agent suppresses some of the information in order to commit
fraud on his principal, the information will not be deemed imputed to the principal
under the rule.

Sharpe v. Foy

A husband created a settlement for his infant wife and covenanted that on her
attainment of majority, he would concur with her and with her consent, settle her real
estate and convey her real estate to the trustees under the agreement.

The conveyance was never made to the trustees. The husband needed some money and
obtained the wife’s consent in mortgaging her real estate to secure the loan.

The Plaintiff who was the mortgagee was not aware that this property was affected
by any settlement. The mortgage had been prepared and negotiated by a common
solicitor. This solicitor knew of the fact that the property was subject to a
settlement. But did not inform the Plaintiff as it might make the Plaintiff hesitant
about advancing the money.
Due to this fraudulent conduct, the court held that the Plaintiff could not be fixed
with constructive notice or any other notice of the settlement.

Also, due to the fraud committed, the mortgagee would be considered a bonafide
purchaser for value without notice and would therefore have priority over the trustees
claiming through the wife under the settlement.

Wilkes v. Spooner & Anor.

There was property which was subject to a lease in which the lessee covenanted not to
use the property for any other noisy or offensive trade other than being a pork butcher.
This same lessee had also taken a lease of another property in the same street where
he carried on general butchering business. He assigned his interest in this latter
mentioned property to the Plaintiff together with his goodwill as a general butcher and
covenanted with the Plaintiff that he would not deal in other meats except pork at the
former mentioned property.

Later the lessee gave up business at the pork butchery and surrendered his lease to the
landlord. The landlord granted a new lease to the son of the lessee which contained a
covenant restricting the son from using the property to carry out any business other than
butchery.

At the time that the landlord accepted the surrender from the previous lessee, he had
no notice of the restrictive covenant between the Plaintiff and the previous lessee. The
son however, knew of it, yet set up shop as a general butcher in accordance with the
terms of the lease.

The Court held that the landlord did not have actual notice of the covenant between
the former lessee and the Plaintiff. Neither were there any circumstances under which
he could be fixed with constructive notice (because the properties were owned by
different landlords and there was no way that the Defendant could have known of the
existence of such an agreement unless the lessee himself made it known to him).

A bonafide purchaser for value without notice may confer a good title on a purchaser
from him with notice. For this reason, the new lessee, even though he had notice of the
covenant was not bound by it.
It is necessary to consider in our discussion, section 25 of the Land Registry Act, 1962.
This provision requires that all instruments conveying interest in land must be
registered.

Once such an instrument is registered, it is deemed to be actual notice to the whole

world of the interest in the property. As such, an unregistered instrument will be void
in accordance with the Act. As such, even though an interest in land may be created
first, it will not be recognized as prior for the purposes of the application of this maxim,
if a subsequent interest is created and registered before the initial interest (unless the
subsequently obtained registered interest is obtained fraudulently).

Fraud, Estoppel or Gross Negligence

Where there is some fraud on the part of the holder of the interest that was created
first, the law will not allow his interest to subsist, since equity acts on the conscience.
So, if for example, an owner of property fraudulently induces another party to purchase
the property, the sale will be void and should a subsequent interest in the property be
created by another party, that interest will be recognized as the proper one. It could
also be that the initial owner of the property stood by and watched as another party
purported wrongly to acquire an interest in the property.

Where the holder of the earlier interest makes an express or implied representation
which deceives the owner of the later interest, the initial interest holder would be
estopped from subsequently asserting his title to the property.

In the event that the holder of the initial interest is negligent in asserting his claim to
the property, his interest will not be recognized either under law or equity. E.g. where
such a holder fails to ask for the title deeds without a reasonable excuse.

Manners v. Mew

The Plaintiff lent money to his solicitor who was the defendant. The defendant as
security for the loan, conveyed his interest in a property to the Plaintiff. However,
whenever the Plaintiff requested for the deeds from the Defendant, he was met with
excuses but was assured not to worry. Later the Plaintiff asked the agents of the
defendant about the deeds, to which they responded that they had no idea.

Further investigation showed that the Defendant had used the deeds as security for an
advance from a bank. In order to repay the advance from the bank, the defendant
borrowed money from someone else and had delivered the deeds to this person as an
equitable mortgage which was to secure the repayment of the money lent him. Later
the Defendant became partners with the one who lent him the money and when that
person got married he created a trust and assigned the mortgage to 2 other people while
the one who lent him the money held on to the deeds. These people denied knowing
that the deeds had already been mortgaged to the Plaintiff.

The Court held that the Plaintiff as the legal mortgagee was the one entitled to recover
the deeds even though the current mortgagees were bonafide purchasers for value
without notice. He was prior in time and had the legal estate in the deeds and due
to the fraud committed by the defendant, his legal mortgage could not be postponed.

According to the court, there must be either direct fraud or negligence amounting to
evidence of fraud to induce the court to interfere for the purpose of postponing a Party
who insists on the legal benefit of his deed.

The Court will postpone a prior legal estate to a subsequent equitable estate where
the owner of the legal estate assists or connives at the fraud which led to the creation
of the subsequent equitable interest. However, the court will not postpone a legal
interest on grounds of carelessness or want of prudence on the part of the legal
owner.

Registration

Section 25 of the Land Registry Act states that a registered instrument is actual notice
to the world of the interest in the property. Without registration, instruments conferring
interests in land are void. Registered instruments therefore, according to Kludze, have
priority over other interests regardless of whether or not that interest was created first.

Over-reaching
This is the transfer of the prior interest to the proceeds of the sale so as to free the
property or title itself from the prior encumbrance. Kludze is doubtful as to the
application of this doctrine in Ghana.

Rule 2: The rule in Dearle v. Hall. This rule states that the priority of instruments
depends on the order in which notice of the dealings was received by the one by
whom the property is distributable. The first person to give proper notice of his
interest will succeed over one who fails to do regardless of the order in which their
interests were created.

According to Kludze, the rule in Dearle v. Hall supersedes all other rules on priorities.
The first step to determining priority is to find out if the rule in Dearle v. Hall is
applicable. If not, other rules governing the determination of priorities will apply.

Bailey v. Barnes

The owner of the freehold interest in 4 houses mortgaged them to secure a loan.

The Plaintiffs in this case were judgment creditors in an action against the original
owner of the properties. They had obtained a receiver by way of an equitable execution
on the equity of redemption in the 4 houses. The Plaintiffs failed to register their order
for a receiver but gave notice to the mortgages and the tenants occupying the houses.

The mortgagees transferred their mortgages in the property to the defendant for some
consideration. The defendant in turn conveyed his mortgages in the property to one
Hannah Midgley for the same amount he had paid the original mortgagees. Even though
the defendant purported to exercise the power of sale in transferring the mortgage to
Hannah, it turned out that he was merely a nominee for her and there was no real
exercise of the power of sale. Hannah also mortgaged the properties to another who
sold the equity of redemption to another.

The plaintiffs brought an action against the defendant and Hannah’s successor in title
to impeach the validity of the sale between the defendant and Hannah. The action
succeeded and the court declared the sale as a fraudulent execution of the power of
sale, rendering subsequent transfers void and the Plaintiffs, the ones rightfully entitled
to the equity of redemption.
 The one who purchased the equity of redemption from Hannah’s successor in title (Mr.
Lilley) was not joined as a party to the suit, however, on receiving notice of the suit,
he paid off the mortgage and took a conveyance of the legal estate from the original
mortgagees. Also, at the time he purchased the equity of redemption from the successor
to Hannah, he did not have actual notice of any impropriety in the sale between the
defendant and Hannah. He only noticed that the sale had been undervalued but went
ahead with the purchase.

The Court held that that Mr. Lilley did not have actual knowledge of the impropriety in
the power of sale; neither did he willfully ignore something a prudent purchaser would
have noticed. The doctrine of constructive notice is based on good sense and is designed
to prevent fraud on owners of property. But the doctrine must not be carried to such an
extent as to defeat honest purchasers. Cases of constructive notice are reduced into 2
classes:

1. Where the purchaser has actual notice of some defect, inquiry into which would
disclose the existence of others

2. Where the purchaser has deliberately abstained from making inquiries into
something for fear that he may discover something wrong.

The Court went further to mention that the maxim qui prior est tempore potior est jure
(where the equities are equal the first in time will prevail) is in the favour of the
Plaintiffs. However, this maxim is subject to the maxim of where the equities are equal,
the legal title prevails. Equality here means the non-existence of any circumstance that
affects the claim of one rival, makes his claim less meritorious than the other. Therefore
the one with both equity and law on his side is better off than the one with only equity
on his side.

As such, since Mr Lilley successfully obtained the legal interest in the property (even
though it was during the time that the initial suit against the defendant was pending),
he was entitled to the interest in the property.

5. He who seeks equity must do equity

This maxim means that to obtain an equitable relief, the plaintiff must be prepared to
do what is fair and right to the defendant. This maxim looks to future conduct of the
plaintiff.

Its illustration can be seen in illegal loans, the doctrine of election, and consolidation.

Illegal Loans
Illegal loans are unenforceable because of the doctrine of “ex turpi causa non oritur
actio” Commented [sb4]: This means “from a
dishonorable cause an action does not arise”.
However, where an illegal loan is secured by a mortgage, an order for the delivery of Essentially, a plaintiff will not be able to pursue a
legal remedy if it arises in connection with his own
title deeds may be refused by the court unless the mortgagor agrees to repay the loan. illegal act.
It must be noted that this rule is of limited application as it indirectly enforces illegal
loans which the law seeks to discourage.
However where the lender seeks a declaration that the mortgage is void, he will be
entitled to it without repayment since that isn’t an equitable relief.

Lodge v. National Union Investment

In this case, one party borrowed money from the other and mortgaged some securities
to him. It turned out that the lender was unregistered and under the Money-lenders
Act 1900, it was illegal for an unregistered money lender to lend money to another
person. That meant that the loan was void. On finding out that the lender was not
registered, the mortgagor sued for the return of his securities.

The Court held that unless he paid back the loan, no order would be made for the
return of the securities.

Elections

The doctrine of election states that in the event that a donor conveys property to a one
party through an instrument and in that same instrument purports to convey property
belonging to that party to another party, the party to whom the initial conveyance is
made will be put to an election. He must either accept the benefit conferred on him
by the donor and give away his property to the other party or reject the donor’s gift
in its entirety. He cannot accept the gift and refuse to give out his property.
According to Chitty J in Re Lord Chesham, “the doctrine of election is based on the
principle that a person is not allowed to approbate and reprobate; that if he
approbates, he shall do all in his power to confirm the instrument which he
approbates.”

It must be noted that the coming to effect of the doctrine of election in any
circumstance is not based off the donor’s/settlor’s intention.

Consolidation of mortgages

According to the doctrine of consolidation, where a person is entitled to two mortgages

from the same mortgagor, he may refuse to permit the mortgagor to exercise his
equitable right to redeem one mortgage without redeeming the other. This is important
because of the fact that one mortgage could become less valuable with time.
However, this doctrine has been abolished in Ghana due to Section 19(4) of the
Mortgages Decree 1972 (NRCD 96).

Notice to redeem mortgage

Under the old system, where a mortgagor wished to exercise his equitable right to
redeem his mortgage, he was required to give reasonable notice of his intention to do
so to the mortgagee or pay an interest in lieu of notice.

This was to show that since the right of redemption after the contractual date was an
equitable one, equity would require the mortgagee to have notice so that he
wouldn’t be taken by surprise, since he was entitled to assume that the mortgagor had
no intention of redeeming past the contractual date for redemption.

In Ghana currently, it is no longer necessary for the mortgagor to give reasonable Commented [sb5]: Section 20 of the Mortgages
Decree 1972.
notice before exercising his equitable right of redemption.

Lissenden v. CAV Bosch

The appellant in this case collected compensation under the Workmen’s

Compensation Act for a partial incapacity, but appealed against the award of the
compensation as he claimed that the amount paid him was less than what he was in
actual sense entitled to. The respondents in defence claimed that the appellant’s claim
 could not be granted since the plaintiff had already agreed to accept and accepted the
compensation awarded under the Workmen’s Compensation Act.

The Court held that the maxim that one may not approbate and reprobate is a synonym
for the equitable doctrine of election and is very different from the common law view
of an election (the right to affirm a contract affected by fraud or to repudiate it).

And that this maxim could not be applied in the right of a litigant to appeal from the
award made under the Workmen’s Compensation Act or even a judgment of court.
There is nothing to elect between because the right to appeal is the appellant’s by
statute and by rule. He is not faced with alternative rights but rather it is on right
which he seeks to exercise in a larger degree. As such he could not be precluded from
appealing form the award even though he had collected the money.

6. He who comes to equity must come with clean hands

This maxim, unlike the one above looks to the past conduct of the plaintiff. As was
stated in the case of Jones v. Lenthal, “he who has committed iniquity shall not have
equity.”
However, we must note that this maxim is not to be applied so widely. The general
depravity or bad character of a plaintiff will not be a bar to an equitable relief. It is
only conduct that has an immediate and necessary connection to the relief sought that
will bar a plaintiff from obtaining an equitable relief.

A tenant who has entered into an agreement for a lease may obtain specific
performance granted he has not breached any of the important covenants or
provisions in the lease. Coatsworth v. Johnson

Owusu v. Ankomah

Cory v. Gertcken

If an infant fraudulently misrepresents his age in order to obtain money from

trustees, he cannot compel a repayment of the money when he is of full age.

7. Delay defeats equity

Also referred to as equity aids the vigilant and not the indolent and the Latin
expression is “vigilantibus non dormientibus aequitas seccurit.” It applies both in law
and in equity.

Where a party sleeps on his rights and acquiesces for a great length of time, then equity
will refuse to come to his aid.

Unreasonable delay that is sufficient to prevent a party from obtaining an equitable

remedy is known as laches. Laches is made up of a lapse of time as well as certain
circumstances which would make it inequitable to enforce the claim. These
circumstances could be instances where the party has conducted himself in such a way
that his actions could be equivalent to a waiver of his interest.

Not every delay amounts to laches. Delay is fatal if:

a. It is evidence of a waiver of the right in question, or

b. It results in the loss or damage of evidence by which the other party’s claim may
be rebutted, or

c. It is due to waiting to see if a business venture will prosper, or

d. The plaintiff has so acted in a manner that has induced the defendant to alter his
position on the reasonable faith that his (the plaintiff’s) claim has been released
or abandoned.

Also, to amount to laches, there must be a full knowledge of the rival claim, legal
capacity to disprove the claim and the free will to do so. Therefore, ignorance,
disability or undue influence are good defences to laches.

Note that laches does not bind successors.

Unlike laches, acquiescence is the result of a direct act that implies that the party has
waived his right or interest.

In Ghana, the Limitations Act, 1972 (NRCD 54) prescribes time periods after which
certain actions become statute barred. Section 6(1) of the Act however provides that
the limitation periods prescribed in the Act are not to be applied to claims for
equitable reliefs.

The Act goes further to provide in Section 6(2) that the courts may apply the limitation
periods by analogy in proceedings where the interests of justice so require.

Where the prescribed limitation period is expired, it is presumed that the action is
barred by laches and the burden of proof is on the plaintiff to prove that there has
not been laches. However, where the claim is brought prior to the expiration of time,
then the burden of proof is on the defendant to prove laches.

Allcard v. Skinner

The Plaintiff was introduced by her spiritual director to a sisterhood and became a
member of the sisterhood. The rules of the sisterhood demanded that the members give
up all their property to either their relatives, the poor or to the sisterhood itself. The
rules further required that the property given to the sisterhood was to be held by the
lady superior in trust for the general purposes of the sisterhood and that the members
of the sisterhood were to seek leave of the superior before seeking advice elsewhere
and that they were to obey the voice of the lady superior as the voice of God.

The Plaintiff, a few days after becoming a member, made a will bequeathing all her
property to the lady superior. The Plaintiff left the sisterhood in 1879 but made no
claim for the return of her property until 1885 where she made a claim for the
return of her property on the grounds that she conveyed it to the sisterhood due to
the undue influence exerted on her by the lady superior and without any
independent and separate advice.

The Court held that although the Plaintiff had entered the sisterhood on her own volition
with the intention of devoting her fortune to it, she was subject to undue influence from
the lady superior, her spiritual director and the rules of the sisterhood. For this reason,
she was entitled to claim a restitution of her property that was in the hands of the
sisterhood. She could not claim the part that had been expended for the purposes of
the sisterhood while she was still a member.
 However, the court held that the Plaintiff’s claim was barred by her laches and
acquiescence. This was because, after the Plaintiff left the sisterhood, she insisted on
having her will back but made no attempt to collect any money from the sisterhood
until 6 years later. This constituted both laches and acquiescence.

8. Equality is equity

In the absence of any clear and sufficient reason for any other basis of division,
equity will proceed in the notion that a division in equal shares is what is intended.

Petit v. Smith

Jones v. Maynard

In this case, a husband and wife kept money in a joint bank account. They both paid
their earnings and income into it and drew from it for their purposes. There was no
settled agreement between them as to their rights in the account even though the
husband contributed more to the account.

Later, the couple divorced and the husband closed the account and withdrew the entire
balance. The wife sued for half of the balance in the account at the time of the divorce
and half the value of the investments that the husband had made using the money in
the account. The husband in defence, contended that the balance and the investments
should be divided according to the proportion in which the parties had made the
payments into the account.

The Court held that the principle of equality should be applied and that the wife should
be entitled to one half of the balance and the value of the investments. This is
because once money is contributed into a common pool by a husband and wife, the
money becomes the joint property of the couple, as such to divide it up according to
their proportion in which they contributed to the pool would be inconsistent with the
rationale behind creating a common pool of resources.

According to Vaisey J, “where one is searching for justice, as one must, and cannot
find any other secure and sound basis, I think that equality is the best rule.”

Re Bower’s Settlement Trust

The terms of a settlement directed that the trust fund be divided unto unequal shares
to be held in trust for named persons and their children. The terms further provided
that in the event of a failure of the trusts for any share, it was to accrue by way of
addition to the shares of the other trustees for the beneficiaries.

One trust failed and a trustee asked the court to determine whether on a true
interpretation of the settlement terms, the share under the failed trust was to accrue
to other trustees in equal proportions or in proportion to the original shares to which
they would accrue.

The Court held that, in the absence of words indicating a contrary intention, the accrual
was to be in equal proportions.

The application of this maxim can be seen in the following circumstances:

a. The presumption of tenancy in common

Section 14(3) of the Conveyancing Act states that there is a prima facie statutory
presumption of tenancy in common where property is held by more than one person.
Equity dislikes the fact that joint tenancies give rise to the right of survivorship with
the entire interest in property held by two persons goes to one on the death of
another, leaving the successors of the deceased with nothing.

b. Purchase of property in unequal shares

Where two or more persons contribute money for the purchase of property in
unequal shares, there is a presumption that the property is to be held by them
as tenants in common in proportion to the sums of money they individually
advanced for the purchase. This presumption holds even where the property is
conveyed jointly to them. It can only be rebutted if they express a contrary
intention.

Consequently, equity will insist that on the death of one tenant, the others hold his
share in trust for his personal representatives.
It must be noted that when the purchasers are a husband and wife, the strict
rules do not apply. Property purchased by a husband and wife will be presumed
to be held in a joint tenancy system, unless a contrary intention is expressed.

Re Cohen

A husband and wife lived together in a flat which belonged to the wife. The husband
died, followed by his wife and on their deaths, an amount of money was discovered
hidden in the house in unlikely and unsuitable places. There was no evidence as to
the ownership of the money, neither was it mentioned in the will of either of them.

The Court held that since there was no evidence proving who owned the money, the
legal presumption that the owner of the land is the owner of all chattel found on
the land would be applied. As such, the money belonged to the woman’s estate.

However, where the money was hidden as a “nest-egg” against an emergency, the
principle of equality would be applied ONLY if the money could be considered
subject to an equal and severable joint tenancy in the joint lifetime of the spouses,
with the right of survivorship accruing after the death of one spouse.

Rimmer v. Rimmer

The parties were married and purchased a home together even though their
contributions to the purchase were in unequal shares.

The amount provided by the man was done by means of a mortgage of the house
to a building society. Both husband and wife were wage-earners but the man made
some allotments to the woman for housekeeping purposes. Out of this allowance
given her by her husband, she made payments to the building society on her
husband’s behalf as repayment for the mortgage. Later, she made payments out of
her own earnings to completely redeem the mortgage.

The man later deserted his wife and sold the house. The wife applied for a share of
the sum realized under the Married Women’s Property Act.

The Court held, on appeal, that the wife was to be entitled to an equal portion of
the proceeds from the sale. “Where the Court is satisfied that both parties have a
beneficial interest, and a substantial beneficial interest, and where it is not possible
or right to assume some more precise calculation of their shares, equality, I think,
almost necessarily follows.”

Quartey v. Armar

The parties were married until 1966, when their marriage was dissolved. On the
dissolution of the marriage, the plaintiff sued the defendant for a declaration that
she was the owner of two houses and an order that the defendant deliver to her the
original deed of conveyance in respect of one of the houses which was in his
possession.

The Plaintiff claimed that she had bought the houses using her savings and the
defendant claimed that he had bought the houses using his income, and that in any
event, she held the houses in trust for his benefit. The deeds were in the wife’s
name, one in her maiden name and the other in her married name. The defendant
claimed that the first one, he bought for her to keep in the event of his death
intestate. The second one, he instructed her to buy.

The Court held that having regard to the purchase price of the first house and the
wife’s income at the time the property was purchased, it was highly unlikely that
she bought the property. Also the intention of the husband that he should remain
the beneficial owner of the houses could be seen in the fact that he kept the deeds
and other relevant documents with him and the wife made no attempt to demand
them until the marriage had broken down.

