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Equity notes

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Equity Notes

The common law legal system originated in England and spread to the other countries mainly through colonization. In some
countries it was partly received, such as Muslim countries where it co-existed with Islamic laws . There were three main phases to
the development of common law, the first phase being the development of the common law and the common law courts (1066-
1485). The second phase was the development of equity (1485-1832) and finally the fusion of common law and equity (post 1832)
which basically set the foundation for the modern English legal system.

The Norman conquest of England in 1066 is generally considered to mark the beginning of the history of English law. Before that
England was not united and did not have a central administration. There was the existence of diverse customary laws of German
origin which were supplemented by royal statutes. This period was called the Anglo-Saxon period. The local courts were presided
over by bishops and earls. After the battle of Hastings, William the conqueror introduced a strong feudal system and brought an end
to tribal rule. Every piece of land was held by mediately or immediately by the Crown. The English King had his own royal courts
(courts of common law) while the feudal lords had local courts. This system paved the way for common law. The Normans created a
uniform and common law based on the unification of the diverse local customary laws. The royal court was the highest court and
presided over the local courts. Its judges interpreted the common law. The king’s court eventually split into three; the Exchequer
(dealt with financial matters), the common pleas (dealt with disputes about the rights in land) and the King’s Bench (serious
criminal matters).

Difficult cases were tried in Westminster where the royal courts were centralised. When similar issues arose, the earlier solutions
were applied. The law was thus common as between the royal courts. This gave rise to judicial precedence. Civil action in common
law were built around the writ system. To begin an action, the plaintiff had to obtain a writ . The writ was written command issued
by the Lord Chancellor in the King’s name ordering the defendant to appear in court and show cause why the plaintiff should not be
given the relief he claims. If there was no writ to cover what the plaintiff claimed then there was no remedy.

Problems with the common law

The common law developed rapidly in the 13th century but by the 14th century it declined. This is because it had some defects.
Firstly, the writs became too rigid and could not be applied to every case. Each different kind of action had its own writ and
procedure. The power to invent new writ meant also the power to create new rights and duties. To preclude the recognition of new
remedies, the provisions of oxford were enacted in 1258 which provided that the chancellor could not on his own initiative issue new
writs. A new writ could only be issued if it had the command of the King and his Council. This problem was mitigated by the statute
of Westminster II in 1285 which gave the chancery clerks the power to ixnvent new writs only if the case was in a like with an
existing writ. So if there existed a writ in a like case, falling under a similar law and requiring a like remedy, the existing writ could
be varied to meet the requirements of the new case. This resulted in litigants not having a remedy either because there was in
existence no writ to cover their case or the existing writ could not be conveniently amended to fit the particular facts and
circumstances of the case.

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Also, the doctrine of stare decisis or judicial precedence insisted that a previous case even if wrongly decided remained a binding
authority until overruled by a higher court unless it can be shown to have been decided per incuriam or can conveniently be
distinguished. This made it impossible to depart from previous decisions potential to do justice in novel situations.

Secondly, an error in the application of a writ can result in actions being lost. It was common to make mistakes because each writ
had complex rules. Also writs were quite expensive and discouraged litigants.

Thirdly, there was a problem with defences and corruption. A powerful defendant could defy the court or intimidate the jury. Judges
were accused of bribery and corruption while the defendants could delay proceedings.

Fourthly, the remedies were inadequate in the sense that declaration and damages could be awarded. Injunction could not be
placed on individuals.

Fifthly, the common law did not recognize trust. Due to these defects, cases were brought to the king-in-council.

Sixthly, a mortgagor at common law forever lost his right of redemption of the property if he failed to redeem it at the precise date
agreed on by the parties.