With regards to the other house, the court stated that where two or more persons
purchase property with their contributions in unequal shares, the purchasers
were presumed to hold the property as tenants in common and their shares were
to be in the proportion of their contributions to the purchase.

However, where the persons involved are man and wife, it is presumed that they
intended to hold it as joint tenants, in the absence of evidence to the contrary.
As such, the maxim “equality is equity” will prevail. According to the case of
Balfour v. Balfour, “The ordinary incidents of commerce have no application in the
ordinary relations between husband and wife.”
 Even though the title deed was in the wife’s name, she held it in trust for both of
them as their joint property.

On the other hand, in the event that two or more persons purchase a property and
advance equal sums of money, equity will follow the law and presume that they are
joint tenants.

Also children cannot succeed to property as tenants in common and for that reason,
they cannot sell a portion of the property on the intestacy of their parents. This
principle was illustrated in the case of Khoury v. Tamakloe.

c. Joint loan on a mortgage

Where two or more persons have advanced money in a mortgage whether in equal
or unequal shares, equity presumes a tenancy in common between the
mortgagees. Though they lend jointly, each means to lend his own and take back
his own.

It must be noted that Section 7 of the Mortgages Decree, 1972 (NRCD 96) treats 2
or more mortgagees as joint tenants with a right of survivorship ONLY with regard
to their relationship with the mortgagor but inter se, they are tenants in
common.

d. Partnership assets

Where partners acquire property they are presumed to hold it as tenants in

common. This is due to the principle of jus accrescendi inter mercatores locum
non habet, which means the right of survivorship has no place in business
transactions.

This rule extends to joint undertakings carried on with a view to profit even if there
is no formal partnership in existence.

Consider the new Companies Act, in relation to the partnership assets.

e. The right of severance in a joint tenancy

 There are some circumstances which under equity would lead to the severance of a
joint tenancy and its subsequent conversion to a tenancy in common. This is to
exclude the incident of survivorship.

9. Equity looks to the intent rather than to the form

The Court in the case of Parkin v. Thorold in explaining this maxim noted that the
courts of equity make a distinction between matters of form and matters of substance
and where they find that by insisting on form the substance will be defeated, they
will hold it as inequitable for a person to rely on the form and thereby defeat the
substance.

For example, in a contract where a particular time has been specified for performance,
equity will not hold a party bound strictly by the time for performance if he is in breach,
guaranteed that that party is willing to perform within a reasonable time after the
specified date.

Equity will not pay too much attention to technicalities and for that reason, it will
recognize a transaction as valid even if it lacks the due formality.

The implication of this maxim may overlap with the maxim, “Equity looks on that as
done which ought to be done.”

Earlom v. Saunders

One guy named William Powell created a trust through his will over his land for the
benefit of his wife for life. He devised the remainders to sons and daughters and one
Widdrington Powell and William Powell. They were to hold the property as tenants in
common. He further directed that on his death, his executrix should take £400 to
purchase land or any other security and settle that property under a trust for the benefit
of his wife for life.

The testator died without issue. After his wife died and all other beneficiaries except
the last one. The last one was an infant and made a will transferring all his estate to
the Plaintiff and died before he could attain majority.
 It turned out that the trustees had failed to take out the £400 and use it to purchase
land or any other security as the testator had directed. For this reason, the infant’s will
did not convey this money to the plaintiff.

I cannot, for the life of me understand what this case is about and how it relates to the
maxim.

Street v. Mountford

10. Equity looks on that as done which ought to be done

This maxim often applies to contracts. It means that equity will treat a contract to
perform an obligation as already performed in favour of the person(s) specifically
entitled to enforce the contract and not volunteers.

This maxim is to be applied with caution as it presumes the creation of an equitable

interest. The maxim only takes effect where the contract is one capable of specific
performance (i.e. it must be one made for value, must not lack mutuality, must have
sufficient part performance, should not require the constant supervision of the court,
and must not be one for personal service or personal skill).

The popular saying that an agreement for a lease is as good as a lease is not necessarily
true as the lessee in this case cannot enforce his rights against third parties who are
bonafide purchasers for value without notice. The lessee will also not be entitled to
his remedy unless “his hands are clean.” His claim may also be defeated by delay.

It is necessary to note that an equitable lease does not create any estate in land but
rather an interest in land, therefore, any covenants which touch and concern the
land will not run with such an interest. As such to give the general proposition in Walsh
v. Lonsdale a wide and general meaning would be a fallacy.

Busby v. Acquah

In this case, the defendant had executed an equitable lease to the plaintiff and
subsequently executed a legal lease in favour of a third party without notice of the
already existing lease to the plaintiff. Even though the lease with the plaintiffs had been
 properly executed, the court refused to enforce it by specific performance because of
the execution of the legal lease.

In a subsequent judgment, the court declared the legal lease as void. And the plaintiffs
in the former case appealed. The West African Court of Appeal held that the trial court
in refusing to grant specific performance, had held rightly as at that time, the legal
lease was considered as valid. However, since the legal lease was now void, there was
nothing that could prevent the court from granting specific performance.

Walsh v. Lonsdale

The defendant agreed to lease a mill to the Plaintiff for 7 years at a certain amount.
The executory agreement restricted the Plaintiff from running more than a specified
number of looms. The agreement also demanded that rent should be paid in advance
and there should also be available in advance on demand, a year’s rent in addition to
any yearly rent unpaid previous to the demand.

The Plaintiff was let into possession and paid his rent quarterly contrary to the
agreement. Later the Defendant demanded payment of rent in accordance with the
agreement and put in a distress for rent.

The Plaintiff sued for damages for illegal distress, an injunction to restrain the
Defendant from selling under the distress and specific performance of the agreement
for a lease.

The Court held that because the Plaintiff held the estate in accordance with an
agreement for a lease, he was entitled to be protected as if he held the estate under
an actual lease.

Also, the landlord was entitled to exercise the same rights as he would, had he actually
granted a lease. Therefore the landlord was entitled to exercise his right to claim
distress. However, the Court held that the time had not yet come for the determination
of that question.

11. Equity imputes an intention to fulfil an obligation

 This maxim means that where a person is under an obligation to perform an act and
that person does another act which could be construed as fulfilling another possible
intention, it is presumed that the act done is in fulfilment of the prior obligation as
this is the most favorable intention to place on a man’s acts.

The act done must be an equivocal one. E.g. where a debtor pays money to his creditor
but fails to specify what the money was used for. In such a case, the money paid will be
deemed to have been paid in satisfaction of the debt owed. Also, the rule applies only
to existing valid obligations.

Snowden v. Snowden

There was a marriage settlement which contained a covenant directing the husband
to pay money for trustees to use to purchase land in favour of his wife. The husband
failed to pay the money but purchased a freehold estate.

The Court held that the land was subject to the marriage settlement. And that where
a man is under an obligation to perform an act and he does what may enable him to
do the act, it shall be taken to have been done by him with the view of doing that
which he was bound to do.

In the situation where a debtor owes more than one debt to the creditor, Section 21 of
the Limitations Decree, 1972 provides that where there exists a number of debts owed
and the debtor makes a payment to the creditor, and neither party appropriates the
payment to any particular debt, the payment will be deemed to be in pari passu
fulfilment of all debts which are not statute-barred, once there is no express or implied
contrary intention.

Where all the debts are statute barred, the payment will be deemed to be appropriated
pari passu in respect of all these statute-barred debts.

Section 21(2) clearly provides that the statute in no way intends to overthrow the rule
of equity but it only applies where neither party appropriates the payment to any
particular debt.

12. Equity acts in personam

 This maxim means that no equitable remedy would be granted to interfere with the
property itself (like common law would). Equity will only make an order against the
plaintiff personally and punish him for contempt should he fail to obey that order.

Penn v. Lord Baltimore

In this case, the Court granted the remedy of specific performance to the Plaintiff
over land situated abroad.

Ordinarily, the English Court would not have jurisdiction in relation to matters of
immovable property situated abroad. However, since equity acts in personam and will
not interfere with the land, the court had the jurisdiction to grant equitable remedies
on immovable property not located within its jurisdiction.

However, if the matter in contention was one of title to the land, the court would not
have had the jurisdiction to decide the matter.

REMEDIES

SPECIFIC PERFORMANCE

What is it?

It is an equitable remedy granted by the court at its discretion, directed at a particular

person or persons to compel that person(s) to perform an obligation which they have already
lawfully undertaken to perform.

Failure to comply with an order of specific performance will amount to contempt of court and
the contemnor is liable to punishment by imprisonment until he decides to comply with the
order and purges his contempt with an apology.

Because specific performance is a remedy given in personam, it is available even where the
property is located outside Ghana, granted the person against whom the order is sought is
within the jurisdiction of the court. See Penn v. Lord Baltimore

It must be noted that since specific performance is a discretionary remedy, all the maxims of
equity and other frailties of equity apply in its grant.
For example, as in the case of Busby v. Acquah, specific performance was initially denied due
to the fact that the property had already been subjected to a legal lease in favour of a bonafide
purchaser for value without notice.

Also, where the one seeking the remedy does not come before the court with clean hands, (i.e.
where the plaintiff fails to abide by an important term in the agreement or engages in unfair
or reprehensible conduct), the court will refuse the grant of the remedy.

There has been debate concerning whether specific performance is available at customary law
in Ghana. The reason for this debate is that, should specific performance be available under
customary law, this would mean that its grant would not always be subject to the rules of
equity.

In the case of Sobotie v. Omabegho, the issue was whether the then Native Court could grant
an order of specific performance since that court administered only customary law. Van Lare
J. stated that it could not since the remedy of specific performance is peculiar to English law.

However, the court in the case of Lartei v. Fio decided otherwise. The question before that
court was whether the Local Court, empowered to administer only customary law could grant
specific performance. Ollenu J. expressed a contrary view to the dictum of Van Lare in Sobotie
v. Omabegho.

Kludze however, disagrees with Ollenu.

CONDITIONS FOR THE GRANT OF SPECIFIC PERFORMANCE

1. The contract must be specifically enforceable.

What this means is that there must be a binding contract in existence before specific
performance can be granted. The obligation arising out of the contract must be one that
is binding in law. Where the obligation is illegal or immoral, the remedy will not be
granted.

Also, the contract need not be binding at common law. Once it is enforceable at equity,
it is enough.

Short v. Morris
The Plaintiff was a native of Sierra Leone. He sought an order of specific performance
for an agreement relating to the sale of land. There was a document signed by the
 Plaintiff and the Defendant that evidenced an agreement between both parties and that
money had been received by the defendant as an advance on the purchase price of the
property. The document stated that the Plaintiff had put the purchase price at 850
pounds as against the initial demand of the Defendant for 1000 pounds.

The Court held that on the evidence, there was no evidence of a complete agreement
having been reached because there was no clear evidence of the parties being ad idem
on the purchase price. Due to this, the court refused to grant specific performance.

2. The contract must not be unconscionable

The maxim, “he who comes to equity must come with clean hands” is what is being
applied here. Equity will not grant specific performance for a contract that is not fair
or reasonable, even if it is valid.

The determination of whether the contract is unconscionable or unfair depends on the

position of the defendant.

Campbell Soup Co. v. Wentz

In the American case of Campbell Soup Co. v. Wentz, the plaintiff company entered into
an agreement with the defendant farmers for the sale and delivery of special “red-
cored carrots” to the Plaintiff exclusively.

The terms of their contract further provided that the Defendants could not sell the
carrots to any other person aside the carrots that had been rejected by the Plaintiff.
The terms allowed the Plaintiff to reject carrots in excess of 12 tonnes and where this
happened, the defendant could not resell them unless the Plaintiff consented. And
where the Defendant broke the agreement, they were liable to pay liquidated damages
but Plaintiff was not in any way to be held liable.

The subject matter of the contract was quite unique and therefore the contract was
one appropriate for specific performance.

The Court held that even though the contract was valid, and the Defendant had
breached it, the terms were too hard and unconscionable such that the Plaintiff could
 not come before a court of equity and seek the relief of specific performance. Equity
does not enforce unconscionable bargains.

3. The contract must be in writing (in some cases)

Prior to the enactment of the Conveyancing Decree in 1973, Ghana applied the English
Statute of Frauds of 1677 which specified that no action on a contract or the sale of
land shall be instituted unless the agreement on which the action is being brought is in
writing and signed by the party charged or anyone else lawfully authorized.

The Conveyancing Act in section 4 now specifies that no contract for the transfer of
land is to be enforceable unless it is in writing and signed by the one against whom
the contract is to be proved (or anyone else lawfully authorized to do so) or the
contract is relieved against the need of writing in accordance with section 3.

Section 3 of the Conveyancing Act excludes transactions arising by operation of law,

rules of equity and the doctrine of part-performance from the need for writing.

Akwei v. Agyapong

This case was decided before the enactment of the Conveyancing Act. In this case, the
court refused to grant the remedy of specific performance because the transaction was
not under customary law and neither was it in writing.

After the enactment of the Conveyancing Act however, the courts have granted specific
performance for contracts not in writing, guaranteed that these contracts were
supported by acts of sufficient part-performance.

Sbaiti v. Samarasinghe

In this case, there was an oral agreement for a lease for a 5 year period. The agreement
was never put into writing but the Defendant issued a confirmatory note so that the
Plaintiff could obtain the necessary approval from the Ministry of Education. After
letting the Plaintiff into possession of the completed portion of the premises, the
Defendant refused to execute a written lease for the Plaintiff and attempted to eject
the Plaintiff from the property.
 The Court held that the confirmatory note was not sufficient to prove the existence of
a lease since it did not contain a date of commencement and the term of years
created by the lease.

Kludze does not agree with this decision. And refers to the case of Doe v. Philips in
which the court agreed that in the absence of a duration in a lease, and where the rent
is measured year by year, a yearly tenancy is to be presumed.

However, the court granted specific performance because the Plaintiff had
sufficiently part-performed her obligations under the agreement.

Djan v. Owoo

Refer to the brief above.

Asare v. Antwi

The Plaintiff in this case offered to buy a plot of land at Adabraka if “the price was
right.”

No plot was ever specifically identified, no purchase price named but the Plaintiff paid
an advance of 50 Ghana pounds to the Defendant.

The Court, on appeal refused specific performance because there was no definite
contract in existence, unlike in Djan v. Owoo.

4. There must be sufficient part performance

The principle here is that, although the formal requirement of writing has not been
complied with, equity will hold that there is a binding contract (if all the necessary
conditions for the formation of a contract exist), guaranteed that the one seeking to
enforce the contract has performed a sufficient part of his obligations under the
contract.

The part performance must come from the one seeking to enforce the contract and not
the defendant.
What will amount to sufficient part-performance is a question that needs to be
considered. According to the case of Maddison v. Alderson, the act of part performance
is to be based on the faith of the contract and must also be unequivocally referable to
the contract.

Maddison v. Alderson

Refer to brief above

Per Lord Selborne, the payment of money whether in part or in full, will not constitute
sufficient part-performance unless there is parole evidence connecting the payment
with the alleged agreement.

In cases involving rent, it has been held that the payment of rent in advance is not
enough, but rather taking possession of the premises is enough.

The Ghanaian courts in the case of Asare v. Antwi affirmed the decision in Maddison v.
Alderson.

However, in the latter case of Djan v. Owoo, the court held that the payment of two
installments as a part of the purchase price was sufficient part-performance. And
due to the fact that the receipts adduced as evidence of the transaction were not
sufficient to satisfy the writing requirement.

Koglex v. Field

The plaintiff in this case, entered into negotiations with the defendant for the lease of
the defendant’s landed property. The parties agreed on an annual rent amount and
that 5 years rent advance should be paid.

In line with his agreement, the plaintiff company paid an amount of money to the
defendant as part of the rent advance, and was given receipts as evidence of those
payments. The Plaintiff drafted a rent agreement which was delivered to the defendant,
after which the company commenced preparatory work on the land.

The defendant stopped the workers of the plaintiff from commencing work on the land,
claiming that no agreement had been reached. The defendant’s solicitors then invited
the plaintiff to a meeting. Attached to the invitation was a memo in the solicitor’s
handwriting containing his comments on the plaintiff’s draft agreement.

The meeting was held and attended by both parties and their solicitors. At the meeting,
the comments on the draft lease agreement were discussed and at the close of the
meeting, the defendant instructed her lawyer to draw up a final lease document
reflecting their conclusions within a week.

The lawyer failed to do that, so when the plaintiff put his workmen back in possession
of the property, the defendant called the police to help remove them from the premises.

The plaintiff’s solicitor wrote to the defendant’s solicitor demanding that they
expedite the completion of the lease agreement as all the terms had already been
agreed to by both parties at the previous meeting. The defendant’s solicitor denied
that the terms had already been agreed to and informed the plaintiff and their solicitor
that the defendant was no longer interested in any further negotiations concerning the
lease. The letter said nothing about the amount that had been paid as rent advance.

The plaintiff therefore sued for specific performance and the defendant counterclaimed
for general damages for trespass.

The Plaintiff’s claim was dismissed in the High Court, all the way to the Supreme Court.
The plaintiff then filed an application for review of the Supreme Court’s decision.

The Supreme Court held on review (in relation to specific performance), that the relief
of specific performance lies whenever agreement between parties has gotten to a
stage where it would amount to fraud on the part of one party to refuse to perform
his obligations under the contract.

The Court commented on recent developments in the law regarding specific

performance. For example, with regard to the doctrine of mutuality, the Ghanaian court
had moved from the position that the specific performance should be mutually available
to the parties to the position that once the party against whom the remedy would not
have been available (per the doctrine of mutuality) has performed his side of the
contract, then specific performance ought to be granted.
Also, the Court mentioned that there had been a trend in favour of accepting part
payment as sufficient part performance.

This was supported by the English case of Steadman v. Steadman. In this case, there
was an oral agreement between a husband and his wife for the wife in the course of
divorce proceedings to convey her interest in their matrimonial home to the husband
in return for an amount of money. The husband paid part of the amount promised,
but the wife refused to execute the deed of transfer. The Court in that case held that
the payment was sufficient part performance.

This holding had been applied in Djan v. Owoo and Tahiru v. Mireku. And in light of these
developments in the law of specific performance, the application ought to be allowed.

What is the subject-matter of specific performance?

Traditionally, specific performance was available only for contracts relating to the sale
or lease of land. This is was due to the fact that every plot of land was unique in itself
and failure to deliver for sale or lease that particular land was very difficult to
compensate with money or even another plot of land. And till today, most of the cases
before court concerning specific performance are for contracts relating to the sale of
land.

Bonsu v. Agyeman

The plaintiff sued claiming specific performance an agreement between him and the
defendant concerning the sale of land. At the High Court, the plaintiff’s action
succeeded. The Court of Appeal however set aside the order of specific performance
and instead awarded damages because the judges believed that damages were
adequate given the circumstances. The Plaintiff then appealed this decision.

The Supreme Court mentioned that the position of the law both in England and in Ghana
is that the remedy of specific performance is the primary remedy available for the
breach of a contract to sell land.

There is a presumption that with contracts for the sale of land, damages are
inadequate. This presumption, according to Date-Bah is the result of the history of
equity. Since most petitioners who sought the exercise of the Chancery’s jurisdiction
claimed specific performance in relation to land, it became a building block for the legal
proposition that even though specific performance is a discretionary remedy, it is
usually available to enforce contracts for the sale of land unless there is a reason for
denying an equitable relief altogether.

Today however, specific performance is no longer restricted to contracts concerning the

sale of land. Initially it was extended to include chattel of a unique nature or articles
of some intrinsic value. However, these days, it can be granted in respect of any article
at all granted that damages will be inadequate.

Section 58 of the Sale of Goods Act, 1962 (Act 137) gives statutory effect to the grant
of specific performance for chattel. Section 58 provides that where there is a breach
of a contract to deliver specific or ascertained goods, the court may order that the
contract be specifically performed.

The Doctrine of Mutuality

Traditionally, there is a general rule with regard to the doctrine of mutuality as a

prerequisite for the grant of specific performance. Mutuality means that each party to
the agreement should be entitled to the remedy of specific performance. So unless the
defendant is also capable of claiming specific performance against the plaintiff, the
plaintiff would not be entitled to the remedy.

Mutuality must exist at the time of the contract.

There is a “want of mutuality” where the defendant could not be able to also claim
specific performance against the plaintiff. This was especially common in cases involving
infants.

There would also be a want of mutuality in a contract for the sale of land, where the
vendor has no valid title to the land and is the plaintiff in this case. This is because,
since he has no title, the defendant would not be able to obtain an order of specific
performance against him to compel him to convey the property (nemo dat quod non
habet).

This rule has been criticized by many, including Maitland who stated that even where
there was a want of mutuality at the time of the contract, the remedy could be granted
where the mutuality is fulfilled at the time of completion of the contract. However, this
still was premised on mutuality being a precondition for the grant of specific
performance.

In Ghana, the courts seem to have re-examined this doctrine and seem to be charting a
different path as regards mutuality.

Lartey v. Bannerman

In this case, a father entered into an agreement for the purchase of a house for his
infant daughter and made an advance payment of the agreed purchase price. The
defendant issued a receipt and there was documentary evidence to support the
existence of the contract of sale.

Later the defendant attempted to resile from the agreement. And the plaintiff sued,
acting as the next friend for his infant daughter since she did not have the capacity to
institute actions in court.

The trial judge, minded of the doctrine of mutuality, refused the grant of specific
performance due to the want of mutuality. On appeal however, this decision was
reversed.

The Court of Appeal indicated that the father was the principal contracting party and
not the daughter’s agent and for that reason, they substituted the father as the plaintiff,
exercising their powers under the then High Court Civil Procedure Rules, 1954 (LN
140A). After doing so, there was no want of mutuality.

The Court failed to discuss the implication of the doctrine of mutuality in relation to
infants.

The court stated by way of obiter that where the infant had performed all the
obligations under the contract such that there was nothing left that the court could
compel her to perform, then the remedy of specific performance might be available in
such a case.
 In England, the rule on the doctrine of mutuality has been subjected to re-appraisal. In
the case of Price v. Strange, the parties agreed orally that if the plaintiff executed
certain repairs on the property in question, he would be granted a lease of it.

The Plaintiff completed half the work, but the defendant repudiated the contract and
refused to allow him to continue works on the property. A defence proffered by the
Defendant was the want of mutuality but the court rejected this defence.

According to the court, specific performance will not be granted against a defendant
where the court cannot ensure that the plaintiff will specifically perform any
unperformed obligations, unless damages would be adequate for the defendant due to
a default on the plaintiff’s part. The Court also further stated that the doctrine of
mutuality is a matter that should affect discretion and not jurisdiction.

5. Damages should be inadequate

It is a basic rule of equity that an equitable remedy will not be awarded where the
remedy available at law is adequate. This is because equity follows the law.

It is therefore the fundamental rule that specific performance will not be granted in a
case where the plaintiff can be adequately compensated at common law with
damages.

It is generally considered that every piece of land is unique and a failure to convey it as
agreed cannot be adequately compensated by damages or the offer of another piece of
land. Refer to Bonsu v. Agyeman.

Where the property is movable, the remedy will not be granted unless special reasons
exist for it (i.e. where the good is intrinsically special, rare, has sentimental value or
has singular beauty, antiquity and uniqueness). Where the goods can readily be
obtained on the open market, it is likely that the courts will refuse this remedy.

Section 58 of the Sale of Goods Act allows the courts to grant specific performance in
contracts for the sale of specific or ascertained goods. This is yet to be applied by the
Ghanaian courts.
 There are some contracts where the parties specify an amount of money to be payable
as liquidated damages in the event of default. In such cases, it can be implied reasonably
that damages will be adequate and therefore, a court would be reluctant to grant
specific performance.

It must be noted, however, that the provision for liquidated damages will not
constitute a bar to specific performance, unless it is clear that the provision for
liquidated damages is the sole and exclusive remedy in the circumstances, or that
the liquidated damages provision constitutes a separate and alternative agreement.

The courts also consider the real intention of the parties to determine whether the
remedy of specific performance should be granted.

6. There should be no misdescription of the subject matter of the contract

If the subject-matter of the contract is mis-described in a substantial manner, this

vitiates the entire contract (meaning the contract is deemed void ab initio) and
therefore, the contract cannot be specifically performed.

British Bata Shoe Co. Ltd. v. Roura & Forgas Ltd.

The parties entered into negotiations for the sale and purchase of a plot of land with
the building on it which was located in Accra. The appellants wrote to the respondents,
confirming that they had agreed to pay an amount of money for the freehold property
on the completion of the transfer of title by the agreed solicitors.

The appellants’ solicitors examined the title deeds and discovered that the freehold
estate in the property was not vested in the respondents, but rather that they had a
life interest in the property (the documents failed to mention the heirs of the
respondents as part of the persons to whom the property had been conveyed). They
disclosed this to the appellants, upon which the appellants refused to continue with the
purchase. The respondents then sued for specific performance.

The Supreme Court refused to grant specific performance on the grounds that what was
being offered was fundamentally different from what was being bargained for.
 Also it has been held that a court will not force a possessory title on a party that
intended to purchase a freehold interest.

And where the misdescription is substantial, the purchaser may decide to insist on the
purchase but with an abatement in the price. However, the purchaser may not
exercise this right where he had knowledge of the misdescription at the time of
purchase or ought to have known of it.

Where the misdescription is minor or insignificant, the court may grant specific
performance. In such a case, even though the purchaser will not get exactly what he
bargained for, he can get it substantially and the discrepancy can be compensated for
with damages.

It is important to note that the statement, “Equity will not aid a volunteer” applies here
as well. To claim specific performance, the plaintiff should have provided some form
of consideration.

7. The contract should not be illegal or immoral

The courts will not grant specific performance where the contract to be specifically
performed is illegal or immoral.

Ewing v. Osbaldiston

The parties had agreed to enter into a partnership for the purpose of acting plays at a
theatre within 20 miles of London. It happened that the law at the time prohibited
persons from acting plays for hire, gain or reward within 20 miles of London, unless
they had the authority of letters patent from the Lord Chamberlain.

The court refused to grant specific performance for such an agreement because to
decree that it be specifically performed would promote the commission of an illegal
act.

Zagloul Real Estates Co. v. British Airways Ltd.

The Plaintiff agreed in writing, to lease a part of its premises to the British Caledonian
Airways Ltd, (which was an external company) for a 25 year period. The lease document
 was prepared by the solicitors of BCAL and pursuant to the lease, BCAL paid an amount
as rent to the plaintiff.

There was in force at the time, the External Companies and Diplomatic Missions
(Acquisition or Rental of Immovable Property) Law, 1986 (PNDCL 150) which governed
the transaction between the parties.

And in order to circumvent the requirements of this law, the solicitors of BCAL drew up
a deed of indemnity which provided that, in the event that BCAL was obliged to pay the
plaintiff rent in a convertible currency, the plaintiff would give BCAL an indemnity to
the full extent of the total sum paid by BCAL and will pay this money on demand to
BCAL.

BCAL later ceased operations in Ghana and assigned the remainder of its lease to the
defendants (another external company) with the consent of the plaintiff.

The Ministry of Foreign Affairs requested that the rent be paid in convertible currency
and an implementation committee established under the law assessed the appropriate
amount of rent payable and wrote to the defendants demanding payment of this rent
through the Bank of Ghana.

In accordance with the agreement between the Plaintiff and BCAL, the plaintiff paid
back the money paid as rent to the defendants, but the defendants refused to accept
it. They claimed that their payment in advance to the Plaintiff had discharged them
from the obligation to obey the provision of the PNDCL 150.

The Plaintiff then sued claiming that notwithstanding their agreement, the defendants
were under the obligation to pay convertible currency in accordance with PNDCL 150.

The Supreme Court held that the agreement between the Plaintiff and BCAL was clearly
a dishonest device to defeat a clear provision in a statute. Due to this, it was
unenforceable both at law and at equity. Since it was illegal, it was void ab initio and
could therefore not be enforced. The Court would therefore refuse to order specific
performance of the agreement.

8. The contract should not be one that requires supervision

 It is a general rule that the courts will not grant the remedy of specific performance for
a contract that requires the constant supervision of the court.

Ryan v. Mutual Tontine Westminster Chambers Association

The parties had concluded a lease agreement for a residential flat in a block of buildings.
There was a covenant in the lease that provided that the lessors would provide a
resident porter who would perform some duties. The porter that was appointed by the
lessors was a cook and due to the nature of his profession was irregular at work.

The court in this case refused to grant specific performance because the contract would
require the court to continuously supervise whether the porter was doing his job and
this would involve successive, continuous acts.

An exception to this rule is that specific performance may be granted where there is a
building contract and the contract stipulated the nature and the specifications of the
building with sufficient precision.

The reason why courts refuse to grant specific performance for contracts that require
the constant supervision of the court is because equity will not grant a remedy in vain.
As such, equity will not grant a remedy that it is not in the position to enforce.

In the case of Balogun v. Edusei, the court declined to make an order committing some
people to contempt because there was an Act of Parliament that granted the
contemnors an indemnity.
In the case of Levandowsky v. Attorney General, the judgment creditor in a case in
which an appeal was pending applied to the court for an order to go into execution of
the judgment debt regardless of the appeal. During the hearing of the application, the
court’s attention was drawn to the fact that the judgment debtor was the State and
that under the State Proceedings Act no execution, or attachment or process could be
issued by the Court to enforce the payment of money or any costs by the Republic.
The Court therefore refused to grant the application as the order made would be in
vain.
Commented [sb6]: In this case, the Minister of
Interior and the Commissioner of Police deported
some people who had applied for the writ of habeas
corpus to contest the legality of their arrest prior to
deportation.
The Minister and the Commissioner of Police had
been served with notice of the motion that these
deportees had filed for the writ of habeas corpus as
well as the date for the arguments. This
notwithstanding, the Minister and the Commissioner
of Police went ahead and ordered the deportation.
They were found guilty of contempt. Court was
adjourned for 2 DAYS, giving them the opportunity
to purge their contempt through apology and
regret.
Parliament, on that same day enacted an Act that
indemnified the contemnors from all liability and
penalty.

9. The contract should not be one of personal services and personal skills
The general principle is that the courts will not grant specific performance for contracts
of personal services or those involving the use of or application of personal skills.

It is improper to compel a man to work against his will. And equity leans against
contracts of servitude. The court in the case of De Francisco v. Barnum, stated that
this position adopted by equity is such as to prevent the courts from turning
contracts of service into contracts of slavery.

Lumley v. Wagner

A lady was contracted to sing at a theatre for a specified period at an agreed

remuneration. The Court refused to grant the remedy of specific performance to compel
her to honour the agreement.

For this same reason, an employer cannot be compelled to keep an employee, and so
the proper remedy for wrongful dismissal lies in damages.

The Ghanaian courts have questioned the application of this principle in Ghana.

Owusu-Afriyie v. State Hotels Corporation

The plaintiff was a former employee of the defendant corporation who had been
wrongfully dismissed. In addition to the other reliefs sought, the plaintiff asked to be
reinstated.

The Court was of the view that legislative trends had suggested a change in the legal
position as some statutes provided for reinstatement in the event of wrongful dismissal.
The judge distinguished between public and private employment and held that with
regard to public employment, specific performance could be decreed.

In some American jurisdictions, particularly where the employer is a public institution,

the courts are willing to decree specific performance.

Another rule to note regarding the grant of specific performance is that the courts will
not split a contract so as to grant specific performance of only a part of it UNLESS the
whole contract is specifically enforceable. Therefore, if the contract concerns several
matters, some of which are not specifically enforceable, the courts will refuse specific
performance.

Ogden v. Fossick

There was an agreement between the defendant and the plaintiff to the effect that the
defendant would grant a lease of a coal wharf to the plaintiff at a certain rent and that
the defendant would be appointed manager of the wharf throughout the tenancy of the
plaintiff at a fixed remuneration. Because of the part of the contract that dealt with
the employment of the defendant, the court refused to grant specific performance as
this was a contract of service which is not specifically enforceable.

The only time where a court will grant specific performance of part of a contract, where
that part to be performed is distinct and severable from the unenforceable parts of the
contract.

Wilkinson v. Clements

In this case, there was a building contract which provided for piece-meal leases to be
granted to the builder as he completed a building on each plot of land. On the
completion of the building on one plot of land, the court granted specific performance
for the lease of that plot, though the rest had not been completed.

WHAT DOES IT MEAN TO SAY SPECIFIC PERFORMANCE IS A DISCRETIONARY REMEDY?

All equitable remedies are discretionary.

This means that the plaintiff is not entitled to the remedy as of right. The grant of
specific performance is subject to the exercise of judicial discretion which is to be
exercised according to certain fixed rules and principles. According to Kludze, some of
the things that the courts take into consideration include the nature of the property,
the conduct of the plaintiff, and possible hardship to the plaintiff.

With regard to the nature of the property, the courts will be reluctant to grant specific
performance where the property is easily obtainable on the open market.
Where the plaintiff does not seek the remedy with clean hands or delays unreasonably
in seeking the remedy, the court may refuse to grant specific performance.

Also, since equity’s main aim is to do justice, where it is seen that the grant of specific
performance will cause unnecessary hardship to the parties, it will refuse to grant the
remedy. For example, where the plaintiff seeks specific performance for land which is
subject to a dispute as to title, then the court will not grant the remedy since the
purchaser will now be involved in litigation, the outcome of which cannot be predicted.

NOTE:

Under the old State Proceedings Act, 1961 (Act 51), in section 13 (2) and (3), the
State could be held liable in contract as a private person. However, the same Act in
section 13(1) prohibited the grant of an order of specific performance or injunction
against the State. In lieu of such orders, the court could make a declaratory order
in respect of the rights of the parties.

In the new State Proceedings Act, 1998 (Act 555), the combined effect of Sections 2, 3
and 13 is also to make the liability of the state in contract and tort the same as that of
a private individual. And in addition, the court, in civil proceedings, can grant any relief
and make any order as it has the power to make in respect of a private individual
including specific performance and injunction. (Section 13)

INJUNCTIONS

What is it?

An injunction is an equitable remedy directed at a party ordering them to either do

or refrain from doing a specified act.

And where the order is issued for the protection of some right in property, it is usually
directed not only at the party, but also at his agents, workmen, successors and assigns.

Since an injunction is an equitable remedy, it is issued where the conduct of the party
is likely to cause injury that damages cannot adequately compensate. For this reason,
most people seek injunctions when the injury is threatened.
A party may also seek the remedy during the pendency of a case, in order to maintain
the status quo, pending the final determination of the rights of the parties to the case.
Such an injunction is known as an interim or interlocutory injunction.

Since it is a product of equity, this remedy operates in personam. This means that it is
directed at a specific individual or group of individuals and not the whole world. And
failure by that person(s) to obey the order will amount to contempt, leading to
imprisonment until the contempt is purged.

In the case of Republic v. High Court; Ex Parte Laryea Mensah, the court held that a
person commits contempt where that person willfully disobeys an unambiguous and
clearly understood court order requiring him to refrain from doing or to do something
else than make payments. This act of contempt is punishable by imprisonment.

TYPES OF INJUNCTIONS

1. Perpetual or interlocutory

A perpetual injunction is granted to either a party to do an act or restrain a party

from doing an act indefinitely.

Where the injunction is interlocutory, it is granted to preserve the status quo

pending the final determination of a case.

2. Prohibitory or mandatory

A prohibitory injunction, also called a restrictive injunction, is granted to restrain a

defendant from committing a particular act.

A mandatory injunction is one that is granted to require a defendant to do an act.

In earlier times, the order was given in negative terms. E.g. where the defendant
has laid pipes on the plaintiff’s land, the order would compel the defendant to not
allow the pipes to remain on the land.

Jackson v. Normandy Brick Co.

In this case, the plaintiff sought an order to restrain the defendants from building on
the land contrary to the provisions of a lease concluded between them. The plaintiff,
instead of bringing the order in the usual form requiring the defendants not to allow the
building to remain on the land, the plaintiff rather couched the relief directing the
defendant to remove the buildings.

The court in this case noted that the plaintiff did not use the traditional form. And
though he did not use that form, the order would be granted and from henceforth, the
court would prefer to be the form used by the plaintiff.

ON WHAT GROUNDS WILL THE COURTS GRANT AN INJUNCTION? PRINCIPLES

GOVERNING THE GRANT OF INJUNCTIONS

1. Where damages are inadequate

As with every equitable remedy, the plaintiff must show that the conduct he seeks
to restrain or order the other party to do is one that cannot be adequately
compensated for by the award of damages.

As was stated in the case of Wood v. Sutcliffe, “the very first principle of injunction
law is that prima facie, you do not obtain injunctions to restrain actionable
wrongs, for which damages are the proper remedy.”

In a case where the defendant is man of straw, it would be useless to enforce an

award of damages against him. For that reason, the court may readily grant an
injunction. In such situations, the defendant is said to be judgment proof.

Kludze suggests that to condition the grant of an equitable relief on the economic
status of a defendant in inconsistent with the fundamental principles of justice
because all persons are to be equal before the law. As such, the indigence of a party
should not be considered in determining whether or not there is an adequate remedy
at law.

Another circumstance in which damages would be seen as inadequate would be

where there is a continuing nuisance. In such a case, it would be better to restrain
it than to allow it to continue in expectation of successive actions claiming damages
every time it happens.
 Also where a trade mark is infringed, it is better to restrain the infringement from
further occurring because money might not be adequate to remedy the injury caused
to the brand.

It must be noted that in defamation cases, courts are less likely to grant an
injunction even though damages are difficult to compute in such cases because such
an injunction might be restraining the constitutionally guaranteed freedom of
speech.

2. The plaintiff must establish a right

The plaintiff must show to the court that he has a right which the injunction is being
sought to protect.

Maxwell v. Hogg

Hogg earlier registered an intended name for a magazine, “Belgravia”. Maxwell,

unaware of this, also decided to start a magazine using the same name and began
advertising, thus incurring considerable expense.

Hogg sought an injunction to restrain Maxwell from using the same name and the
injunction was refused.

According to the court, merely registering a title does not give rise to copyright in it,
and therefore, there was no legal right to be protected here.

According to Turner J, to obtain an injunction, a plaintiff must “show some property,

right, or interest in the subject matter of his complaint”.

Refer to Day v. Brownrigg brief above

Thorne v. BBC

It is a fundamental rule that the court will only grant an injunction at the suit of a
private individual “to SUPPORT A LEGAL RIGHT.”
Here, the court refused to grant an injunction simply because the alleged act to be
restrained was a criminal or illegal act i.e. the making of alleged racially discriminatory
statements against persons of German origin.

Injunctions do not only protect legal right in property. They can be used to restrain the
publication of confidential information or communication.

Duchess of Argyll v. Duke of Argyll

The Duke of Argyll communicated confidential information concerning the Duchess, to

a newspaper.

The court held that the information was still confidential as it was shared between a
husband and a wife. Communication between a husband and a wife is to be protected
against breaches of confidence. As such, the injunction was granted to restrain the
newspaper from publishing that information even though the relationship between the
Duke and the Duchess had turned sour.

P.A Thomas & Co. v. Mould

The Court in this case, refused to enforce by committal an injunction restraining the
defendants from making use of certain confidential information acquired by them in the
course of their employment, since the plaintiff had refused to disclose the nature of the
confidential information to the court. The Court mentioned that there has got to be a
clear certainty about the nature of the information for which an injunction is being
granted because a failure to obey an injunction is punishable by prison.

Where a statute is broken or some other public right is infringed, the Attorney-General
is the proper person to sue for an injunction.

A-G v. Sharp

In this case, the defendant had applied for a license to operate an omnibus within
Manchester but had been refused.

The penalty for operating without a license was the payment of fines. The defendant
who was comfortable paying these fines, continued in operation without a license.
 At the suit of the Attorney General, the court granted an injunction was granted to
restrain the defendant from operating in contravention of the law since the
statutorily provided remedy was not effective.

This position of the Attorney General is enforced in Ghana’s law in Article 88(5) of the
Constitution which gives the AG the responsibility to institute and conduct all civil
proceedings on behalf of the State and to be sued as defendant in any matter against
the State.

3. Injunctions are discretionary remedies

As in the case of every equitable remedy, an injunction is also granted at the court’s
discretion. And this discretion is of course exercised in accordance with the principles
common to all equitable reliefs and according to precedent.

The only injunction in which the discretion to be exercised is minimal is the case where
it is to restrain the breach of a negative stipulation in a contract. The court must obey
the terms agreed on by both parties in their contract. The negative stipulation must be
fair and reasonable.

Where the plaintiff seeks to restrain the conduct of the defendant and the defendant
ceases that behavior before the application is heard in court and there is no likelihood
that the conduct of the defendant will continue, then the application may be dismissed.

CFC Construction Co v. Accra City Council

The Plaintiff complained that the defendant council had been dumping rubbish near
their residential area which was causing some offensive stench. The Plaintiff therefore
sought an injunction restraining them from continuing with that.

Before the application could be heard in court, the Defendant Council had ceased the
dumping and the stench had ceased as well.

The Court held that an injunction would not be appropriate anymore since the act to be
restrained had ceased. However, should the conduct still prevail, the Plaintiff had 6
months within which to apply for an injunction.
According to Kludze, although an injunction is a discretionary remedy, there is a high
probability that once the plaintiff can establish right and a violation or threatened
violation of that right, he will obtain the injunction. The discretion here would refer to
certain circumstances, the occurrence of which will lead the court to withhold the grant
of the injunction. These circumstances are as follows:

1. The adequacy of damages

2. Minor injuries: The nature or extent of the injury being caused the Plaintiff is not
crucial to the exercise of the discretion. An injunction will not be refused simply
because the injury is nominal. The court must rather consider whether the trespass
or conduct complained of is trivial or a technical one which has no resultant injury.
Where there is no resultant injury then the remedy cannot be granted.

3. The difficulty of compliance: The Court will not order the defendant to do the
impossible, so where complying with the order will be expensive and difficult to the
defendant, the court will not grant the injunction.

Morris v. Redland Bricks Ltd.

In this case, the defendant had damaged the plaintiff’s land through his excavations
and caused the plaintiff a loss of 600 pounds. To remedy the damage done to the
plaintiff’s land would have involved an expenditure of almost 35,000 pounds.

The Court refused to grant an injunction asking him to remedy the situation because
of the harsh financial consequences.

It is important to note that the difficulty of compliance should not be a determining

factor in the exercise of discretion where the difficulty was not deliberately created
by the defendant.

Self-induced difficulty or difficulty resulting from intentional conduct cannot

constitute a defence. As in the case of Papanikolas Brothers Enterprises v.
Sugarhouse Shopping Centre Associates, where the defendant with full knowledge
of a restrictive covenant against the building on an open space reserved for parking
of customer’s cars, decided to begin building a petrol station. Even though there
was a financial difficulty, the court still granted the injunction since the difficulty
 was a result of his intentional conduct. He knowingly and willfully assumed the
difficulty because he was aware of the restrictive covenant.

4. Undertaking by the defendant: The whole purpose of an injunction is to ensure that

a particular conduct ceases, so where the defendant gives a satisfactory undertaking
that the acts complained of will cease, the injunction may not be granted, because
it is no longer necessary. The undertaking in itself operates as an injunction and a
breach of it is punishable as if the defendant actually breached an injunction order.