The development of equity

Direct petitions were made to the King to grant an appropriate remedy for the injustice arising from the deficiencies and
limitations of the common law. This is because the King, as Fountain of Justice, has the residue of judicial power. The petitions
known as bill were addressed to the King initially but as their number grew the petitions were referred to the Lord Chancellor
directly by the King. Subsequently, the proclamation of 1349 provided that certain petitions should be directed to the chancellor. In
1474, the chancellor issued the first decree on his own authority and thereafter his own decrees were often made. The Lord
Chancellor who was referred to as the keeper of the King’s conscience disregarded the common law formalities and stuck a fair
dealing judging it with his conscience. This became known as equity. In its early stages, equity was not a system of law or fixed body
of rules. Each case was decided ad hoc by the Chancellor according to his own sense of justice. This made the outcome of a case
unpredictable partly because of the lack of precedence as well as the fact that the conscience of the Chancellor differs from one
person to the other. Later in 1672, all Chancellors were trained lawyers. From the chancellorship of Lord Nottingham in 1673,
equity was transformed from a jurisdiction based on conscience of the Chancellor into a system constructed around established
principles and rules. Because of his great work of systematisation of the principle of equity lord Nottingham is known as the father
of Equity. In 1818, the rules of equity were as fixed as those of common law. This body of law supplemented common law and
sometimes even corrected it.

A rivalry existed between common law because an injunction could be placed on someone to forbid the person from bringing the
case to a common law court. Later on, common law and equity were fused. Even though they are fused together, their principles are
not fused.

The nature of equity

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Equity in the broad sense means fairness that is justice according to natural justice and morality. This was the basis of equity as
observed considering its origin. However, equity today is a settled body of rules of law which do not necessarily coincide with any
notion of natural justice, fairness or morality. Equity in the narrow sense therefore means the rules which were formerly designed to
mitigate the rigors of the common law, together with the more modern developments. The word ‘equity’ may be used in the broad
sense or the narrow sense. ASHIEMOA V BANI. In Section 54 of the courts act, the choice of law rules provide for a recourse to
equity and good conscience in the formulation of the rules for the resolution of issue no specifically covered by clear set of rules. It
seems here that the ‘term’ equity here is used in the broad sense. This is mandated by virtue of section 17 of interpretation act,
1960 which says that common law includes both the common law in the English sense, equity in the English sense and assimilated
rules of the customary law.

Equity supplementary to law

Equity does not exist by itself and has never had a separate or independent existence. If there was no common law, there would be
no equity. Equity is distinguishable from the general body of law, not because it seeks to achieve a different end, nor because it
relates to a necessarily different subject matter, but merely because it appears at a later stage of legal development.

Equity in personam

One reason equity effectively supplemented the common law was because it acted in personam and on conscience. This means that
it acts on the person. The common law usually makes a declaration in relation to a property or a thing, the res; judgement in rem.
The declaration is then respected by the whole world. If a person acts contrary before it is eventually pronounced, it is for the
person who right is violated to institute an action. The award for such a case is pecuniary damages.

A judgement on the person however acts on the person. This is because the remedy is placed on the person and not the whole world.
If the person disobeys, the court will punish the individual for disobedience. The chancellor could secure the attendance for even the
rich or powerful individuals by an order called a sub poena. It could also obtain evidence on oath to prevent the rich and powerful
from defying the court or intimidating the jury. The chancellor rarely awarded damages but in some rare occasions decree the
defendant to pay a sum in money.

The equity court or court of chancery

The chancellor was the only judge of the equity court. Later on a master of rolls was appointed to assist the chancellor as the
volume of work increased. In 1813 a vice –chancellor was appointed and in 1841 two more vice chancellors were added. Cases
where first taken to the Rolls or one of the three vice-chancellors. From there an appeals lay to the court of appeal in chancery
constituted by the chancellor. Two Lords justices of appeal in chancery were appointed in 1851. The court of chancery had seven
judges at the time it was abolished in 1875.

Conflict between court of chancery and common law courts

In the course of time a conflict developed between the court of chancery and the common law courts. This is because at certain
times, the results achieve at equity was contrary to that of common law.