5. Cessure of annoyance: Where the annoyance or the conduct complained of ceases

before the injunction application is heard, and there is no likelihood for the
resumption of that conduct, then there is no need for the injunction. The application
will be dismissed though possible with costs awarded against the defendant. See CFC
Construction v. Accra City Council brief above.

However, where the annoyance did not cease voluntarily but as result of some
difficulty, this means that one the difficulty is remedied, it is likely to still persist
and for that reason, an injunction will lie.

6. The Conduct of the Plaintiff: The Court in the exercise of its discretion, may
consider the conduct of the plaintiff both before and at the hearing of the
application.

He who comes to equity must come with clean hands, therefore where the
plaintiff is himself in breach of his obligations under the agreement in question,
the court may refuse to grant the remedy.

The plaintiff’s conduct in court may also lead to the refusal of the remedy as in the
case of Armstrong v. Sheppart & Short Ltd. where the plaintiff misled the court.
Due to this, he was refused the injunction.

Acts of laches and acquiescence on the plaintiff’s part may also lead to the refusal
of the injunction.

INTERLOCUTORY INJUNCTIONS
Also known as interim injunctions, this is an injunction which is granted after the
commencement of a suit but pending the final determination of that suit. Such injunctions
are only effective until the final determination of the suit or for a shorter time as stipulated by
the court.

The main aim of such injunctions is to prevent an irreparable damage from being done after
the commencement of the action and before the judgment is given. The interlocutory
injunction maintains the status quo until the final determination of the case.

Sometimes the injunction must be granted to facilitate the administration of justice. So for
instance where there is a matter in court concerning the title to land and such a matter is
crucially reliant on the identification of boundaries marked by existing farms or clearings, then
the interlocutory injunction will be granted to preserve material evidence.

Punjabi Bros v. Namih

The father of the defendants sub-let a store in Kumasi to the plaintiffs for a period of ten years.
Later, by a deed of gift, he assigned his entire interest in the store to the defendants. The
assignment was not registered but in spite of this, the plaintiffs on request, began paying rent
to the defendants.

A few days after the sub-lease expired, the defendants sued the plaintiffs for an order to eject
them, recovery of possession and mesne profits. They were successful in court. The Plaintiffs
filed a notice of appeal but before the appeal could be heard, a written agreement was reached
between the parties where the Plaintiffs agreed to withdraw the appeal on the condition that
the defendants would allow continue in occupation for 3 months rent-free, at the end of which
they would be granted a new lease on mutually satisfactory terms. And at the defendants’
insistence, an amount was paid by the plaintiff before the signing of the agreement.

At the end of the 3 month period, the defendants by letter demanded the surrender of
possession of the store and one month later, the plaintiffs were evicted by the original court
order.

The plaintiffs sued claiming a declaration that they were statutory tenants and an order for
recovery of possession as well as specific performance of the agreement and the return of the
money paid.
They also filed an ex parte application for an interim injunction to restrain the defendants,
their agents, servants, assigns, representatives and successors from further trespass to the
premises of the subject matter of the suit, pending the final determination of the suit.

The Court held that its power to issue injunctions extends to the protection of legal rights to
property from damage pending litigation. The Court has an inherent jurisdiction to issue an
interim injunction when it appears necessary to preserve the status quo pending the hearing
and determination of the suit. It is especially necessary in a genuine suit for trespass where
much depends on proof of possession.

The party seeking the injunction must have a legal right, but needs the aid of the court in
protecting the property in question, until this legal right has been properly established by the
court.

Therefore, he is required to show a STRONG PRIMA FACIE case in support of the legal right
which he asserts. He is not required to make out a clear title but must satisfy the court that
he has a fair question to raise as to the existence of the legal right which he is asserting.

This is because the court must, before disturbing the rights of another party, be satisfied that
the probability is in favour of his case failing ultimately in the final issue of the substantive
suit.

The plaintiff must satisfy the court that the court’s interference is necessary before he can
establish his legal right upon trial, in order to protect him from “irreparable injury”. Injury is
irreparable where it is a material one which cannot be adequately remedied by damages.

Where the respondent is disputing the legal title of the applicant to the property in dispute,
the court will seldom grant an injunction before the applicant has established his legal right.

The court must also consider the relative convenience or inconvenience that might result from
the refusal to award the interlocutory injunction. In this case, since the respondents were the
ones in possession, they would most likely suffer more hardship if the interlocutory injunction
were granted.

Therefore, the injunction was refused.

An interim injunction is granted in some cases to avoid rendering a court judgment nugatory.
This was seen in the case of Lardan v. Attorney-General. Commented [sb7]: The applicant in this case
claimed to be a citizen of Ghana and could
therefore not be deported under some sections of
Where the circumstances require it, an interim injunction may be granted against both parties the Deportation Act which applied only to aliens.
The court granted an interim injunction (ex parte)
and not only the defendant or respondent. to restrain the execution of the deportation order
against him pending the determination of his
citizenship, as failure to grant this order would
DOES THE PLAINTIFF NEED TO PROVE A PRIMA FACIE CASE? have led to his deportation and any pronouncement
on his rights would be useless.

The initial position of the law was that an applicant was required to disclose a prima facie case
for the establishment of the right he was asserting in the substantive case.

The reason behind this was stated in the case of Preston v. Luck by Cotton LJ where he stated
that, “though the court is not called upon to decide finally on the rights of the parties, it is
necessary that the court is satisfied that there is a serious question to be tried at the hearing
and that upon the facts before it there is a probability that the plaintiffs are entitled to the
relief.”

Even in the Lardan case, the court refused to grant the interim injunction after the initial
grant ex parte was opposed by the Attorney-General because the applicant failed to disclose
a prima facie case of Ghanaian citizenship, as his affidavit merely stated that he was born in
Kumasi and his mother was born in Krachi.

In Punjabi Bros v. Namih, the court re-echoed the need for the establishment of a prima facie
case, but extended the notion of what constitutes a prima facie case from having “a fair
question to raise at trial” to “probability of success in the final suit”.

The court in the case of Annobil v. Annobil refused to follow the extension made in Punjabi
Bros. The court here held that the plaintiff need not show that he would be entitled to the
relief sought in all events, but that he should adduce evidence which shows a prima facie
case for relief.

In 1975 however, the House of Lords in the case of American Cyanamid Co. v. Ethicon
scrapped away the prima facie requirement. And rather stated that the plaintiff needs only to
establish a real possibility and not a prima facie case.

American Cyanamid v. Ethicon

The plaintiff was an American company that owned a patent covering certain sterile absorbable
surgical sutures. The defendant was also an American company which manufactured a suture
in the US, which they were about to supply to surgeons in the UK, when the plaintiff applied
for a quia timet injunction restraining them from doing so because, they claimed that the
defendant’s suture infringed their patent.

The plaintiff further applied for an interlocutory injunction which the trial court granted upon
the usual undertaking of damages by the Plaintiff. The award was appealed till it got to the
House of Lords.

The House of Lords held that the grant of an interlocutory injunction is a temporary remedy
which is also discretionary. The object of the interlocutory injunction is to “protect the
plaintiff against injury by violation of his right for which he could not be adequately
compensated in damages recoverable in the action if the uncertainty were resolved in his
favour at the trial.”

However, the plaintiff’s need for protection must be weighed against the corresponding need
of the defendant to be protected against injury resulting from his having been prevented from
exercising his own legal rights for which he cannot be adequately compensated under the
plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour
at the trial. There is therefore a need to determine the balance of convenience.

The House of Lords then held that the rule requiring the establishment of a prima facie case
leads to confusion and for that reason, it should be done away with.

All the court needs to satisfy itself with is the fact that the claim is not frivolous or vexatious,
in other words, that there is a serious question to be tried.

It is not part of the court’s function at that stage to attempt to resolve the substantive conflict.

Where damages are recoverable at common law and would be adequate to remedy the
situation, then no matter the strength of the plaintiff’s claim, the injunction is not to be
granted. It is where there is doubt as to the adequacy of damages that the question of balance
of convenience arises.

Considering the balance of convenience, it was noted that Ethicon’s suture was not yet in the
market so there was nothing that would have been stopped by the injunction. Ethicon also held
a dominant position in the UK market for absorbent surgical sutures and adopted an aggressive
sales policy.

Cyanamid on the other hand, were now in the course of establishing a growing market for their
sutures. Should Ethicon be allowed to market their suture until the substantive infringement
matter is tried, this would prejudice the chances of Cyanamid in establishing itself in the
market. Also, once the market gets used to Ethicon’s suture, it would be “commercially
impracticable” for Cyanamid to deprive the public of it by insisting on a permanent
injunction. This would have a damaging effect on the company’s good will.

As such, the interlocutory injunction was granted.

As was seen in the American Cyanamid case, the following questions are to be considered in
the grant of an interlocutory injunction:

1. A real prospect of success: The claim must not be frivolous and vexatious. There must
be a serious question to be tried.
2. A balance of convenience
3. Maintenance of the status quo: Where the balance of convenience is equal, it is a
matter of prudence to take measures that will preserve the status quo. A new venture
will be restrained but not an already established enterprise.
4. Relative strength of the cases: It is not the duty of the court at that point to embark
on anything like a trial of conflicting affidavits. But where there are certain undisputed
facts, and the relative strength of one party’s case is disproportionate to the other,
then this should be considered in deciding the balance.
5. Special factors: These are factors that might tip the scales of balance of convenience.
In American Cyanamid, one such factor noted by Lord Diplock was that American
Cyanamid was now attempting to establish a brand for itself in the UK.

GHANAIAN CASES ON INTERLOCUTORY INJUNCTIONS

1. 18th July Ltd. v. Yehans International Ltd.

In this case the respondent had initiated a suit claiming a declaration of title to land
at the Light Industrial Area, Accra. The respondent also applied for an order of
interlocutory injunction.
 The respondent exhibited to its affidavit, an indenture and Land Certificate and deposed
to the fact that the appellant would change the nature of the land if not restrained by
an injunction. The interlocutory injunction was granted by the High Court but dismissed
by the Court of Appeal.

The Supreme Court held that even though the grant of an interlocutory injunction is
discretionary, a court must consider whether the case of the applicant is not
frivolous and must ensure that the applicant has demonstrated a legal or equitable
right which the court should protect.

The court must also ensure that the status quo is maintained as much as possible to
avoid causing irreparable damage to the applicant pending the hearing of the matter.
The court must also consider the balance of convenience and refuse the application
where it would cause serious hardship to the other party.

Also, in the grant of interlocutory injunctions, the applicant usually undertakes to pay
a sum as damages. The Supreme Court held that the requirement of an undertaking
could be waived by a court, since the remedy is in itself subject to the court’s
discretion.

The Supreme Court dismissed the appeal and granted the interlocutory injunction.

2. Ransford France (No. 1) v. Electoral Commission & AG

The plaintiff applied for an interlocutory injunction restraining Parliament from

considering the Representation of the People Parliamentary Constituencies Instrument
(CI 73) until the final determination of an action and also for another interlocutory
inunction restraining the EC from using CI 73 in preparation for the conduct of the 2012
General Elections, pending the determination of the substantive suit.

The Court referred to Date-Bah in the case of Welford-Quarcoo v. AG where he said

that, the requirements for the grant of an interlocutory injunction are:

• The applicant must establish that there is a serious question to be tried

 • The applicant must establish that he/she would suffer irreparable damage
which cannot be remedied by the award of damages, unless the interlocutory
injunction is granted.

• The balance of convenience is in favour of the applicant, should the remedy

be granted.

According to Date-Bah, the balance of convenience means weighing up the

disadvantages of granting the relief against the disadvantages of not granting it. And
“where the relief relates to a public law matter, particular care must be taken not to
halt action presumptively for the public good, unless there are very cogent reasons for
doing so, provided that any subsequent nullifications of the impugned act or omission
to act cannot restore the status quo.”

Since the plaintiff sought to restrain public bodies, the Court stated that a public
authority should not be restrained by an interlocutory injunction from exercising its
discretionary powers UNLESS the plaintiff shows that there is a real prospect that he
will succeed in his claim for a permanent injunction at the trial.

The Court referred to the case of Republic v. High Court (Fast Track Division) Accra;
Ex Parte Ghana Lotto Operators Association (NLA, Interested Party), where Atuguba
JSC held that when a body is entrusted with statutory discretion, the courts should be
careful not to clog the exercise of that discretion with injunctions.

This however, does not mean that an interim injunction cannot lie against a body that
improperly exercises its statutory discretion as was held in AG v. CHRAJ and Amoah v.
WAEC.

In respect of the first interlocutory injunction against Parliament, the court referred to
Tuffour v. AG, where the Court of Appeal sitting as the Supreme Court held that courts
can all into question a decision of the Parliament but the courts cannot extend their
writs into what happens in Parliament. Therefore, injunctions may not be used to
interfere with the decisions and processes of Parliament. Proceedings within Parliament
walls are completely privileged from judicial intervention.
In respect of the second interlocutory injunction, the court held that since the EC was
the only body with the power to create constituencies, once it did not create the
constituencies in compliance with the statutorily laid down requirements, then the
plaintiff was entitled to seek a remedy, which he was seeking in the substantive suit.

And should the court in the substantive suit, grant his reliefs, it would nullify the
impugned acts of the EC. And this cause the nation irreparable damage since the whole
electioneering process would grind to a halt.

But should he fail in the instant action for the interlocutory injunction, no irreparable
damage will be caused to him, between now and when the substantive suit is heard and
determined.

This meant that the balance of convenience was tilted in favour of the EC and for that
reason, the court refused to grant the application, as doing so would also cause harm to
the nation as a whole.

KINDS OF INTERLOCUTORY INUNCTIONS

1. Mandatory interlocutory injunctions. The court has the jurisdiction to grant a

mandatory injunction on an interlocutory application, but will seldom do so.

2. MAREVA & ANTON PILLER ORDERS

Mareva Injunctions

These are orders granted by the court to restrain a defendant from parting with his
assets pending the final determination of a substantive suit.

Traditionally, such orders were not granted by the court but in 1975, the case of
Mareva Compania Naviera S.A. v. International Bulk Carriers S.A., this order was first
granted by the courts.

Mareva Compania Naviera S.A. v. International Bulk Carriers S.A.

The ship-owners of the Mareva vessel let the vessel to the charterers on a time
charter-party for a trip to the Far East and back. The charterers in turn sub-
chartered the vessel on a voyage charter to the President of India.
The charterers defaulted in payment to the ship-owners and an exchange in telexes
made it plain that the charterers were unable to pay. For that reason, the ship-
owners treated the conduct of the charterers as a repudiation of the charter and
issued a writ claiming the unpaid sums and damages for repudiation. They further
applied for an ex parte injunction to restrain the charterers from removing or
disposing of any of the moneys (received by the charterers under the voyage charter)
out of the jurisdiction.

The Court, on appeal, held that an injunction will not be granted to protect one who
has no legal or equitable right whatever. Lord Denning held that a creditor has a
right to be paid a debt owed him, even before he had established the right to be
paid by getting judgment for it.

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 a
jurisdiction in a proper case to grant an interlocutory injunction so as to prevent him
from disposing of those assets.

And in this case, there was a high likelihood of the charterers disposing their assets
or removing it out of London before the judgment is given. And the ship owners may
never get their charter hire at all. So it would be prudent for the court to restrain
the defendants from disposing of the moneys in the bank in London until judgment
is given.

On what grounds will a Mareva injunction be granted?

1. The Plaintiff must fully disclose all matters to his knowledge which are
material for the judge to know.

2. The plaintiff must state the grounds of his claim against the defendant and its
amount.

3. The defendant must have assets within the jurisdiction. The plaintiff must give
grounds for which he avers that the defendant has assets in the jurisdiction.
The existence of a bank account within the jurisdiction is enough even if the
bank account is in overdraft.
4. The plaintiff must show reason to believe that there is a real risk of the assets
being disposed of or being removed from the jurisdiction before the judgment
is given.

5. Usually, the plaintiff must agree to an undertaking with damages, quite often
with a security or bond.

In the case of A.J. Bekhor & Co. v. Bilton, the order should restrain the defendant
from disposing of or removing from the jurisdiction or dealing with his assets within
the jurisdiction. The assets must not exceed the value of the Plaintiff’s claim.

The Mareva injunction may be varied where the defendant requires money to make
payments in the ordinary cause of business or to provide for his living expenses or
the cost of defending the action. This was held in the case of Iraqi Ministry of
Defence v. Arcepey Shipping.

Anton Piller Orders

This order prevents the defendant from destroying vital evidence before an issue
comes to trial. It grants the plaintiff the power to enter the defendant’s premises
and search for, examine, remove or copy articles specified in the order.

Anton Piller KG v. Manufacturing Process Ltd.

The defendant company and their two directors were the UK agents of the Plaintiff
Company which was a German company that manufactured frequency converters for
computers.

According to the Plaintiff, the defendant was in secret communication with other
German manufacturers and was sharing with them confidential information
concerning the plaintiff’s power units and details of a new converter, the disclosure
of which could be most damaging to the Plaintiff’s business.

The Plaintiff therefore applied for an interim injunction ex parte to restrain the
defendants from infringing on their copyright and disclosing confidential
information and also for an order for permission to enter the defendant’s premises
to inspect the documents in their possession relating to the machines and designs
and remove the documents from the defendant and place them in the custody of
the plaintiff’s solicitors.

The trial court, based off the plaintiff’s undertaking to issue a writ forthwith,
granted the interim injunction to restrain the copyright infringement but refused to
grant the order for the inspection of and removal of documents.

The Court, on appeal, held that no court has the power to issue a search warrant
to enter a man’s house so as to see if there are papers or documents which are
of an incriminating nature. This is an already established principle of law.

However, the difference between this and the order that the Plaintiff was seeking
was the fact that, this order does not authorize the Plaintiff to enter the defendant’s
premises against the defendant’s will. It authorizes the entry and inspection by
the permission of the defendant. The plaintiff must seek the defendant’s
permission. The permission of the defendant is what the court will order and should
they fail to give permission following the court order, they will be guilty of
contempt.

According to the court, such orders can be made ex parte but only when it is
essential that the plaintiff should be able to inspect so that justice can be done and
also when the giving of prior notice to the defendant would cause the grave
danger of destruction of vital evidence, and when the inspection of the documents
would do no real harm to the defendant or to his case.

And where the order has been granted, the Plaintiff is required to act with due
circumspection. The Plaintiff must be attended to by his solicitor who should give
the defendant the opportunity to consider the order and consult their own
solicitor. And where the defendant thinks the order has been improperly
obtained, they will then have the opportunity to apply to the court to discharge
the order.

Where the Defendant refuses to grant permission, the Plaintiff must not force his
way in but rather, accept the refusal and bring it to the court’s notice on an
application to commit if need be. The Defendant’s refusal not only puts them in
peril of contempt but also of the adverse inferences been drawn by the court
against him, to the extent that it is advisable for him to comply with the order.

Due to the nature of the order, Lord Denning was of the opinion that the order was
to be applied only in extreme cases where there is grave danger of property being
smuggled away or vital evidence being destroyed.

According to Lord Ormrod, there are 3 essential pre-conditions for the grant of such
an order. The first is that there should be an extremely strong prima facie case.

Second, there must be very serious damage, potential or actual for the applicant.

Third, there must be clear evidence that the defendant has in his possession an
incriminating document or thing, and that there is a real possibility of such
documents or things being destroyed before any application inter partes can be
made.

The order is to permit inspection or suffer contempt and adverse inferences

drawn by the court. As said by Lord Ormrod, the refusal to comply can be the most
damning piece of evidence against the defendant at the subsequent trial.

There is also a great responsibility on the solicitors of the applicant to ensure that
the carrying out of such an order is meticulously done with the fullest respect for
the defendant’s rights.

Pre-Conditions for the Grant of an Anton Piller Order, as stated by Lord Denning
and Lord Ormrod

1. There must be an extremely strong prima facie case.

2. The damage, potential or actual, must be very serious for the applicant.
3. There must be clear evidence that the defendants have in their possession
incriminating documents or things and that there is a real possibility that these
things may be destroyed.
4. And according to Lord Denning, where the order would do no harm to the
defendant it should be granted.

LIMITATIONS TO THE GRANT OF THE ORDER

1. It must be served by an independent supervising solicitor accompanying the
plaintiff who must explain to the defendant what it means in clear English as
was held in the case of ITC Films Distributors Ltd. v. Video Exchange Ltd.
2. The order is to be served between 9:30 am and 5:30 pm on a weekday.
3. The defendant should be afforded the opportunity to apply within short notice
to vary or discharge the order, provided that the plaintiff and supervising
solicitor have been granted access to the premises.
4. The search for the document should be in the presence of the defendant
5. The applicant must undertake in damages any loss suffered in the search.
6. In accordance with the right against self-incrimination, the order will not be
granted if it requires the defendant to provide answers or documents that are
self-incriminating. This was held in the English case of IBM United Kingdom Ltd.
v. Prima Data International Ltd.
But later, in the case of Cobra Golf Ltd. v. Rata, the Court held that the
defendant had no right to assert an entitlement to a privilege against self-
incrimination.

In Ghana however, section 97 of the Evidence Act grants persons the privilege
against self-incrimination in all proceedings. The Act defines a deed or document
or the disclosure of information as self-incriminating where it constitutes, forms
an essential part of, or when taken together with another set of facts, will form
a basis for the reasonable inference of a VIOLATION OF THE CRIMINAL LAW OF
GHANA.

Therefore, where the order to grant permission for the disclosure of such
information is given and the information would not constitute a violation of the
criminal law then indeed, the order would be granted.

PERPETUAL INJUNCTION

Also called a permanent injunction. This is an order obtained after the plaintiff’s
right has been established in court and he has shown that there is an actual or
threatened breach of it by his opponent.
Such an order permanently restrains the unsuccessful party from doing a
particular act that the court orders.