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There were difference between the common law and equity that accounted for the conflict between the two. Firstly common law
decided cases according to the strict common law rules and was technical while equity was relatively flexible and mitigated the
rigor of the common law. Secondly, common law was concerned with the strict rights of the parties while equity did not rely on the
strict application of rules to determine the fate of a claim. An example is the conferment of the legal title on the trustee while equity
confers the cestui que trust on the beneficiary reducing the rights of the trustee in the use of the property. Sometimes equity
rendered judgments by the common law unenforceable. This resulted in the common law judges protesting. Matter reached a peak
when chief justice Coke of the common law courts contended that anyone who went to the equity courts to obtain an injunction to
prevent the enforcement of a judgement of the common law courts was guilty of an offence contrary to the statutes of praemunire.
The Lord Chancellor (Ellesmere) responded that the equity courts were in no way interfering with common law courts as they
judgments were in personam. The king ruled in favor of the equity courts after seeking the opinion of the AG (Bacon). When
eventually legislation was passed to address this issue it was said that equity would prevail when there was a conflict. It is said that
one of the reasons for the victory of equity is because the equity courts declined to intervene in matters traditionally falling within
the domain of common law.

The judicature acts and the fusion of law and equity

It was inconvenient for parties to be hopping back and forth between the equity courts and common law courts. This is because
each court did not have the full jurisdiction to completely satisfy the demands of the parties; such as a grant for an interim
injunction prior to the legal declaration of the party with title to a piece of land.

The common law procedure act of 1854 attempted to grant the common law courts limited power to award equitable reliefs. Also,
the chancery amendment act of 1858(lord cairns’ act) have the court of chancery the power to award damages in addition to, or in
substitution for, an injunction or a decree of specific performance in some cases.

The judicature of act of 1873 which came into force in 1875 abolished the king’s bench, common pleas, exchequer and probate,
divorce and admiralty as well as the equity court and established a single high court with the jurisdiction to administer both law
and equity. One of the fundamental effects of the Judicature Act was to prevent the multiplicity of proceedings so that all matters in
controversy whether legal or equitable, might finally be determined by the same court in the same suit.

It is emphasized that it was a fusion of jurisdiction not law. This had been rejected by modern authorities like Sir George Jessel who
argues that as they is only one court and that equity laws prevail it there is a fusion in both jurisdiction and law. This was supported
by the Law Lords in UNITED SCIENTIFIC V BOROUGH COUNCIL.

Maitland contends that so much should not be read into the fact that equity prevails over the common law as equity would not exist
without common law. For example equity recognizes the fact that legal title in a trust rests with the trustee but only seeks to make
sure he holds the property for the benefit of the beneficiary by entrusting the equitable title in the beneficiary.

The high court was divided into the Queen’s Bench, chancery division and probate, divorce and admiralty division, however, they
still had common law and equity jurisdictions.

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In Ghana, the courts are vested with both common law and equity jurisdictions as seen in Section 11 of the Supreme Court
ordinance. Section 18 of the repealed Supreme Court ordinance provided that equity prevailed over that of common law.

The nature of equitable interests

Equitable interests are sometimes described as equities. There are four categories of equitable interest

● Equitable interests- relate to the rights beneficiaries may have in property held in trust for them by the trustee.
Subsequently, it was extended to purchasers who gave consideration, if they at the time of the conveyance knew of the
trust; the doctrines of constructive, imputed and implied knowledge prevent purchasers from benefiting for purposely
shutting their eyes to the existence of a trust. Equitable rights therefore came to be enforceable against all except the bona
fide purchaser for value in good faith without notice of the title in another person. The equitable interests so created are
similar to legal estates so that there can be a legal fee simple and an equitable fee simple. This is the reason for the maxim
‘equity follows the law’. However equity does not use the strict rules of common law. RE ARDEN. However, the conveyance
of an existing equitable interest, in which a strict conveyancing language is used, is construed strictly. RE WHITSON’S
SETTLEMENT. However, section 13(2) conveyancing decree now states that every conveyance shall pass all interest and
rights in the land which the transferor had the power to convey, unless a contrary intention is expressed in the conveyance,
or appears by necessary implication.
● Mere equities- the distinction between mere equities and equitable interests is that equitable interests are actual rights
in property while mere equities are usually of a procedural nature. Examples are rescission and rectification.
● Floating equities- they are rights which float until there is a surplus of assets over liabilities against the estate in the
situation that a personal representative has to settle the debts of the testator before granting the residue property to the
prospective beneficiary. Equity protects the interests of the prospective beneficiary by ensuring that the estate is properly
administered by the personal representative. COMISSIONER OF STAMP DUTIES V LIVINGSTON. This interest may or may
not materialized after the paying of the testator’s debts.
● Equitable rights and remedies- these include specific performance and injunction. They may not necessarily be
connected directly with property as an injunction could be granted against a tort such as nuisance.

Classification of equity before 1875

Exclusive jurisdiction- these remedies only the equity courts could grant. An example is trust.

Concurrent jurisdiction- these concern cases where equitable rights were granted in addition to those found under common law.
Such additional rights included specific performance of a contract where damages were inadequate; an injunction to restrain or
prevent an injury or its repetition; appointment of a receiver to prevent the defendant from destroying or parting with property in
dispute; and an order for account.

Auxiliary jurisdiction- there were other matters connected with litigation, with which the common-law could not adequately deal
because of defects in its procedure. For example a defendant could not be compelled to give evidence or produce some documents.
Equity developed procedures to elicit evidence in order to facilitate the administration of justice.

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This classification was made by an American jurist called Story. However this classification is no more relevant as the courts now
exercise both jurisdictions.

INJUNCTION

An injunction is an order of the court to a party to do or refrain from doing a specified act. Where it is issued for the purpose of
protecting some right in property, it is usually directed not only at the party but also at his agents, servants, workmen, successors
and assigns.

The courts have held over the years that the remedy of interlocutory injunction is not only discretionary but that it must be granted
in every case in which it appears 'just and convenient'. This is traceable to section 25(8) of the judicature act of England of 1873.
POUTNEY V DOEGAH.

Scope of injunction remedy

According to Maitland, the only torts which lie outside the field of injunctions are assault and battery, false imprisonment and
malicious prosecution. An application for an order of interlocutory injunction is almost an indispensable aspect of land cases. In
land law the remedy is generally used against trespassers and competing developers, but it may equally be used to exclude the
defendant, to protect a license to occupy premises, to restrain third parties and occupants and to prevent building in breach of a
covenant in a lease. It may be used in contracts, especially to restrain the breach of a clause. A landlord may also use an injunction
to restrain the breach of any covenant in a lease. An application for an injunction may also be made to restrain breaches of
planning control and to restrain nuisance and pollution as well as the breach of a contract. The remedy may also be used in
industrial and employment relations as well as in intellectual property, elections and chieftaincy matters.

Domain and scope of equitable remedies and protections

A distinction is made between damage remedies, declaratory remedies, restitutory remedies and coercive remedies. Damage
remedies are a monetary remedy aimed at making good the plaintiff’s losses. Restitutory damages involve the recovery of money.
Equitable remedies are coercive, restitutionary or declarative. Declaratory remedies involve the declaration of title; that is a right
as well as a remedy. Claims in equity for rescission of an agreement are actually declarative of rights. Equitable restitution occurs
when for example it is held that property bought by a trustee with trust money is held on constructive trust for the beneficiaries.

An injunction is a coercive remedy operating in personam. The injunctive remedy can be granted ex parte-Order 25 rule 1. The
judge hears only the plaintiff’s side in the form of evidence by affidavit. The defendant does not have the opportunity to attack or
defend himself. However, the plaintiff must show a need for a relief so compelling that little time can be wasted for hearing and
notice. It is vital for the plaintiff to show why notice has not been given. The defendant is not bound until he receives notice of the
order. Sub rule 9 states that an order obtained ex parte shall lapse after the expiration of 10 days from the making of the order
unless the court directs otherwise.

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A preliminary debate.

The jurisdiction of the court to grant or refuse an order of interlocutory injunction is found primarily on the rule that the order be
granted in situations where it is just and convenient to do so. However, there are cases which insist that the jurisdiction should be
based on legal reasons and settled principles of law. The dominant view is for the courts to find jurisdiction if the ends tend to justify
the judicial means. It was stated in SOUTH CAROLINA INSURANCE CO V ASSURANTIE MAASCHAPPIJ that the power of the
high court to grant injunctions was only limited to situations where the applicant can show that the other party has invaded or
threatens to invade a legal or equitable right or where one party has behaved in a manner which is unconscionable.

The overriding requirement of a substantive claim

A plaintiff with no rights cannot obtain an injunction, however just and convenient his case might be.