Such injunctions do not literally remain in force forever, but rather last as a final
solution to the present dispute. And where the plaintiff’s interest in the land
determines, the order will be automatically vacated. And where the
circumstances change, the court may even modify or discharge the order.

The pre-requisites for the grant are as follows:

1. The applicant must have established the existence of a right in himself,

usually at the conclusion of a substantive suit concerning the subject matter
in his favour. Also, where the defendant admits the plaintiff’s right, it will
be treated as if it had been submitted to judicial determination.

2. The applicant must prove that his right in the property, as established or
admitted, is threatened with violation or has been violated by the defendant.
An injunction will not be granted simply because the plaintiff desires it.

QUIA TIMET INJUNCTIONS

In an event where there is a feared or threatened violation or infringement of

the plaintiff’s right, although no actual violation has yet been committed, and
the court deems it better to prevent the infringement than to wait for it occur
before rushing to court, the court may on the plaintiff’s application, grant a QUIA
TIMET INJUNCTION.

This type of injunction may be either interlocutory or perpetual, depending on

the facts.

The conditions for its grant are similar to all the considerations discussed above,
but in addition, there is an additional need to prove that there is not only a
possibility but a strong probability or an imminent danger of VERY SUBSTANTIAL
IRREPARABLE DAMAGE.

Mamudu Wangara v. Gyato Wangara

The parties were Burkinabe nationals. The plaintiff brought an action for
declaration of title to a house and damages against the defendant.

According to the plaintiff, he and one other person had been granted a plot of
land by the Moshiehene of Dormaa-Ahenkro for services they had rendered to
him. He and the other person built on the land and occupied different parts of
the house they built. Subsequently, that other person was deported from Ghana.

The defendant, sometime after the departure of the other person from Ghana,
called on the plaintiff and demanded that he pay rent to him for the portion that
he was occupying or face ejection.

According to the defendant, the house was built by the other deportee and
another person. The other person had been granted the land by the Moshiehene,
but when he died, the deportee took control of the house. When the deportation
happened, the deportee, prior to his departure, gave all the documents of title
to the house to him (the defendant).

Based off the instructions of the relatives of the deportee who were still in
Ghana, he rented out the unoccupied rooms in the house to the other tenants
and called on the plaintiff who was already in occupation to pay rent or face
ejection.

The defendant’s story was corroborated by the testimony of the son and niece
of the deceased man who had been granted the land by the Moshiehene. They
further testified that the plaintiff was a friend of the deportee who was invited
to stay in the house without paying rent and so he had no claim of ownership to
the house.

The Court of Appeal held, in relation to injunctions, that where there is a legal
right which can be asserted at law or equity, a court of equity has the jurisdiction
to grant an injunction to protect that right. The jurisdiction to grant the
injunction is practically unlimited and is done in circumstances where it is just
and right to do so.
In this case, it had been proven that the plaintiff had been granted the leave and
licence to occupy some part of the house without the payment of rent of any
kind. The plaintiff therefore, did not have an ownership interest in the land but
could not be ejected from the house so long as his licence had not been revoked.
The plaintiff could also not claim damages, since there had been no injury
sustained. He had not been ejected, but rather threatened with ejection.
Threats which were unlawful and unwarranted since the plaintiff was under no
legal or equitable obligation to pay rent to the defendant.

The Plaintiff should therefore have sought a quia timet injunction rather than a
declaration of title and damages. The quia timet injunction was appropriate to
restraint the defendant from interfering with his right to occupation of the
portion of the house that he was legally entitled to.

The court referred to the case of Redland Bricks Ltd. v. Morris, where the court
stated that the quia timet injunction was invented by the court to prevent the
jurisdiction from being stultified, since such an injunction is to prevent an
apprehended legal wrong, though none has occurred at present.

The Court, in order to avoid multiplicity of suits decided to amend the writ of
summons by claiming an order for injunction, rather than turning him back to
issue a fresh writ claiming the injunction.

In the case of Re Anderson-Berry, an administrator of a deceased’s estate was

restrained by a quia timet injunction from distributing the estate since he had
threatened to distribute the estate without making provision for the possibility
of liabilities. These threats by the administrator had persisted to the point of
the issuance of the writ.

However, in the case of AG v. Nottingham Corporation, the defendant

corporation planned to build a smallpox hospital between some 48 to 157 yards
of a residential area. An injunction was sought against the project as it was likely
to pose a health hazard to the residents of the area.

The Court in that case refused to grant the injunction because there was no proof
of ACTUAL and REAL DANGER.
Where there is a possibility of danger and a responsible body assures to take
necessary steps to avoid the danger, then the injunction may be refused.

In the case of Bridlington Relay Ltd. v. Yorkshire Electricity Board, the plaintiff
company had erected a mast on their land for TV and radio business. The
defendant erected an overhead electricity power line very close to the mast.
The plaintiff applied for an injunction to restrain the defendant due to the fear
that the power line might interfere with the transmissions. The defendant gave
an assurance that it would make every effort to prevent interference.

The Court accepted the assurance as satisfactory and therefore refused to grant
the injunction.

In CI 47, Order 25 Rules 9(1) and (2), where a person is applying for an
interlocutory injunction, that person may be required to make an assurance that
where it is determined that he was not entitled to the relief in the substantive
suit, then he will pay an amount of damages to the respondent.

These terms are considered mandatory by the court, therefore the failure of a
court to apply with them constitute an error on the face of the record and
therefore a judgment given without this undertaking can be quashed as was done
in the case of Republic v. High Court, Koforidua; Ex Parte Ansah Otu.

It is also worthy to note the decision of the court in the case of Kofi Manu v.
Akosua Agyeiwaa & 3 Ors. Here, the court stated that it would not ordinarily
grant any relief which a party has not formally asked for. UNLESS where the relief
emerges from, or is apparent from the evidence on record.

RECTIFICATION

This is an equitable remedy which allows for the correction of an error in a

document so that it reflects the true intentions of parties.

This is an exception to the parole evidence rule, where oral evidence may be
admitted to demonstrate that a written instrument is incorrect.
The remedy does not correct the mistake of entering into the contract or improve
the nature of the agreement contained in the instrument or document.

As was explained by James VC in Mackenzie v. Coulson, “courts of equity do

not rectify contracts; they may and do rectify instruments purporting to have
been made in pursuance of the terms of the contract.”

Rectification is not limited only to contractual matters however, it is available

for the correction of errors in almost all instruments except wills and possibly
company regulations.

In the case of Joscelyne v. Nissen, there was an agreement between a father

and a daughter where the father proposed to allow the daughter take over his
car hire business. Earlier on, in the course of discussion of the proposal, it was
made clear that should the proposal be accepted, the daughter would pay all the
household expenses, including electricity, coal, and gas bills due in respect of
the part of the house occupied by her father. Their agreement was oral and later
was reduced into writing and failed to include the term placing liability on the
daughter as was agreed prior to the reduction of the contract into writing.

The daughter took over the car-hire business but failed to pay the bills. The
father sued asking that the written agreement be rectified to reflect their prior
common intention in the oral bargain.

The court granted the remedy because the father proved the prior common
intention.

If a party is aware of an error in a document and does not seek an order of

rectification to have it corrected, it will be assumed that he prima facie
acknowledges the accuracy of the document. And such conduct makes it difficult
for him to allege an error in a subsequent dispute.

Since rectification is an equitable remedy, it is granted in accordance with the

general maxims of equity. It may not be granted where there is another remedy
available to the parties.
It may also not be granted unless the parties can prove a mistake in the contract.
It may also be granted where there is proof that one party was induced by fraud
to sign the agreement.

Here, only the written agreement would have had to be procured by fraud and
not the agreement itself. Because if the agreement itself was procured by fraud,
then the remedy of rescission would be the most appropriate.

Before a claim of rectification will be heard by the court, the plaintiff must be
sure that there is no other remedy that will achieve the purpose for which he is
seeking the remedy. This is because equity is reluctant to offer a solution where
the desired result can be satisfactorily attained.

According to Kludze, there are at least 3 possible alternative solutions in

correcting errors in instruments, and others may present themselves in light of
the particular circumstances of each case.

1. Voluntary correction of the parties

This is the cheapest and most expeditious solution.

The parties themselves, on agreeing that the document does not accurately
reflect their agreement, insert the correct term and strike out the erroneous
item. In such a case, the parties must sign the alterations and interlineations
to avoid any possible future disputes regarding their authenticity.

However, where the instrument has been registered as in with the Lands
Registry, then the parties may execute and register an addendum to the
original agreement expressly stating the correction to the original and
register the addendum.

Alternatively they may execute and register a new agreement in substitution

for the earlier one. This new instrument should declare that the earlier one
is revoked or superseded by the new one.

A voluntary correction of error by the parties will preclude rectification in a

court of equity.
 Also where an instrument is corrected by the court, it will be deemed to have
a retroactive effect. But a document voluntarily corrected takes effect from
the date of its execution and cannot be given that retroactive effect.

2. The execution of a collateral contract

Instead of seeking an order of rectification from the court, the parties may
resolve the problem by entering into a collateral contract to give effect to
their true, original agreement.

This was done in the case of Walker Property Investments (Brighton)

Limited v. Walker, where the defendant had agreed to take a flat in a house
and it was agreed that he should have use of the basement rooms for storage.
Shortly after he entered into possession, a standard written agreement was
signed by the parties which did not reflect the right to use the basement.

Subsequently, the lessor company wrote to the defendant and acknowledged

his right to store personal belongings in the basement room. Then later, they
wrote to him telling him that he only had a revocable licence to use the
basement room and sought to revoke the licence.

The Court held that the right to use the basement room was not part of a
revocable licence but rather it was a part of the original lease agreement
and for that reason, the defendant was entitled to have the agreement
rectified to include a use of the basement room.

Alternatively, given the omission in the lease, the initial letter from the
lessor allowing the use of the basement room could be deemed a collateral
contract which supplied the omission. And the consideration for that
collateral contract was the defendant’s agreement to take the flat for rent.

A collateral contract has the same effect as a formal decree of rectification.

3. Construction

Where it is possible for a document to be construed even with the

uncorrected mistake to give effect to the true intent of the parties, the court
may correct an obvious clerical or grammatical error as a matter of
construction without recourse to a decree of rectification.

In such a case, the error must be obvious.

Where the word “not” is erroneously found in an instrument, that word may
be ignored on the ground that the palpable mistake of a word should not
defeat the true intention of the parties, as was held in Bache v. Proctor.

In the case of Coles v. Hulme, there was an instrument reciting the

indebtedness of the defendant in the sum of 7700, without specifying any
currency. The court held that on a true reading of the agreement, the
currency was pounds sterling, being the currency of England where the
instrument was executed.

The court have been in the practice of correcting such clerical errors. They
will not correct an error unless it is obvious and there is no difficulty in the
ascertainment of the true intention of the parties.

Requirements for Rectification

1. There must be a mistake in the written document

Unless it is clearly established that there is a mistake in the instrument,

there can be no rectification.

This is because the essence of this remedy is to correct an error that was
made during the process of reducing the agreement into writing.

The mistake must be in the written expression of the prior intent or

agreement. The relief will not be granted to improve the terms of an
agreement. E.g. a landlord who has bargained for low rent cannot seek
this remedy to change the rent price when he becomes aware of his
imprudence.

A mistake in the agreement itself cannot be rectified, no matter how

unconscionable or unfair or oppressive the term of the contract is. The
proper remedy in such a case would be rescission. Equity cannot reform
an agreement but can only correct an error made in reducing the
agreement into writing.

Usually the type of mistake for which the remedy is granted is a common
mistake i.e. a mistake common to both parties.

Where the mistake is unilateral, the courts are reluctant to order

rectification unless there is fraud or estoppel arising from the other
party.

However, where the instrument containing the error is recording a

unilateral transaction, then the mistake will be unilateral and the court
will rectify it except if the instrument is a testamentary instrument.

Common mistake

This is a fundamental requirement. And even where the mistake is

common to both parties, the courts are still reluctant to grant it. The
remedy is not granted as a matter of course.

PY Atta & Sons Ltd. v. Kingsman Enterprise Ltd.

The plaintiff in this case had entered into an agreement with the
defendant believing that it was a sublease and the parties related to
each other on that basis. However, the final document was drafted by
a solicitor and it reflected the interest of the plaintiff as an
assignment.

The Court granted the remedy of rectification because both parties had
relied on the agreement as a sublease from the time agreement until
the time of execution. Even though the defendants claimed that they
intended it to be an assignment, cross examination revealed that the true
intention of the parties was that the interest vested in the plaintiff
should be as sublease.
According to the case of Fowler v. Fowler, at least 4 requirements must
be satisfied before a court of equity will intervene:

1. It must be shown that there is an antecedent agreement between

the parties.

The parties must show that there was a prior concluded agreement
between the parties or an ascertained intention.

It must be clearly established that the parties had come to a final and
firm agreement which the instrument failed to accurately express, or
that there was a firm intent which the instrument does not truly
express.

According to Lord Denning in the case of Frederick E. Rose Ltd. v.

William Pim &Co. Ltd. the remedy of rectification is not concerned
with intentions. It is necessary to show that the parties were in
complete agreement as to the terms of their agreement but by some
error wrote them down wrongly.

Therefore to ascertain the terms of their agreement, you look at their

outward acts (i.e. what they said or wrote to each other before the
signing of the agreement) and compare it with the signed document.

Where one predicates with certainty what their contract was and that
by common mistake it was wrongly expressed in the document, then
rectification will be granted.

It was however held in the case of Joscelyne v. Nissen that it is not

necessary to have a complete, concluded and binding contract to
succeed in an action for rectification.

A sufficient common intention is enough.

2. It must be shown that the antecedent agreement was in force and

remained in force at the material time of the execution of the
agreement which purported to express the agreement or intention,
 It must be established that the parties intended to adhere to the
antecedent agreement at the time of execution of the impugned
instrument. This was expressed by Lord Chelmsford in the case of
Fowler v. Fowler.

If the parties subsequent to the agreement decide to vary the terms

of the agreement, an instrument which correctly expresses the
subsequent agreement will not be rectified to restore the terms of
the initial agreement.

An instrument will not be rectified to reflect changes made after the

signing or execution of the agreement.

The critical requirement is the intention of the parties when the

instrument when was signed and executed. If that intention differs
from what has actually been written then the instrument can be
rectified because the true intention wasn’t expressed in the
document.

In the case of Frederick E. Rose Ltd. v. William Pim &Co. Ltd., the
parties concluded an oral agreement for “Moroccan horsebeans
described here as feveroles.” This same phrase was used in the
written contract. It turned out that both parties had been mistaken I
thinking that the feveroles and Moroccan horsebeans were the same.

The reason behind the refusal of rectification in this case was that
although both parties innocently mistook Moroccan horsebeans and
feveroles as the same thing, there was no discrepancy whatsoever
between the antecedent agreement and the written agreement. The
innocent misrepresentation could found an action for rescission but
not rectification.

3. It must be shown that by reason of the mistake in expressing the

agreement or intention in writing, the instrument fails to
accurately reflect the correct agreement and intention,
 An instrument cannot be rectified unless there is a clear an
unambiguous proof that it has failed to accurately express what has
been demonstrated as the true intention of the parties at the time of
signing or execution.

In proving this, the applicant must establish what exactly and

precisely the instrument has to be reformed to say. This is because,
in an action for rectification, the court can only act on the mutual
and concurrent intention of the parties.

In the case of Frederick E. Rose Ltd. v. William Pim &Co. Ltd. there
was no such discrepancy and so there was nothing to rectify.

Mistakes of fact are rectified. It is unlikely that mistakes of law are

valid grounds for rectification.

4. It must be shown that the rectification sought will remove the

discrepancy between the instrument and the correct antecedent
agreement or intention so as to give effect to the true agreement or
intention.

Even where a discrepancy is proved between the antecedent

agreement and the impugned written agreement, rectification will
not be decreed unless the result of rectification will give effect to the
true intention of the parties at the time of execution.

Unilateral mistake

There is a unilateral mistake where a party unaware of the error in it, signs or
executes a document which fails to accurately record his antecedent agreement
with the other party.

Usually, rectification is not granted for unilateral mistakes. The exceptions to

this rule are where the mistake is as a result of fraud or there is an estoppel
based on the fact that the defendant encouraged the other party’s unilateral
mistake.
Where the unilateral mistake is obvious there can be no rectification. This is
because a court of equity will intervene on the defendant’s conscience. So where
the defendant is unaware of the plaintiff’s mistake, his conscience is clear and
so equity will not intervene either by way of rectification or rescission.

Fraud

The conscience of the fraudulent party is not clear and as a result, equity
operates to hold him to his conscience.

Courts have been met with challenges in defining what would constitute fraud
for the purposes of rectification caused by a unilateral mistake. It has been
decided that this question is to be answered on a case by case basis.

But fraud, according to Kludze, certainly includes a false statement of fact

knowingly or recklessly made, or made without belief in its truth, with the intent
that it will be relied upon by the representee and actually relied upon by him.

The misrepresentation need not be made with the intent to profit or with a
corrupt motive. Fraud has been held to exist even in cases where the party had
the opportunity to ascertain the truth independently.

A misrepresentation which is of opinion will not qualify here, only

misrepresentations of fact. A deliberate untruth may also constitute fraud.

However if the representation induces the making of the agreement rather than
the execution of the instrument, then rectification will not be granted but rather
rescission.

Actual fraud need not be proved. Constructive fraud is enough. There is no one
definition as to what constitutes constructive fraud and for good reason. The
courts do not want to be unduly constrained in the finding of fraud. Constructive
fraud may arise from undue influence or abuse of confidence. E.g. a person fails
to explain the full implications of a provision in an agreement that would inure
to his benefit to the other party.

Estoppel
Where the defendant has conducted himself in such a way that he ought to be
stopped from denying the mistake.

The basis of this estoppel, according to Kludze is that the defendant by reason
of his inequitable conduct has so badly affected his conscience that the other
party must be protected.

The estoppel therefore prevents the defendant from resisting rectification.

The defendant in such a case must be guilty of some misconduct or sharp practice
so inequitable that it would be unfair for the defendant to take advantage of the
plaintiff’s unilateral mistake. This misconduct need not amount to fraud.

An example would be where a party is fully aware of the mistake in a document

and does nothing to correct it.

In the case of Thomas Bates & Sons Ltd. v. Wyndham’s (Lingerie) Ltd, Buckley
LJ laid down circumstances under which a person will be estopped from resisting
rectification:

1. One party should have erroneously believed that the impugned document
contained a particular term or provision, which mistakenly it did not contain,
2. The other party was aware of the omission or the inclusion and that it was
due to the mistake on the part of the mistaken party,
3. That that other party aware of the mistake failed to draw to the attention of
the mistaken party, the mistake
4. The mistake must be calculated to benefit the one aware of the mistake.

Rectification will not be allowed normally, if a third party has acquired the rights
flowing from the impugned document, bona fides and for value.

Delay on the part of the mistaken party may also bar a claim.

Beale v. Kyte
 In this case, the vendor after 6 years, brought an action for the rectification of
a contract conveying land to him. According to him, the conveyance to him
included more land than was provided for in the written contract.

He commenced the action as soon as he had noticed the mistake. The defence
of laches was rejected and rectification was decreed. It was held that laches
here begins to run from the time of discovery of the error and not the time of
commission of the error or the date of execution of the document.

Rectification in Unilateral Transactions

A unilateral mistake in a unilateral transaction may require rectification. All that is

necessary to prove is the unilateral mistake on the part of only the one who executed
it. The difficulty here is the sufficiency of proof of the unilateral mistake.

Rectification in such cases will not be granted simply because the one who executed the
document is dissatisfied or has subsequently changed his mind.

It would seem that all documents can be rectified with the exception of wills. According
to Kludze, a will may only be rectified where there have been insertions and omissions
by fraud without the testator’s knowledge.

RESCISSION

The remedy of rescission is the one by which one party to a transaction may set aside
that transaction. The transaction may be and often is a contract; but it may be available
in other cases, including settlements, gifts, releases and other transactions.

The effect of rescission is to restore the parties, as far as practicable, to their former
positions prior to the transaction, as if to all intents and purposes the transaction never
took place. Because of this rescission is normally accompanied by restitution.

In a sense, rescission is not a judicial remedy strictly speaking, but rather the right a
party has to set aside a transaction. Therefore it is not the court that rescinds the
agreement but rather the applicant.
For that reason, rescission may be done without the court, by a party simply declaring
to another that he no longer wishes to be bound by the contract. Where the other party
accepts it, then the transaction is void, and both parties are absolved of any obligation
arising thereunder.

Where the other party refuses to accept the rescission then the matter becomes
justiciable to determine whether or not there is a right to rescind.

Where the court decides that there is a right to rescind, then the conduct of the
rescinding party is ex post facto justified and no liability is incurred. Where the opposite
happens, the rescinding party incurs liability for damages for breach of contract. Due to
risk of this liability, it is advisable to first obtain a judicial order of rescission before
repudiating the contract.

Even where the other party accepts the rescission, the parties may still visit court to
adjust their rights if an agreement out of court is not achieved. This is called restitution.

The Court here, gives an order to the parties to restore each other benefits or property
received under the transaction prior to the rescission. This is known as restitutio in
integrum. This is to avoid the unjust enrichment of either party so that one cannot
withdraw from an agreement while retaining some of the benefits received thereunder.

Usually where there is a court order of rescission, the court goes further to grant the
order of restitution so that the parties do not need to return to the court to seek it
separately. As a condition for the grant of an order of rescission, there must be a
restitution to return the parties to the status quo ante.

If restitution becomes impossible, the right to rescission cannot be exercised.

Restitution is a sine qua non for rescission.

Rescission has the effect of dissolving the legal relationship, so that as far as practicable
the parties revert to their respective positions as they were prior to the impugned
contract.