GOURIET V UNION OF POST OFFICE WORKERS.

The International Confederation of Free Trade Unions sought to embark on a protest against South Africa’s racial policies. The
defendant, the UPW, thereupon resolved to boycott all telephone calls, mail and telegrams to South Africa for a week. Two days
before the boycott, the plaintiff, a citizen of SA approached the AG for his consent to institute proceedings for an injunction to
restrain the defendant from embarking on the strike. The AG refused to grant his consent. The plaintiff thus instated the action
himself and got an interim injunction. The AG was invited to the court and the issue was whether the plaintiff was entitled to sue on
behalf of the country without the AG’s consent. HELD: the power to grant an injunction is discretionary and that before it can be
granted, there must be a declaration of rights which is legal rights. As such, the person seeking the injunction must have the right to
institute it and must show that he will suffer damage.

He must have a cause of action entitling his to a substantive claim. FOURIE V LE ROUX

Acquiescence and laches

These are the factors considered by the courts in an application for an interlocutory injunction. RUSSEL V MARTIN,

The element of acquiescence

● Mistaken belief by the party pleading acquiescence

● Silence in spite of duty to correct mistaken belief- with this the person burdened with the duty to speak must be aware of
the true situation, he must show the mistaken belief of the other party and finally his silence must be of a nature that
encouraged the other party to act upon the mistaken belief
● Detrimental act on the basis of mistaken belief

The consequence of acquiescence is that both common law and equity estop the guilty party from denying the truth of the implied
representation. The estoppel also operated between successors in title of the parties and also against third parties who may acquire
title from the guilty party. Successors in title of the party pleading acquiescence benefit as they also acquire a right to plead
estoppel against adverse claimants.

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The benefiting party has a right that can be defended against the whole world except a claimant with a better title . In English case
law the acquiescing party has on occasion be compelled to execute a conveyance in favor of the benefiting party. Ollennu has
argued that under customary law acquiescence never full extinguishes title, conferring only a possessory right. It is claimed that
the right last as long as the improvement. Once the improvement ceases, the land reverts to the original owner as held by KINGDON,
C.J. in ADO V WUSU

Laches and unreasonable inaction and delay by the claimant after the infringement of his rights has already occurred. ARGYLL V
ARGYLL

The plaintiff brought an action against the defendants seeking a interlocutory injunction restraining them from communicating
and publishing(second and third def), information of, inter alia, secrets of the plaintiff relating to her private life, personal affairs or
private conduct communicated to the first defendant in confidence during the subsistence of their (first def) marriage not hitherto
made public and any particulars relating to the proceedings for divorce in Scotland other than those authorised under section 1 (1)
(b) of the Judicial Proceedings (Regulations of Reports) Act, 1926. Held- an obligation of confidence can arise independent of a
contract or any right of property. Subsequent adultery by one spouse resulting in divorce did not relieve the other spouse from the
obligation to preserve their earlier confidences Accordingly, the plaintiff's adultery did not entitle the first defendant to publish the
confidences of their married life, and an injunction would be granted restraining him from so doing.

Principles governing injunctions

● Inadequacy of damages- an injunction is an interference by the court with an individual’s freedom of action. Such
interference is therefore only permitted when the matter cannot be treated in any other way. If the conduct sought to be
restrained can be adequate compensated with damages, an injunction will not lie-WOOD V SUTCLIFFE. Damages are
inadequate in the sense that if they can only be assessed with great difficulty or if the assessment would be highly
speculative. There may be reason why though damages can be assessed may be valueless to the plaintiff. This is because the
defendant may be indigent and therefore has no property upon which an execution may be levied. There is also the
situation where the defendant may continue to injure the plaintiff indefinitely-HODGSON V DUCE. This case is shows that
not the nature of the injury can give rise to an injunction but also the personality of the defendant.