Rectification due to its nature bears similarity to discharge of contracts by breach,

contracts void for mistake, contracts void for immorality or illegality, and repudiation.
Discharge of a contract by breach

A party to a contract may breach an obligation so fundamental to the contract that it

goes to the very roots of the contract. Where this happens, the other party may declare
that he is no longer bound by the terms of the contract. The contract will be declared
as discharged by reason of the breach and will cease to exist.

The innocent party is discharged from the performance of any future obligations under
the contract. However, the rights and liabilities incurred until the time of discharge are
preserved, unlike rescission where the parties will be deemed not to have even entered
into the contract at all.

With a discharge by breach, the innocent party may claim damages from the defendant
for breach of contract. Rescission is inconsistent with a claim for damages because
damages presumes that the contract has been breached, whereas the effect of rescission
is to treat the contract as not having ever come into existence.

One cannot therefore claim for rescission and damages.

Contracts void for mistake

It is often to distinguish between this and rescission because of the historically different
approaches adopted by the common law and equity.

Both have the effect of treating the contract as void ab initio. However, the availability
of the reward is dependent on different factors.

Contracts void for illegality

It is a general principle that the courts do not enforce contracts that are illegal or
tainted with immorality, whether the enforcement is sought at law or at equity.

Where a contract is realized as illegal, it is declared void ab initio and the parties are
released from their obligations.

The difference between this and rescission is that with rescission, the court orders a
restitution of the parties to their previous positions prior to the existence of the
contract. With a contract void for illegality however, due to the illegality, the court will
avoid helping the parties return to the status quo ante. The loss will be let to remain
where it falls because no restitution will be ordered.

Repudiation

A purchaser may repudiate a contract because the other party is not able to deliver the
consideration for which the bargain has been made.

The repudiating party should allege that there has been a failure of consideration, the
failure of which has destroyed the basis of the contract. E.g. in a contract for the sale
of land, where the vendor’s title is defective, then the seller may repudiate the
conveyance without any liability for breach of contract.

Repudiation may be withdrawn on pain of damages where the other party finds a way
to cure the defect complained of or becomes capable of performance of its obligation
on the date set for performance.

However, with rescission, the decision is final once effective and cannot be withdrawn.

Grounds for Rescission

The most common grounds are:

1. Fraudulent Misrepresentation: it is a settled principle of law that where an

agreement is procured by fraud, the contract evidencing the agreement may be
rescinded at the instance of the party on whom the fraud was perpetrated.

A representation is said to be fraudulent if it is:

• A false statement of fact,

• Made knowingly or without belief in its truth,

• Or made recklessly,

• Or made without caring whether it is true or false, and

• With the intent that it should be relied upon,

 • And the plaintiff actually relies upon it.

Japan Motors Co. Ltd. v. Randolph Motors Co. Ltd.

The plaintiffs in this case intending to sell their motor workshop which consisted of
showrooms, spare parts store, parking space, office machinery and some equipment
began negotiations with one guy which resulted in a deed of agreement for the sale of
the workshop.

An agreement was also reached that the plaintiffs would be allowed occupation of the
workshop for 3 months after the date of agreement in order to allow them complete the
workshop.

The guy failed to pay the agreed sum by the specified date and so approached the
plaintiffs asking for an extension of time to complete the payment by negotiating a loan
with National Investment Bank. At the bank’s request, the guy, as managing director of
the defendant company, decided to float the company.

The defendant company then entered a new agreement with the plaintiffs which to all
intents and purposes was the same as the previous one executed between the plaintiffs
and the guy. Acting on the defendant company’s behalf, the loan transaction went
through and the guy paid a greater part of the debt owed but there was an outstanding
amount plus interest.

The defendants contended that the first agreement between the plaintiffs and the guy
was not binding on them and was therefore null and void. They further contended that
the plaintiffs had deliberately and fraudulently misrepresented to them the actual value
of the premises as well as the chattels and things. And therefore they counterclaimed
for rescission of the contract.

The Court, in relation to rescission held that, “Where a purchaser had been induced to
buy property by the vendor’s fraudulent misrepresentation, the purchaser had 2 courses
or option open to him; he might abide by the contract and then bring action to recover
damages he had sustained due to the fraud; or he might rescind the contract, return
the property if already accepted, and recover the purchase price if already paid by
action after demand and refusal.
The principle is that a contract induced by fraud was not void but only voidable at the
election of the party defrauded, and when once the party defrauded has elected to
abide by the contract, being aware of the fraud, he could not afterwards have it
rescinded.

The undue delay and the unequivocal acts on the part of the defendants undoubtedly
showed that the defendants elected to abide by the agreement despite the so-called
fraudulent misrepresentation and they were bound by their election. With full
knowledge of the alleged fraud, the defendants chose to abide by the contract. They
could not when it suited their convenience retract it, reprobate it, and go back on their
own liability. Thus even if fraudulent misrepresentation had been proved, the conduct
of the defendants would have warranted a refusal of an order to have the contract
rescinded.

2. Innocent Misrepresentation:
Where the material representation on the basis of which a party entered into a
contract, is false, the party to whom the misrepresentation was made may have the
contract rescinded.

The falsity of the representation is enough to constitute sufficient ground for

rescission. It is not necessary for the one seeking to rescind to have been aware of
the falsity of the representation at the time it was made.

What is important however, is that the fact that such an innocent misrepresentation
must have been substantial or material. Where the innocent misrepresentation is
immaterial or inconsequential, it will not be a proper ground for rescission.

For a misrepresentation to be innocent, the maker must honestly believe that it is

true. The Court in Derry v. Peek, held that a false statement made honestly with
want of care or made with an honest belief on insufficient grounds, may constitute
an innocent misrepresentation.
Even where the party making the representation previously knew the truth but can
show that he had forgotten at the time of making the representation, he may be
said to have still made the representation honestly. This was the holding of the court
Commented [sb8]: In this case an Act of Parliament
provided that a company’s tramway carriages could
be moved by animal power and with the consent of
the Board of Trade by steam power.
The prospectus of the company however provided
erroneously that the carriages could be moved by
steam power instead of horses.
The Court held that the misrepresentation was an
innocent one and not actionable for damages
because the directors of the company honestly
believed that that was the position of the law.

in Low v. Bouverie.
 The reason behind this, according to Kludze is that there is no intention to deceive.

So where a lessor honestly misstates to a lessee the length of the term which it is
within his power to grant, then the lessee would be entitled to rescind the contract
based off this misrepresentation.

The honest misrepresentation must be a statement of fact and not an opinion.

Therefore a statement of the law in such a context is generally regarded as an
expression of opinion.

A claim for rescission due to an innocent misrepresentation cannot be resisted on

the grounds that the plaintiff was negligent in not obtaining the truth. It is not
enough to say that if he had used due diligence, he would have found out about the
falsity of the representation.

Redgrave v. Hurd

In this case, a retiring solicitor honestly over-stated the gross returns of his legal
practice to the defendant to whom the practice was to be transferred along with
the purchase of the solicitor’s suburban residence.

The defendant was shown the papers relating to the legal practice, but did not take
a closer look at them. Had he examined the documents, he would have realized that
the business was worthless. When he later discovered the worthlessness of the
business, he declined to complete the transaction.

The plaintiff sued for specific performance. The defendant resisted specific
performance and counterclaimed for rescission on grounds of innocent
misrepresentation.

The Court held that the defendant was entitled to rescind the agreement.

3. Contracts Uberrimae Fidei

These are contracts made based on the utmost good faith in which the contracting
party is required to make a full disclosure.
 In such a contract, one party has exclusive knowledge of the material facts. That
party is under an obligation to make full disclosure of such facts. Where the
disclosure is not made or the utmost good faith is not observed by either party, then
the contract may be rescinded by the other.

According to Kludze, the rationale for the obligation of full disclosure is that,
because the facts are in the exclusive knowledge of one party, the risks or
obligations assumed under the contract may be different from those intended by the
party who is ignorant of the facts.

Examples of contract uberrimae fidei include contracts of insurance, contracts to

subscribe for shares in a company, family settlements, contracts for the sale of land,
contracts of suretyship and partnerships. The last three types of contracts
mentioned do not fall strictly within the category of contracts uberrimae fidei,
according to Kludze. This is because they only require general disclosure without a
misrepresentation.

In the case of Gordon v. Gordon, the court set aside a family settlement where the
rights of the parties depended on a secret marriage known to one side and not
disclosed to the other.

4. The Express Right to Rescind

There are some contracts that give the parties to it the express right to rescind
under certain conditions. Where such a stipulation exists in a contract, the court
will give effect to it, and either party may rescind the agreement with the provision.

Although the courts will give effect to such a provision, it has been held that this
right can only be exercised in a reasonable manner.

A vendor cannot for instance avail himself of such a provision in the contract by
knowingly failing to disclose a defect in title and then claim to rescind because he
cannot make a good title. This was held in the case of Re Des Reaux and Setchfield’s
Contract.

The right to rescind is not an arbitrary power to terminate the contract with
impunity. If a party is seen to have known of the defect at the time of entering into
 the contract and is unwilling or unable to cure it, he cannot rescind, and his failure
to perform may be tantamount to a breach of contract.

5. Misdescription

This is described by Kludze as a mistake in stating the boundaries, location, the size,
the quantity or some other vital feature of the subject matter of an agreement or
transaction.

Where the misdescription is substantial, the party who is adversely affected by it

may apply to set aside the agreement or transaction.

The Effect of Rescission

Where the remedy of rescission is granted, the effect is to place the parties in the same
position as if the contract or transaction had never been made. If the rescission is both
lawful and effective, it is not a breach of contract and therefore no damages will be
recoverable.

The rescinded contract is deemed to have been dissolved ab initio and there is nothing
that either party can be said to have breached. A claim for damages presupposes the
existence of a valid contract which has been breached.

If there is a valid rescission all payments made must be returned, benefits conferred
must be restored and full restitution made in all other respects. Neither party will be
allowed to keep any payments or benefits conferred under the rescinded transaction.
This is to prevent unjust enrichment.

For this reason, where it is impossible for the court to grant restitutio in integrum, then
the right to rescind may be lost. According to Lord Blackburn in the case of Erlanger v.
New Sombrero Phosphate Co., as a condition to the grant of rescission, there must be a
restitutio in integrum.

If necessary, account must be taken and allowance made for both depreciation and
appreciation of the subject matter of the rescinded transaction.

Loss of the Right to Rescind

A party loses their right to rescind a contract where that party has elected to waive the
right to rescind and rather affirm the contract as is after the facts conferring the right
on him to rescind has come to his notice. E.g. where a fraud is committed and it comes
to that party’s notice, the party will not be allowed to rescind the contract where he
decides to take some benefits under the contract in spite of the fraud. He will be
deemed to have affirmed the contract and waived his right to rescind.

The lapse of time after knowledge of the fraud or other fact entitling a party to rescind
may lead to the loss of the right to rescind. In the case of Re Scottish Petroleum, the
lapse of a fortnight was considered too long.

Adji & Company v. Kumaning

In this case, the plaintiff was a syndicate of farmers. They obtained a tract of land from
the Otwereso stool which was a sub-stool of the Akyem Abuakwa Paramount Stool for
faming purposes. The farmers were strangers to both stools. After the stool had
demarcated the land for them and performed the necessary customs, the farmers went
into occupation and began cultivating cocoa and other food crops on the land.

One condition of the grant was that the farmers were required to pay an agreed sum to
the stool every year. The amount was increased and described by the AA stool as a rent.
The new conditions had been embodied in a lease which provided that the agreed rent
was to be reviewed later.

The defendant claimed that the land had belonged to his deceased granduncle whom he
had succeeded and petitioned for the release of the land to him.

The Court held that the defendant having stood by for 20 years and over, allowing the
plaintiffs to occupy the land, honestly believing that it had been properly granted to
them, equity will not allow him to recover possession.

Defences to Rescission

Since rescission is an equitable relief, its grant is subject to the general principles of
equity.

In particular however, a claim for rescission may be defeated by the following claims:
a) The plaintiff has acquiesced in the situation
b) Restitution is impossible
c) There has been an intervention of an innocent third party’s rights
Where an innocent third party acquires an interest in the subject matter of a
voidable transaction, the right to rescind may be precluded. The third party must
be a bona fide purchaser for value without notice. Where he is a volunteer (a
gratuitous transferee or done), his acquisition of the property will not constitute a
bar to rescission.

ACCOUNT

The remedy of account is usually granted together with another remedy. It is usually
granted in aid of another equitable right or a legal right.

An account is the process by which the court assesses sums due from one person to
another and it also describes the remedy of payment that is ordered by the court at the
end of the assessment process.

Initially, account was available under common law. But the procedure for account
instituted by the Chancery was so superior that it superseded the common law action
for account.

Defences to Account

1. Where the parties have already in writing stated and adjusted the items of the
account and struck the balance and settled the payments, then the remedy of
account will not be granted.

2. Where there is a mistake, accident or fraud in the statement of account, equity will
not allow the account to be conclusive upon the parties.

3. Where there is a fraud or serious error, equity will direct the account to be opened
and taken afresh. In other cases, the plaintiff will be given the liberty to surcharge
and/or falsify. The surcharge is showing an omission where credit ought to be given,
whereas falsification is providing proof that a purported payment is wrongly
inserted.
Anim-Addo & Ors v. Mensah & Ors. (CA decision)

The testator in this case had died leaving a will in English form. In the will he had devised
certain properties to his niece and her descendants.

Doesn’t really mention any principles related to the grant of account.

TRUSTS

Many scholars admit that it is difficult to find a satisfactory definition of a trust.

In the case of Green v. Russell, the court per Romer LJ accepted the definition of a trust
that was proposed by Underhill.

Underhill defines a trust as, “An equitable obligation, binding a person (who is called a
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.”

The above definition contains the essentials of a trust but the problem with the
definition is that it fails to consider charitable trusts. It also fails to consider trusts
which have non-human beneficiaries.

Kludze defines the trust institution as unique and sui generis. It is hard to find its
equivalent in other systems of jurisprudence.

Keeton’s definition is what Kludze refers to in his book as suitable. According to Keeton,
“All that can be said of a trust, therefore is that it is the relationship which arises
whenever a person called a 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 the 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.”
Penner also defines a trust as a device in which personal or proprietary rights are held
by one person on another’s behalf. The one who creates the device is the settlor because
he settles the rights in trust. The one who holds the rights on another’s behalf is the
trustee and the one for whom the rights are held is the beneficiary or the cestui que
trust.

Although defining a trust may seem difficult, explaining the nature of the trust is not as
difficult. Per Lord Hindley in the case of Hardoon v. Bellios, “All that is necessary to
establish the relation of trustee and cestui que trust is to prove that the legal title was
in the plaintiff and the equitable title in the defendant.”

Even though this is too wide a generalization, it still gives us an idea of what a trust is.

Hanbury encourages us to describe a trust and then distinguish it from related concepts
rather than attempt to define it.

Distinguishing between a trust and other related concepts

The reason why it is necessary to do so is because, these related concepts resemble a

trust. Some of them include bailments, agency relationships, contracts and powers.
These concepts were initially enforceable in the common law courts whereas trusts were
enforceable only in a court of equity.

But after the fusion of the administration of law and equity in one court, all of them
became enforceable in one court. According to Kludze, there is therefore the need for
a distinction in substance.

1. A trust and a bailment.

Blackstone defines a bailment as “A delivery of goods in a trust, upon a contract

expressed or implied, that the trust shall be faithfully executed on the part of the
bailee.”

This definition by Blackstone has been subject to much criticism, due to the fact
that not all bailments arise as a result of a contract. Also, in some cases the bailor
may just be relying on the bailee to exercise a certain standard of care in the
 handling of the property under his care. Also, the definition does not distinguish
between the concepts of a bailment or a trust.

Bailment is similar to a trust in the sense that the bailee holds the property with
duties toward the bailor, just as the trustee holds the property with duties toward
the beneficiary.

The differences however, are many.

Differences between trusts and bailments

No. TRUSTS BAILMENTS

1. Creation of equity, therefore Recognized under common law, so not

subject to the frailties of subject to the frailties of equitable
equitable interests. interests.

2. Any property at all can be the Only movable property can be bailed.
subject matter of a trust

3. Trustee has legal title in the
trust property. Therefore an
unauthorized sale of the trust
property to a bona fide
purchaser for value without
notice of the trust will confer a
valid title.
Bailee has only possession of the
property. Therefore he cannot convey
title without the proper authority of the
bailor unless the possession he has is
such as to raise a sufficient
presumption of title in the chattel.

2. A trust and an agency relationship

These two are alike in the sense that they each owe a duty to someone else (i.e. a
principal or a beneficiary). There is therefore an element of accountability with
regard to the property.

Both agents and trustees are required to act personally in the discharge of their
functions without undue delegation. There is also a fiduciary relationship in both
cases.

Differences between a trusts and an agency relationship

No. TRUSTS AGENCY

1. Arises in equity, therefore rules of Arises in equity, therefore the rules

equity can be invoked. of equity are not invoked here.

2. They do not normally import any The agency relationships arise as a

contractual relationship between result of contract (except where it is
the trustee and the beneficiary. an agency of necessity) or another
consensual relationship between the
agent and his principal.

3. The trustee has the legal title to The agent has only possession in the
the property vested in him property.

4. A trustee cannot usually involve The agent can make his principal
his beneficiary in liability liable where he does an act in the
general scope of his employment or
authority.

3. A trust and a contract

These two are very different. The only reason for distinguishing between them is
because a trust may be created by a contract between the settlor and the trustee.

Differences between a trust and a contract

No. TRUSTS CONTRACTS

1. There is no consideration moving The agreement between the parties is
from one party to the other. supported by valuable consideration
There is no contract between the or in some case can be made under
trustee and the beneficiary. seal.
Even where it arises out of a
contract, the relationship is
between the settlor and the
trustee.
2. The beneficiary who is not a party
Ordinarily, only a party to a contract
to the creation of the trust can can sue to enforce it. The exceptions
sue to enforce it. to this rule have been created by
Section 5 of the Contracts Act.
3. Any trust liability falls on the Debts incurred are enforceable
trust property and not on the personally and where there is
trustee personally. insolvency, the debt may not wholly
be recoverable.

4. A trust and administration of estates

These are very similar because the administrator holds the property on behalf of the
legatee or the devisee in a way that is similar to the relationship between a trustee and
a beneficiary.

Differences between trusts and administration of estates

No. TRUSTS ADMINISTRATION OF ESTATES

1. Invented by the Chancery
2. The trustee is normally appointed
to hold the trust property for the
benefit of the objects of the
trust.
3. Where the trustees are more than
one, their power is to be
exercised jointly.
Originated in the ecclesiastical courts
The normal function of the administrator
is to wind up the estate of the deceased.
He pays all the debts of the deceased and
distributes the assets.
The power of administrators is exercised
severally.

CLASSIFICATION OF TRUSTS

1. Public trusts: These trusts are for the promotion of the public welfare, though it
may incidentally benefit an individual or a class of individuals. These are enforceable
by the Attorney-General.

2. Private trusts: These are for the benefit of an individual or class of individual, even
if any benefit may be incidentally conferred on the general public. It is normally
enforceable by any of the beneficiaries.

Private trusts can be divided into:

1. Express trusts
2. Implied trusts
3. Constructive trusts, and
4. Resulting trusts

EXPRESS TRUSTS
This is a trust created by an express declaration of the person in whom the property is
vested. It is created by an express act of the settlor. Sometimes it is called a declared
trust. An express trust may be either executed or executory.

Executed trusts

This is an express trust in which the settlor or testator has marked out in appropriate
technical expressions the interest to be taken by each of the beneficiaries. The trust is
executed because the interests of each beneficiary is defined precisely and there is no
need for a further instrument.

It may also be called a fixed trust or an interest in possession trust. In the case of Egerton
v. Lord Brownley, it was said that the settlor in an executed trust is “his own
conveyancer.” And therefore, where he has expressly stated what settlement he
intended should be made, no new will must be made for him by any forced construction
of his plain directions, but his intentions must be executed in the settlement.

The beneficiary of an executed trust may either receive a contingent or a defeasible

interest.

A contingent interest is one that arises on the occurrence of a certain event. A

defeasible interest ends on the occurrence of a certain event.

A bare trust is a type of executed trust that has very minimal terms. Here the trustee
holds the legal title to the property and simply does the bidding of the beneficiary (who
happens to be the settlor). Due to how similar this type of trust is to a nomineeship, the
trustees are sometimes called nominees.

Executory trusts (also called discretionary trust)

This is an express trust in which the testator or settlor has created a trust in favour of
beneficiaries, and although he may indicate a scheme for settlement, the details are
left to be filled in by the trustees.

Although the objects of a trust must be certain before a valid trust can come into
existence, there is no requirement that the instrument creating the trust should in the
first instance mark out precisely the interests which each of the objects or beneficiaries
is to take in the trust property.

The specific details of the interests of the beneficiaries may be left out to be settled
later. These types of trusts are common in marriage settlements and wills.

Completely constituted & improperly constituted trusts

An express trust is completely constituted when the trust property has been vested in
trustees for the benefit of the beneficiaries.

The beneficiaries of such trusts can enforce the trusts whether or not value has been
given. A completely constituted trust can be created in one of 2 ways:

a) Conveying the property to the trustees,

b) The owner declaring himself a trustee of the property for some other person. In such
a case there is no need for vesting because the trustee already has the title in the
property. There must however be a declaration of himself as trustee for another
person must be evidenced in writing signed by himself or his authorized agent i.e.
only where the property is landed.

The crucial issue here is the method of vesting the property. Whether or not the vesting
has been properly done is a matter to be determined by the common law. E.g. where
the trust property is land, there is a need for writing in order to transfer the interest in
the land.

Until the trust property has been vested in the trustee, the trust remains incompletely
constituted.

According to Kludze, if the trust is not completely constituted, there is technically

no trust. The only possible exception could be where the beneficiaries in an
incompletely constituted trust have given consideration.

This is because, even though equity will not assist a volunteer, equity will not perfect
an imperfect gift. A party who has given value may seek the aid of equity.
Where the donor has done all in his power to vest the legal interest in the property in
the done but some other person has not done his part, equity will regard it as a perfect
gift and enforce the trust.

Re Rose

The donor had executed a voluntary transfer of shares and given it together with the
share certificated to the done. All that was left was for the company to register the
transfer, but it had failed to do so prior to the death of the donor.

The court held that the gift was valid because the donor had done all that necessary on
his part to divest himself of the shares and make the gift. And the completion of the
legal title by registration was only the act of a third party.

IMPLIED TRUSTS

This type of trust arises when there is a presumption that there is an intention to create
a trust, even though there is not proof of the use of express words to that effect and
the formalities for creating a trust are lacking.

Sometimes an implied trust arises from the failure to satisfy the formalities necessary
for the creation of an express trust.

It is sometimes known as a presumptive trust. The rationale of such a trust is that if the
trust is not implied in such circumstances the intended trustee could take the property
as a purchaser with a right of beneficial enjoyment and this could amount to fraud.

RESULTING TRUSTS

This type of trust arises where the owner of property has conveyed it to another person
with the intention of creating a trust, but the beneficial interest returns or results to
the transferor because the trust has not exhausted the entire estate.

Where the property has been conveyed to the trustee but the purposes of the trust do
not exhaust the beneficial interest, the residue results to the transferor. E.g. the settlor
conveys a property to a trustee from which the trustee is to make payment of 1,000
monthly to the beneficiary but the income resulting from the property is 1,500 monthly,
then the 500 results back to the settlor or to his estate.

The difference between this and the implied trust is that with the resulting trust, the
beneficial interest comes back to the settlor or the one who conveyed the property or
the one who provided the money for its purchase. However, with an implied trust, the
property does not result to the settlor.

An example can be seen in the case of Kwantreng v. Amissah, where the father conveyed
his landed property to his daughter to enable her obtain a loan from a bank to complete
buildings on the land. The court held that she held the property on a resulting trust in
favour of her father. Consequently, on the father’s death, she would hold the property
as a trustee for herself and all the named beneficiaries in her father’s will to enjoy the
said property.

A resulting trust may be wither automatic or presumed.

Re Vandervell’s Trust

Equity abhors a beneficial vacuum. Automatic resulting trust arose here.

Presumed Resulting Trust

This type arises where a person providing assets receives a benefit under a trust because
there is an evidentiary presumption that the settlor intends the property to come back
to him. This is usually the case where there is no evidence of the intention of the one
providing the assets.

The presumption of a resulting trust can be rebutted by the presumption of

advancement. The presumption of advancement arises where the person providing the
purchase money for the acquisition of a property has the equitable obligation to support
or make equitable provision for the person to whom the property is conveyed.

In such cases, the person providing the purchase money will be deemed to have made
an outright gift to the other party whom he is under an equitable obligation to make
provision for. Usually it arises in husband and wife or father and child situations.
See Ramia v. Ramia and Ussher v. Darko

With regard to husband and wife situations, the presumption is not destroyed by the
subsequent dissolution of the marriage. As was held in the case of Thornley v. Thornley,
where a husband and wife are tenants by entireties, a decree absolute for the
dissolution of marriage makes them joint tenants. And the former wife is entitled to an
account of rents and profits as from the date of the decree.

The presumption of advancement in marriage situations will also not apply where a wife
buys the property in her husband’s name. This was held in Hesseltine v. Hesseltine.

The presumption of advancement does not apply between a man and his mistress, no
matter how long they have been cohabiting or whether they have children together.
Diwell v. Farnes.

In the case of In Re Sasu-Twum, the court held that a father was under the obligation
to make provision for his child and for that reason, where the father takes a conveyance
of the property in the name of the child, there is a presumption of advancement that
the property was meant as a gift to the child. Also, there is nothing that prevents a
father from advancing property to one child at the expense of the other children, so
long as there was no duress, fraud or undue influence.

The presumption of advancement will not arise in mother child situations. This was held
in the case of Bennet v. Bennet where the court held that there is no such obligation,
according to the rules of equity on a mother to make provision for her child, as in the
case of a father. Therefore, where a mother makes a purchase or investment in the
name of her child, or in the joint names of herself and her child, that does not of itself
afford the presumption of advancement. The intention to advance in such a case would
be one of evidence.

The presumption of advancement may be displaced by the intention of the purchaser of

the property.

In the case of Oppong v. Oppong, the court held that the best evidence of intention was
a declaration by the person who supplied the purchase money at the time of purchase.
Subsequent declarations could not rebut the intention to advance if it really was a
present at the time. In the instant case, in the absence of evidence from the defendant
in support of advancement, the plaintiff’s evidence on the circumstances of the
purchase and his exercise of control over the property was enough to establish his
intention to purchase the property for himself. Therefore he had rebutted the
presumption of advancement.

See Ussher v. Darko

Automatic Resulting Trust

This arise where the trust fails either in whole or in part. The undisposed interest in the
property results to the settlor.

Gateway Worship Centre v. David Soon Boon Seo

The appellant, a Korean missionary was resident in Tema. The appellant promised the
church that he would raise funds for the church when he goes back to Korea. Prior to
his departure to Korea, the appellant produced a video with the church participants
which depicted the community as one of abject poverty and degradation, in order to
curry the sympathy of prospective Korean benefactors and foster their generosity.

When the appellant returned to Ghana, he declared openly to the church that the funds
had been raised. He failed to disclose how much had been raised and proceeded to keep
the money in his bank account. He then used part of the money to acquire the land in
dispute. Subsequently, the pastor of the church, together with the church acting
through its trustees sued.

The Court held that the relationship between the philanthropist in Korea, the church
and the appellant is a trust relationship. The philanthropist in Korea was the settlor,
the appellant the trustee and the church was the beneficiary.

An express trust requires the 3 certainties of intention, subject matter and objects to
be valid. In the instant case however, the facts do not support the creation of an express
trust but rather a constructive trust.

According to da Rocha and Lodoh in Ghana Land Law and Conveyancing, a constructive
trust is “a trust which arises independently of the intentions of the parties but it is
imposed by equity because the circumstances demand that the person holding the title
to the property should be considered a trustee.”

The essentials of a constructive trust are:

1. There must be no express intentions of the parties to create a trust

2. There must exist a fiduciary relationship.
3. The fiduciary relationship must specifically be in the context of trust such as to make
the fiduciary a trustee in equity.

The appellant was not an express trustee, as there is nothing on the record confirming
any intention to be a trustee. It is on record however that the philanthropist donated
the money for the church’s benefit. The appellant as the legal title owner of the money
donated, kept it in his account.

The appellant therefore stands in a fiduciary position because he became the nominal
owner of something that did not belong to him, which he had collected in the name of
the church. He was therefore a trustee in equity over the funds, which he used the
church’s name to raise for their benefit.

As a trustee in a constructive trust, he was required to manage the funds for the benefit
of the beneficiary (the church).

The general principle is that whenever there is or has been a fiduciary relationship, the
beneficial owner of an equitable interest in the property may trace it into the hands of
anyone holding the property except a bonafide purchaser for value whose title is
inviolable.

Constructive Trusts

Lord Denning in the case of Hussey v. Palmer described a constructive trust as one
imposed by law whenever justice and good conscience require it. It is to be applied in
cases where the defendant cannot conscientiously be allowed to keep the property for
himself alone but ought to allow another to have the property or a share in it. He even
further describes it as an equitable remedy.
It therefore arises by the operation of law and not through a deliberate act of the
parties.

For example where a trustee has made a profit no matter how honestly it was made, he
would hold the property on constructive trust for the benefit of the beneficiaries of the
original trust.

See Boardman v. Phipps

Keech v. Sandford

A person had a lease of the profits of a market and devised his estate to a trustee in
trust for an infant. The lessee trustee applied for a renewal of the lease prior to its
expiry, for the benefit of the infant. The renewal was refused.

The trustee then attempted to get the lease for himself.

The court held that the trustee was obliged to convey the lease to the infant and account
for the profits.

Dzidzienyo v. Dzidzienyo

The government, after re-entering a plot of land it had leased to E.A. Dzidzienyo, due
to a breach of contract, again offered the plots to him but he was too ill to accept them
and he died 4 months later without accepting the offer.

The administratrix of the estate of the late Mr. Dzidzienyo had the leases granted her
by a deed which showed that she took the property in a personal capacity.

The court held that the leases were granted to her in her personal capacity solely
because she was the administratrix of the estate of the deceased. Due to this, she held
the property a constructive trustee for the beneficiaries of the deceased’s estate. An
administratrix is not allowed to use her position to derive any benefit from the estate.

Since a constructive trust is created by equity, there are no prescribed formalities for
its creation.
Profits from a crime or profits obtained in the commission of an unconscionable act are
deemed to be held by the one who receives them, in a constructive trust for the benefit
to whom the fiduciary duty is owed.

AG for Hong Kong v. Reid

The respondent who was a former servant of the Crown in Hong Kong breached his
fiduciary duty by accepting bribes during his term of office. It was alleged that he had
purchased properties in New Zealand using this money. He pled guilty to the charges of
bribery and was sentenced to imprisonment. He was further ordered to pay the Crown
the value of his assets which were derived from the bribes.

He sought to caveat the titles to his properties in New Zealand.

The court held that a gift accepted by a person in a fiduciary position as an incentive
for the breach of his duty constituted a bribe and although in law, it belonged to the
fiduciary, in equity, that person not only becomes a debtor for the amount of bribe to
the person to whom the fiduciary duty is owed but a constructive trustee for the bribe
and any property acquired therewith.

If the value of the property representing the bribe had depreciated, the fiduciary had
to pay the injured party the difference between the initial amount of the bribe and the
value of the property. Where the property had appreciated, the fiduciary would not be
entitled to retain the properties in excess, since equity will not allow him to make a
profit from his breach of duty.

Therefore all the New Zealand properties were held by the respondent in constructive
trust for the Crown.

Trusts which are not enforceable by or on behalf of the cestui que trust or the object
are known as trusts of imperfect obligation or honorary trusts. As a rule, they are
declared invalid because a trust must have a beneficiary.

Except for charitable trusts a court will not hold that a trust is valid unless the trust is
for the benefit of ascertained or ascertainable beneficiaries and can be enforced by the
court.
Morice v. Bishop of Durham

The testatrix, after making some dispositions in her will, bequeathed all her personalty
to the Bishop of Durham to dispose of the ultimate residue “to such object of
benevolence and liberality as he (the bishop) would approve of.”

The bishop expressly disclaimed any beneficial interest in himself personally. And since
it could not be deemed an absolute gift to the Bishop, the trust failed. Because this
trust was not a charitable one, it failed for vagueness. A vagueness that the cy-pres
doctrine could not cure.

The property therefore resulted in favour of her estate.

Re Astor’s Settlement Trust

A settlement made in 1945 contained trusts of income to be applied during a specific

period for a number of non-charitable purposes which included among others, the
maintenance of good understanding between nations, the preservation of the
independence and integrity of newspapers, the control publication, financing or
management of newspapers and the protection of newspapers from being absorbed or
controlled by the combines.

The court held that these trusts were invalid, first because, they were not for the
benefit of individuals but for a number of non-charitable purposes which no one could
enforce.

There have been some exceptions to the general rule against the enforcement of trusts
of imperfect obligation. These include:

1. Trusts for the erection or maintenance of monuments, tombs and graves. Re Hooper.
2. Trusts for the care of specific animals. This will not however apply to the settlor’s
pets. Re Dean; Pettingall v. Pettingall.

FORMALITIES FOR THE CREATION OF A TRUST

Anyone with the capacity to hold property can create a trust.

The main question that comes to play here is the nemo quod non habet rule.
Only a person of unsound mind cannot create a trust. This is because he lacks the
dispositive intent.

Under Ghana law, it would seem that an infant can create a trust because both under
the common law and customary law, an infant can hold interest in property. It must be
noted that according to the case of Edwards v. Carter, a disposition or settlement made
by an infant is voidable and the infant may repudiate it either within his infancy or
within a reasonable time after the attainment of majority.

However where the trust is created in a will, the testator must be at least 18 years old
in conformity with Section 1 of the Wills Act.

The 3 Certainties of a Trust

In the case of Knight v. Knight, Lord Langdale set out the 3 requirements of an express
trust as follows:

1. Certainty of words/intention
2. Certainty of subject matter
3. Certainty of objects

It must be noted these 3 certainties do not apply to resulting, implied or constructive

trusts but only express trusts.

1. Certainty of Words

The words used by the settlor must express his intention to create a trust. Technical
words are not necessary. The words must simply evince an unequivocal intention to
create a trust in favour of some intended object or beneficiary.

The settlor must use clear, imperative and unambiguous language. For this reason,
precatory words have been held as not enough to create a trust.

Precatory words are words of entreaty. They include words of wish, hope or desire. And
prior to the decision in the case of Lambe v. Eames, such words could give rise to a
trust.
In the absence of a certainty of words, no trust will arise and the intended trustee/done
may take the property as beneficial owner.

Lambe v. Eames

The testator gave property to his widow “to be at her disposal in any way she may think
best for the benefit of herself and family.”

The court held that this was an absolute gift to her and was not in any way to be
construed as creating a trust in favour of the family.

James LJ in that case stated that the courts of equity were too officious in interposing
trusts where it was clear that a trust was never meant to exist in that case. He further
describes it as an act of cruel kindness.

Re Adams and the Kensington Vestry

In that case, the testator gave all his estate, both real and personal to his wife, “her
heirs, executors, administrators and assigns, in full confidence that she will do what is
right as to the disposal thereof between my children, either in her lifetime or by will
after her decease.”

The Court held that the words did not create any trust and for that reason, the property
was an absolute gift to the wife. She was entitled to the property beneficially and
absolutely, unfettered by any trust in favour of the children.

It was held by Lord Lopes, that the court will not allow a precatory trust to be raised
unless on the consideration of all the words employed it comes to the conclusion that it
was the intention of the testator to create a trust.

Gyasi v. Quagraine

The testator appointed his nephew as the sole heir of all his movable and immovable
property as well as the administrator of his will. He failed to explain the meaning of
sole heir but explained administrator to mean the one who administers to the needs and
requirements of the household and those abroad in the same way the man himself would
have done as particularized in the said will.
The court held that there was no trust here because of the use of precatory words (“sole
heir”). And even if there were a trust created, that trust would fail due to the lack of
certainty of objects.

Sey v. Sey

A testator gave a house to his brother and stated that the brother was not to sell the
house for any reason thereby to cause his (the testator’s) children to go astray. He was
to look after the testator’s children well and live with them peaceably and quietly.

The Supreme Court held that what the testator had done was to simply admonish his
brother to take care of his children. There was no trust relationship.

2. Certainty of subject-matter

The property which is intended to be the subject matter of the trust must be
expressly designated or so defined or described that it is capable of being identified.

Where the subject matter is not so certain, the gift is void and no trust can arise.
The intended subject matter will just remain a part of the assets or the estate of
the settlor.

Sprange v. Barnard

The testatrix gave money to her widower for his sole use but provided that, “At his
death, the remaining part of what is left, that he does not want for his own wants,”
should be divided equally between the testatrix’s brother and sisters.

The court held that the widower took all, and that a trust could not arise due to the
uncertainty of the subject matter.

Not only must the physical object be certain but the beneficial interest to be taken
therein. However, in the absence of the settlor to specify the duration of the
beneficial interest, the law is to aid in its determination. This is given effect to in
Section 13(2) of the Conveyancing Decree, which allows the court to NECESSARILY
IMPLY the interests and rights to be conveyed.
 It must be noted the provisions in the Conveyancing Act apply only to immovable
property, therefore, where the property is movable, the court will rely on the
intention of the donor as expressed or as can be inferred. Where the language used
in a trust for movable property is imprecise, then no trust will be created and all
the property remains with the settlor.

Where the beneficiaries are 2 or more, their precise proportions must be set out
with certainty in the trust instrument. Lack of certainty here may be cured by the
maxim, “Equality is equity.”

3. Certainty of beneficiaries/objects

The beneficiaries should be ascertainable without difficulty. In other words, the

beneficiaries must be sufficiently described so as to be identifiable.

The beneficiary need not be a person. It may be an object (e.g. religion or

education). Even though the beneficiary is an object, it needs to be ascertainable,
or certain.

Where the beneficiary is uncertain, the trust is void and the property results to the
estate of the settlor.

It is only where the trust is charitable that the courts allow some latitude and apply
the cy-pres doctrine, by which the court may order that the trust be applied to the
nearest object to that indicated by the testator.

Where the trust is for “dependants” the courts have held that such a trust is void
because there is no way to determine the ambit of the word dependant once it is
occurring in a will.

In the case of Gyasi v. Quagraine, the court held that a trust created for “members
of my household and those of my near relations abroad” was too vague to be
enforceable as a trust.

McPhail v. Doulton
There was a settlement which created a discretionary trust to be applied for the
benefit of “officers or employees or ex-employees” of a particular company and
their families.

The court held that the trust would fail due to the insufficient certainty of objects.
It would not be possible to make a complete list of beneficiaries.

It was also held that in a discretionary trust, the requirement of certainty of

beneficiaries is met if it can be said with certainty that “any given individual” is not
a member of the class.

Mussoorie Bank v. Raynor

A testator gave to his widow the whole of his real and personal property “feeling
confident” that she would act justly in dividing the property between their children
when she no longer required the property.

The court held that she took an absolute interest in the property. According to the
court, the 3 certainties are inter-related and the absence of one certainty (the
subject matter) could most likely cast doubt on the existence of the others (the
intention).

SECRET TRUSTS

A secret trust is one that is not manifest from the face of the instrument conveying
the property to the intended trustee. It requires a further instrument or evidence to
discover the trust and its provisions. They may be either fully secret or half secret.

Fully Secret Trusts

The instrument conveying the property does not disclose on the face of it that there
is a trust, although it is conveyed or given on trust. Here the will or conveyance can
look like an absolute gift to the transferee. But the transferee would have agreed
with the transferor to hold the property in trust.

Such trusts may be created either inter vivos or by a will.

Equity enforces such trusts due to the fact that to allow the done take a beneficial
interest in the property is likely to amount to fraud on the donee’s part.

However, equity has set a limit to the enforceability of these types of trusts. The
reason for this is to avoid the use of secret trusts in the making of unattested
testamentary dispositions.

Requirements for the Enforcement of Fully Secret Trusts

These are the limitations imposed by equity as referred to above.

1. The trust must have been communicated to the donee in the lifetime of the
donor. The communication here must have been either oral or written.

2. The donee, prior to the death of the donor must have accepted the trust or
tacitly acquiesced in carrying out the trust. Acceptance may even inferred from
silence, according to Kludze.

3. The nature and terms of the trust must be communicated to the done. The
details must have been disclosed to the donee, i.e. the subject matter, the terms
of the trust and the beneficiaries. Where the donee accepts a secret trust whose
particulars are not disclosed to him before the death of the donor, then he would
be deemed to hold the property on a resulting trust in favour of the donor’s
estate.

Re Boyes, Boyes v. Carritt

The testator by a will drawn for him by his solicitor and executed in London,
gave all his property to the solicitor absolutely and appointed the solicitor as his
sole executor.

The testator had previously told the solicitor that the he wished him to hold the
property subject to directions to be communicated to the solicitor before the
testator died. The testator never communicated any directions to the solicitor.

After the death however, the solicitor found some letters from the testator which
were unattested testamentary documents addressed to the solicitor. It was
stated in these documents that one Mrs. Brown should have practically all the
property.

The court held that there was no trust in favour of Mrs. Brown because the
communication was not done before the testator died. And that the solicitor held
the property on a resulting trust in favour of the estate of the testator.

Where there are 2 or more donees who hold the property as joint tenants in a
secret trust and only one of them is informed about the existence of the secret
trust and that donee accepts to be a trustee, then all the other donees are bound
as trustees, if that donee who accepted did so before the making of the gift.

Where the courts hold that a trust does not exist, the one who accepted it will
take the property as an absolute gift under the operation of survivorship, if the
others pre-decease him.

If the promise to accept the trust is made after the execution of the will, the
other donees are not bound but the one who accepted it will be bound.

Re Stead

The court held that in a secret trust which gifts absolutely property to 2 persons
as tenants, where the trust was communicated to only one donee after the date
of the will, and the other donee had no notice of the trust until the death of the
testator, the joint tenancy between them will be severed and they will hold the
property as tenants in common. They will each hold an undivided share of the
property which descends on his heirs at death.

Only the donee who accepts is bound.

Kludze is of the view that this position of the law is difficult in its application
due to Section 14 (3) of the Conveyancing Act which provides for a presumption
of tenancy in common except in a conveyance in trust.

Nevertheless, Kludze submits that regardless of the Conveyancing Act, because

equity presumes a tenancy in common, and equity prevails over common law, a
 tenancy in common should be presumed so as to prevent the one who accepted
the secret trust from unjustly enriching himself.

Half-Secret Trusts

Here the instrument conveying the property discloses the general existence of a
trust, but the terms of the trust do not fully or even sufficiently appear in the
will or instrument.

The possibility of fraud here is practically eliminated.

Equity provides as a safeguard the requirement that, for a half-secret trust to be

created, the particulars must be communicated to the legatee or devisee and
accepted by him before or at the time of the execution of the will.

Parole evidence will be admitted to establish the existence of such a trust.