● Plaintiff must establish a right- 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- THORNE V BBC. The right need not only be in property. It can be sought to
restrain a publication of confidential information-ARGYLL V ARGYLL. When a statute is broken the AG is the proper person
to seek for an injunction-

AG V SHARP

FACTS: the Manchester Police Regulation Act, 1844 , empowered the Manchester Corporation, who were the licensing
authority for the City of Manchester, license hackney carriages (including motor omnibuses) plying for hire within the city.
The Act provided for penalties for plying for hire without a licence. The defendant, who was the owner or proprietor of
motor omnibuses, had applied for and had been refused a licence by the Corporation. He had nevertheless continued to ply
for hire in the City with his motor omnibuses, and he and his employees had been repeatedly fined for offences under the

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Act. The AG sued for an injunction against the defendant for an injunction to restrain the defendant from continuing to ply
for hire in the City without a licence. HELD:, in a case where a public right has been or is likely to be infringed the
Attorney-General can bring an action if in his discretion he thinks it is a right course to follow, and then he can apply in
that action for the ancillary remedy of an injunction to be granted by the Court in order that steps be taken which will
enforce the public right, inasmuch as without it the particular sanction given as against the individual.

● Injunction as a discretionary remedy- the grant of an injunction is purely discretionary and exercised in accordance
with the principles common to all equitable reliefs and according to precedent. The only injunction in which the
discretionary factor is minimal is an injunction to restrain the breach of a negative stipulation is a contract-DOHERTY V
ALLMAN. The court merely gives effect to the terms agreed by contract. However, the negative stipulation must be fair and
reasonable. Although an injunction is a discretionary relied, it is probably right to say that a party who has established a
right in himself and its violation or threatened violation will obtain an injunction-FULLWOOD V FULLWOD

The Plaintiff brought an action against the defendant for an injunction to restrain the Defendant from representing that the
business carried on by him was the same as that carried on by the plaintiff. HELD: When an injunction is sought in aid of a
legal right, the Court is bound to grant it if the legal right is established. Therefore mere lapse of time will not be a bar to
the granting of the injunction, unless it would be a bar to the legal right.

● Adequate damages- if the injury can be adequately compensated, an injunction will not lie. The plaintiff may however
recover damages for a previous breach or a prior nuisance while an injunction is being decreed to restrain a future breach
or fresh nuisance.

● Minor injury- the nature or extent of the injury is not a crucial exercise of the discretion-GOODSON V RICHARDSON. This
is because to refuse an injunction on the basis on the nature of the injury would mean a rich defendant would be
‘purchasing’ the plaintiff’s right of interest which the plaintiff is unwilling to sell; such as continuing to take water from the
plaintiff’s land against the plaintiff’s wish. The court may however consider whether the trespass is trivial, or is merely a
technical one, without any resultant injury, in which cade an injunction may be refused-

LLANDUDNO URBAN DISTRICT COUNCIL V WOODS.

The plaintiff local authority owned the Llandudno seashore on a lease from the English crown. The defendant, a clergyman
of the Church of England, held services and delivered addresses and sermons on the seashore without the consent of the
plaintiffs. The plaintiff sought an injunction against the defendant to restrain him from holding the services there. HELD:
it was held that the matter was too trivial for an injunction to be given.

● Difficulty in compliance- the court will not order the defendant to do the impossible; therefore the fact that it will be
difficult and expensive to carry out may be a reason for refusing the order of injunction-MORRIS V REDLAND BRICKS LTD .
This would be considered as a factor only if the difficulty was not deliberately created by the defendant. The court will only
consider if the defendant was innocent in creating the situation. It will not be considered if the difficulty was created
deliberately, willfully or knowingly-PAPANIKOLAS BROTHERS ENTERPRISES V SUGARHOUSE SHOPPING CENTER
ASSOCIATES. In that case both a prohibitory and mandatory injunction will lie to stop and remove the offensive structure.

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Proceeding to build on a disputed land during the pending of an appeal, even on a well-founded belief that one will succeed
or presenting the court with a fait accompli amounts to an impermissible risk-taking-WELTON V 40 EAST OAK STREET
BUILDING CORPORATION. It should not however be supposed that it is a good defense to an application for an injunction
to merely argue that compliance with the order would be inconvenient or expensive. It is the defendant’s duty to find his
own way out of the difficulties.

AG V COLNEY HATCH LUNATIC ASYLUM.