Section 2 of the Wills Act does not allow the creation of a trust by a testamentary
disposition, unless the testamentary document is executed and attested in accordance
with the formalities prescribed for wills.

PUBLIC PURPOSE TRUSTS/4LE TRUSTS

This is a trust whose object is to promote the public welfare even if it accidentally
benefits an individual or a class of persons.

Such trusts are usually enforceable by the Attorney-General. Only express trusts can be
the subject of a charitable trust.

The definition of charity was provided in the case of Commissioners for Income Tax v.
Pemsel, where Lord Mcnaghten stated that charity in its legal sense comprises 4
principal divisions:

1. Trusts for the relief of poverty

2. Trusts for the advancement of education (in the case of IRC v. McMullen, the court
held that a trust for the education of children in sports would be charitable. However
 in the case of Re Shaw, it was held that schools for prostitutes and pickpockets would
not be regarded as charitable)

3. Trusts for the advancement of religion (in the case of Gilmour v. Coats, the House
of Lords held that a gift given to a small contemplative order of nuns who had
virtually no contact with the outside world could not be deemed as charitable. There
was no necessary public benefit in the prayers and intercession of the nuns, neither
was there any in their edifying spiritual life. So for a religious charitable gift to be
charitable, the public must be able to derive a benefit from the presence of the
religious people in the community) , and

4. Trusts for other purposes beneficial to the community, not falling under any of the
above mentioned heads.

According to Ghana’s Trustees (Incorporation) Act however, Section 1 provides that the
trustees of an unincorporated voluntary association of persons or body established for a
religious, educational, literary, scientific, sports, social or charitable purpose shall
apply to the Minister for a certificate of registration. This confers on the body of trustees
the ability to hold land and have perpetual succession.

The Act fails to define charitable.

It must be noted that political trusts cannot be seen as charitable. A political trust is
one that has as its purpose the changing of the law. Therefore in the case of National
Anti-vivisection Society v. IRC, where the society formed had the purpose of changing
the law regarding vivisection, the court held that the society could not be considered a
charity.

Things to note about charitable trusts

1. The trust property does not vest in the beneficiaries. They do not have a defined
interest.
2. The beneficiaries do not have standing in a court of equity to sue to enforce the
trust. It is rather the duty of the Attorney-General to do so.
3. Where a charitable trust is impracticable, obsolete or uncertain, or would otherwise
fail, the cy-pres doctrine will be applied to save it. The cy-pres doctrine allows for
the trust to be applied to the next nearest purpose resembling the original trust.
4. They are exempt from taxation under Ghana law.

ENFORCEMENT OF CHARITABLE TRUSTS

Re Faraker

The testatrix left money to a particular named charity that helped widows. It so
happened that some years later, the charity and several others had been amalgamated
under a scheme by the Charity Commissioners.

At first instance, it was held that the charity had ceased to exist therefore the gift had
failed. The Court of Appeal reversed this and held that the amalgamated charities were
entitled to the legacy. The court applied the gift to a slightly wider purpose.

Re Spence

The testator left money to the Blind Home. The Blind Home was run by an organization
that also ran other homes. It was held that the money must be applied only for the home
referred to in the will and not for the general purposes of the organization.

Re Harwood

A testatrix left money to 2 organizations; the Wisbech Peace Society and the Peace
Society of Belfast. The Peace Society of Belfast had never been existent but the Wisbech
Peace Society had existed but had been wound up before the death of the testatrix.

The court held that due to the precise manner in which the testatrix had identified the
organizations showed that she had a clear intention to benefit societies which were
formed for the purposes of promoting peace, and there being no such society as that
named in her will, a general charitable intent could be inferred and therefore the cy-
pres doctrine would be applied.

As a general rule, before a charitable trust can be enforced, the gift must be charitable
under the law.
For a gift to be charitable, it must be for the benefit of the public or a sufficient section
of the public. Refer to Gilmour v. Coats.

Re Pinion

A testator left his studio and contents to be used as a museum to display his collection
of art. Experts were of the opinion that the collection was virtually worthless and of no
artistic merit whatsoever.

Since the collection on display did not have any value, the gift was deemed to have
failed.

Where a trust has both charitable and non-charitable purposes equity will allow for the
severance of the non-charitable part where possible. In the case of Re Jenkins’ Will
Trusts, the court held that finding one gift for a non-charitable purpose among a number
of gifts for charitable purposes did not mean that the testator meant for that non-
charitable gift to take effect as a charitable one, even if the non-charitable gift may
have a close relation to the purposes for which the charitable gifts are made.

In the case of Thrupp v. Collett, the court held that a trust to pay the fines of poachers
was void. Any trust that has its object a breach of the criminal law would be void.

POSITION OF TRUSTEES

Capacity

Generally, anyone capable of holding property can be a trustee. An infant may be a

trustee but he will be subject to the disabilities that come with the disposal of the
property. An infant can also not be held liable for breach of trust committed during his
infancy unless he is guilty of fraud.

A corporation may be a trustee.

A person may be the sole trustee of property for himself and other beneficiaries. He
may also be the sole beneficiary for a trust of which he is one of the trustees. He cannot
be the sole beneficiary and the sole trustee at the same time.

Number of Trustees
There seems to be no restriction on the maximum number of trustees who may be
appointed.

However Section 102 of the Administration of Estates Act provides that where an infant
is absolutely entitled to property under a will or on the intestacy of a person, the
personal representatives of the deceased may appoint 2 or more individuals but not
more than 4 as trustees for the infant’s property.

Appointment of Trustees

The trustees may be appointed by the settlor on making the settlement or may be
appointed by a person who has the power to do so under the trust instrument or the
court.

A trust will not fail simply because there are no trustees to manage the trust, unless the
settlor wants a specific person to be the trustee.

In the case of Re Lysaght, the court stated that where it is of the essence of the trust
that the trustees selected by the settlor and no one else shall act as the trustees of it
and those trustees cannot or will not undertake the office, the trust must fail.

A trust may remain valid even if all the trustees die before it can take effect.

Even if the trustees disclaim the trust, the trust will not fail.

In Mallott v. Wilson, the settlor executed a deed appointing a trustee over a settlement
he had declared in favour of his wife and children. The trustee disclaimed the trust and
following this the settlor executed a deed to the effect that the trustee had never
accepted the trust therefore it was ineffective.

Later, the settlor made a second settlement and sought to include all the property that
was included in the previous settlement. The court held that the old settlement was
still binding. The failure of the original trustee to assume the trusteeship did not destroy
the trust but rather made the settlor himself the trustee in the absence of an original
trustee.

Vesting of trust property

The trust property is vested in the trustees so as to enable them deal with the property,
carry out their obligations and deal with outside parties.

The appointment of a person as a trustee does not mean that the property is
automatically vested in him. There must be a conveyance executed which gives the
trustee the interest in the property.

Termination of trusteeship

A trusteeship may be terminated by the following means: disclaimer, retirement,

removal, or replacement.

Disclaimer

No one can be compelled to accept the office of trustee against their wishes, unless it
is a constructive or resulting trust.

The disclaimer is usually done by deed, as in the case of Stacy v. Elph. It may also be
done orally or by conduct.

A person cannot claim and then disclaim a part of the trust, even if what the party
accepts in distinct and separate from the rest. This was held in the case of Re Lord &
Fullerton’s Contract.

Retirement
Once a trustee accepts a trust, he cannot disclaim but he may asked to be relieved of
his office and for good reason. This release from office is what is known as retirement.
A trustee may also retire if the trust instrument allows it or if the beneficiaries are sui
juris and accept it or if the court so orders.

A trustee is generally responsible for the cost of his retirement and the cost of replacing
him if his retirement is unreasonable.

Removal

It has been suggested that the court has an inherent jurisdiction to remove old trustees
and to appoint new ones if the welfare of the beneficiaries require so. This is according
to Snell.
It may also be that the trust instrument sets out the circumstances and the procedure
for the removal of trustees.

Remuneration of Trustees

As a general rule, trustees are not entitled to any allowance. Their services are expected
to be gratuitous. Even where their services are of a professional nature, they are still
not entitled to remuneration unless the trust instrument provides otherwise.

However the courts have held in cases like Marshall v. Halloway that where the
responsibilities under the trust are onerous, the court can order that the trustees be
paid.

Any expenses incurred by the trustee in the carrying out of their duty is refundable.

Profits made by Trustees

The rule is that a trustee cannot derive a direct profit from handling trust property
which he is under a fiduciary duty to keep.

Where the trustee derives any such profits from it, he will be deemed a constructive
trustee of the property.

Where the trustee receives the money due to a personal service rendered and not as
result of his handling of trust property, the trustee may keep the money. In the case of
Re Dover Coalfield Extensions, the defendant had been appointed by the company to
serve as a director in return for remuneration. He was then issued with the shares
necessary to qualify him as a director and he held them in trust.

The court held that because the defendant had been a director before he had been
made a trustee of the shares, he could not have used his position as trustee to acquire
the directors’ fees and so he was not to be held accountable.

POWERS AND DUTIES OF TRUSTEES

1. The duty to distribute the trust property

 The distribution must be done in accordance with the directions contained in the
trust instrument. Failure to do this leads to a breach of trust, unless the trustee is
able to justify his action.

If a trustee sits back and the other trustees mismanage the funds, the passive trustee
will be equally liable and the passive one will not be entitled to an indemnity from
the active ones. This was the holding in the case of Bahin v. Hughes.

2. The duty to safeguard the property

The trustee is put to a very high standard when it comes to safeguarding the trust
property. He is require to treat it as if it were his own, otherwise he will be held
responsible for any accidental loss to the property.

The standard of care is the same as a prudent businessman would take in managing
similar affairs of his own. This was said in Speight v. Gaunt

Where the trust property must be insured the trustee must do so. This was held in
the case of F&M Khoury v. Jojo, where the trustee was held liable for breach of trust
because although he had insured his own property against civil commotion, he failed
to do same for the trust property.

Where a trustee seeks legal advice and obtains wrong advice which leads to a loss
to the trust estate, the trustee cannot be absolved from liability by merely showing
that he acted based off of the advice. The advice of counsel is not an absolute
immunity to trustees, per Stott v. Milne.

3. The duty to keep accounts

Trustees must keep and maintain proper records of their transactions with the trust
assets.

They are required to keep the trust assets separate from their own assets and
provide records to the beneficiaries when they demand it.
 The trustees are however not bound to disclose the agenda, minutes, or other
documents that set out or contain the reasons behind the exercise of their
discretion. This was held in the case of Re Londonderry’s Settlement.

Re Londonderry’s Settlement

The trustees of a family settlement had a power to appoint shares of capital to

beneficiaries. They distributed all the capital in the way they were tasked to, thus
bringing the settlement to an end.

One of the beneficiaries asked for a copy of the minutes of the meeting of the
trustees at which the distribution decisions had been made and also a copy of the
letters written between the trustees and beneficiaries.

The Court held that the trustees were not entitled to disclose the documents to the
beneficiaries.

4. The duty to invest

Trustees typically have the power to invest the trust funds even if the instrument
does not indicate so.

This duty is in 2 respects.

a) The duty to invest to preserve the risk and yet make a reasonable return on
capital. Investments must be made with due care. Trustees are usually required
to invest in safe ventures. Equity generally favours safety over high returns.

In the case of Re Harari’s Settlement Trusts, the court held that the power of a
trustee to make an investment includes investments outside the range of
authorized trustee investments. Once the trustee honestly thinks that the
investment is suitable for the trust then he may go ahead and make it.

b) A duty to invest so as to be even-handed between the different classes of

beneficiaries.
 Equity imposes a duty of even-handedness with respect to the beneficiaries. The
trustee is required to hold the scales evenly between the beneficiaries. This is
known as the rule in Howe v. Lord Dartmouth.

POWERS OF TRUSTEES

1. The power of sale: The trustee may sell the trust property if need be or if the trust
instrument so dictates. He must sell it at the best price available. Sale might be
either through a private contract or a public auction, in compliance with section 1
of the Trustees Act, 1860.

The trustee also has the authority to issue receipts for such transactions.

2. The power to delegate

The basic rule is that because the office of the trustee is one of personal confidence,
it cannot be delegated unless the trust instrument expressly permits delegation or
the law allows it.

However, the exercise of discretion cannot be delegated.

In the case of Fry v. Tapson, the trustees were empowered to invest trust funds in
mortgages and they advanced £5000 by way of mortgage on a freehold house and
grounds in Liverpool valued, by a valuer, at between £7000 and £8000. The
investment was suggested by the solicitor to the trust. The valuer was introduced by
the solicitor and was an agent of the mortgagor. The valuer had no local knowledge
and earned £75 commission for finding a lender. He overvalued the property which
in fact was worth less than £5000. The court held that the trustees were liable for
the loss to the trust because they should have selected the surveyor personally.

3. The power of maintenance and advancement

The law grants the trustees the power to use the trust property for the beneficiaries’
benefit even when they haven’t yet satisfied a particular contingency.

The power of maintenance allows the trustees to apply the income generated from
the find on behalf of the beneficiary and the power of advancement allows them to
 apply part of the capital from the fund in behalf of the beneficiary, though he may
have a contingent interest.

RIGHTS OF BENEFICIARIES

1. The right to sue to protect the trust property.

As equitable owners of the property the beneficiary has the right to sue to protect
their interest in the trust property. They may sue the trustee and any third party
who deals with the trust property dishonestly.

2. The right to information

Beneficiaries have the right to request for information concerning the administration
of the trust and the trust property.

3. The right to consent to a variation of the terms of the trust

As long as the beneficiaries are sui juris, they have the right to consent to the
trustees acting outside the terms of the trust. (I.e. what would ordinarily amount to
a breach of trust)

4. The right to terminate a trust

When the beneficiaries are sui juris and they all agree, they may call for a
termination of the trust. The trustees will have to convey the property in a manner
provided for by the beneficiaries. The trust may collapse after that. This is what is
known as the Rule in Saunders v. Vautier.

Saunders v. Vautier

A testator created a trust under which the income of the trust property was to be
accumulated until the beneficiary attained the age of 25, at which time both the
capital and the accumulated income were to be transferred to the beneficiary. When
the beneficiary attained the age of 21 (then the age of majority) he demanded that
the trustees transfer the whole trust fund to him. He argued that he had a vested
interest in the property and a direction by the testator which merely affected how
he was to enjoy the property did not prevent him from instructing the trustees to
 transfer the trust property to him. If his interest had been contingent on attaining
25 he would not have been in a position to demand the property until he was 25 and
had satisfied the contingency.

Lord Langdale said:

I think that principle has been repeatedly acted upon; and where a legacy is directed
to accumulate for a certain period, or where the payment is postponed, the legatee,
if he has an absolute indefeasible interest in the legacy, is not bound to wait until
the expiration of that period, but may require payment the moment he is competent
to give a valid discharge.

MORTGAGES

Prior to the enactment of the Mortgages Act, 1972 (NRCD 96), we depended on the common
law definition of a mortgage which provided that a mortgage was “A conveyance of land or an
assignment of chattel as security for the payment of debt or discharge of the obligation for
which it is given.” This was mentioned in the case of Santley v. Wilde.

Under the current Mortgages Act though, a mortgage is defined as a contract, charging
immovable property as security for the due repayment of a debt and the interest accruing on
the debt or for the performance of any other obligation for which it is given, in accordance
with the terms of the contract. Section 1(1) of NRCD 96.

It must be noted that the mortgage is an encumbrance on the property charged, and therefore
the mortgage does not operate so as to change the ownership, the right to possession or any
other interest, whether present or future in the property charged. This is contained in Section
1(2).

Section 2 of NRCD 96 is to the effect that it is irrelevant the name that the parties give to the
transaction. Once the substance of the transaction is a mortgage, it will be treated as such. In
the case of Khoury v. Mitchual, the court held that the true position in equity is that the
mortgagor’s equity of redemption is inviolable. Therefore once a mortgage, always a mortgage.
Where a transaction was in substance a mortgage, equity would treat it as such, even though
it was dressed up in some other guise.
Every mortgage must be capable of being redeemed. In the case of Noakes v. Rice, the court
held that “Redemption is the very nature and essence of a mortgage. It is inherent in the thing
itself.”

How are Mortgages Created?

1. Legally
2. Equitably
3. Customarily

LEGAL MORTGAGES

Here, formality is very important. The mortgage must be in writing signed by the mortgagor.
According to Section 3(1) (a) of NRCD 96, the mortgage is not enforceable unless it is evidenced
by a writing signed by the mortgagor or by the agent of the mortgagor authorized by the
mortgagor in writing to sign.

The writing evidencing the mortgage must contain the following:

a) The name and address of each mortgagor and mortgagee

b) The nature of the mortgagor’s interest in the property which is mortgaged and the
extent to which that interest is subject to the mortgage
c) The mortgaged property by reference to its location and boundaries or reference to a
previously registered document that described the property
d) Where the mortgage secures the payment of money, the date on which the payment is
due and states the principal sum of money lent or to be lent

The writing evidencing the mortgage must be registered in accordance with the Land Registry
Act, 1962 (Act 122).

Asare v. Brobbey

In this case, the appellant obtained a loan of money from the first respondent who was a money
lender. As security for the loan, he mortgaged his house. When he defaulted in repaying the
loan, the second respondent, on the instructions of the first respondent sold the house at a
public auction to the 3rd respondent.
The appellant sought to set aside the sale on the grounds that no notice had been given him
before the sale, in accordance with the terms of the mortgage deed.

The Court held that since the mortgage deed was not registered at the time that the power of
sale was executed, the document itself was ineffective and invalid to confer the rights and
impose the obligations stated in the mortgage deed. This meant that the first respondent did
not have the power of sale at the time the house was sold, and therefore had no title to transfer
to the third respondent.

EQUITABLE MORTGAGES

These are created when the need for writing is excused by the operation of rules of equity
including those relating fraud, duress, unconscionability, past performance or hardship.

CUSTOMARY MORTGAGES

These are created by way of pledge. It is in some respects similar to a mortgage under the
common law. The mortgagor enters into possession until the mortgagor redeems the property.

The Mortgages (Amendment) Act, 1979 (AFRCD 37) tries to unite the customary positon with
statute.

The AFRCD 37 prevents the creation of mortgages over farmland under customary law. Where
this happens, it must be done in accordance with NRCD 96. Any such mortgages created prior
to the coming into force of AFRCD 37 are to be converted.

THE MORTGAGOR’S EQUITY OF REDEMPTION

This is the right of the mortgagor to recover or reclaim any property on the performance of the
act secured by the mortgage. There are some special conditions that equity puts in place
governing how this equity of redemption operates:

1. There should be no clogs or fetters on the mortgagor’s equity of redemption.

The mortgagee must not attempt to exclude the right to redeem. Therefore even where
the parties reach an agreement in the mortgage document that grants the mortgagee
the option of purchasing the property, equity will not permit it even if it seems to be a
perfect bargain.
 In Khoury v. Mitchual, the court held that the true position in equity was that the
mortgagor’s equity of redemption was inviolable. Therefore the defendants by
stipulating for the payment of some additional amounts for the benefit of the
mortgagee, had infringed the equitable doctrine against clogging the equity of
redemption and obtaining an unconscionable advantage.

2. There should be no unreasonable postponement of the mortgagor’s right to redeem

his property

Unless redemption becomes illusory, the right to redeem may not be postponed.

Fairclough v. Swan Brewery

The mortgagor was a tenant of the property in question which had been mortgaged for
a loan. The mortgage deed provided that without the mortgagee’s written consent, the
mortgage debt should not be wholly paid off until a date within 6 weeks of the expiration
of the lease. This was done by fixing the instalments that are to be paid so arranged as
to have the last payment at that time.

After 3 years, the mortgagor sought to redeem his property and the court held that he
was entitled to do so. This was because the arrangement was not merely a postponement
but a device designed to take away the right to redemption.

Redemption only 6 weeks to the expiration of the lease made the right of redemption
illusory.

Knightsbridge Estate Trust v. Byrne

The owners of a freehold property had mortgaged it for a loan. The agreement was that
the repayment should be in half-yearly instalments spread over a period of 40 years.
The mortgagees undertook not to call in the money before the due date.

Barely six years later, the mortgagors brought an action to redeem before the expiration
of the 40 years, this was because the interest rates had fallen and they considered that
they could borrow money more cheaply.
 The court held that the mortgagees’ forbearance not to require earlier repayment, the
transaction was fair and the contractual right of redemption was in no way illusory.

3. The redemption must be free from collateral advantages or conditions which confer an
advantage on the mortgagee.

Kreglinger v. New Patagonia Meat & Cold Storage

Both parties were commercial firms. The mortgagors were preserving meat while the
mortgagees were wool-brokers. The mortgagor took a loan from the mortgagee, with an
option of paying it off at any time on giving 1 months’ notice.

The agreement between them further stated that the mortgagors should not sell their
sheep skins to any other person without first offering them to the mortgagees at the
best price obtainable. Where this stipulation is broken, the mortgagors were supposed
to pay a consideration on all the sheepskins sold to another person to the mortgagees.

In under 3 years, the mortgagors exercised their option of paying off the loan and
claimed to be discharged from the pre-emption clause.

The court held that they were not discharged.

4. The terms of the mortgage must not be unconscionable or oppressive.

“Once a mortgage, always a mortgage”

This means that if on a proper construction, a transaction is a mortgage, equity will not
allow for the insertion of provisions or for the agreement to be given a form, which will
deprive it of the essential nature of a mortgage.

Where a document is in substance a mortgage and the parties call it a different name,
equity will still treat it as a mortgage. In the case of Vernon v. Bethel, the court held
that it was an established rule that the mortgagee can never provide at the time of the
making of the loan for any event or condition on which the mortgage shall be discharged
and the conveyance to the mortgagee absolute.
RIGHTS OF A MORTGAGEE IN EVENT OF A DEFAULT