An action was filed at the relation of a Local Board of Health, praying for an injunction to restrain the visiting justices of a county
lunatic asylum from allowing the sewage from the asylum to pollute a certain stream. HELD: the court will not make an
idle and ineffectual order such that it will be impossible for the order to be carried out. Also, Where a Plaintiff has proved
his right to an injunction against a nuisance or other injury, it is no part of the duty of the Court to inquire in what way the
Defendant can best remove it. It is the duty of the Defendant to find his own way out of the difficulty, whatever
inconvenience or expense it may put him to.

● Undertaking by defendant- the purpose of any injunction being to ensure the non repetition of an annoyance or injury, if
the defendant gives a satisfactory undertaking to abstain from the acts which are the subject matter of the plaintiff’s
complaint, the injunction may not be granted-

JENKINS V HOPE.

The plaintiff sued the defendant for an injunction to restrain him from infringing its patent rights in hats and caps. The
defendant made an undertaking that it will not infringe on it and further undertook to pay the costs of the suit. The
plaintiff nevertheless brought the action for an injunction HELD: Injunction will not be granted because the defendant had
already undertaken to refrain from infringing the plaintiff’s rights.

Breach of such undertaking is punishable by contempt proceedings.

● Cessation of annoyance- where the annoyance complained of ceases before the application for an injunction is heard and
there is no likelihood or intention of resumption, the application may be dismissed-

BARBER V PENLEY.

The defendant was a lessee of a theatre in which he organizes plays. The doors of the theatre opens at 7:30pm and before
then, several people converge at the theatre premises as well as the premises of the plaintiff, which was close to the theatre,
in an effort to enter. The defendant however engages the police to restore calm and order always. The plaintiff sued for an
injunction to restrain the defendant from organizing the play so as to prevent the crowd from converging there. HELD: The
court refused the injunction because although the obstruction was in place at the time of the suit, it had ceased by the
reason of the action of the police.

Damages may still be awarded. Same will apply if the injury complained of was of a temporary nature and there is no
likelihood or recurrence-

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CFC CONSTRUCTION CO V ACCRA CITY COUNCIL.

The defendant council had been dumping garbage and refuse in a quarry in the plaintiffs’ residential area at Tesano, and
the plaintiffs alleged that this had caused offensive and pestilential smell from vapours in their area and that the stench
emanating from the refuse had seriously interfered with their comfort and well-being. The plaintiffs brought an action
against the defendants for damages and an interim injunction to restrain them, their agents or servants from dumping
garbage and refuse near their property. The defendant claimed that they were mandated by law to dump the refuse there
and as such, they had no caused any wrong. HELD: Archer J stated that, because the smell had ceased and the quarry will
be filled soon the court will not grant an injunction for a mere interference with the comfort of the plaintiff. However, this
may be actionable in nuisance.

However, if an annoyance ceased not voluntarily but because of some difficulty such as financial difficulties or unsuitability
or wares for sale, an injunction may still lie-WILCOX V STEEL.

● Conduct of the plaintiff- the court takes into consideration the conduct of the plaintiff before and at the hearing of the
application. He must come to equity with clean hands. Where for instance, the plaintiff’s own trademark constituted false
statements or representations to the public, an injunction to protect it was refused- LEATHER CLOTH CO LTD V AMERICAN
LEATHER CLOTH CO LTD. An injunction to restrain a breach of a contract will not be granted at the instance of a plaintiff
who has defaulted in the performance of his own obligatons under the contract- MEASURES BROS v MEASURES

The defendant agreed with the plaintiff company, of which he was a director, to hold office for seven years at a fixed salary,
and covenanted that so long as he should continue to hold office and for seven years after ceasing to hold such office he
would not carry on or be engaged or interested in any business that would compete with that carried on by the company.
The company went into liquidation and the defendant was told by the liquidators that his employment had ceased. The
defendant thereafter went into his own business and with the established contacts he acquired through his employment
with the plaintiff company, he was in competition with the plaintiff company. The company sued for an injunction against
the defendant to restrain him from continuing from the business. HELD: the winding-up order operated as a wrongful
dismissal of the defendant, and that, he was no longer bound by his restrictive covenant. As such the injunction application
was refused to restrain him from carrying on of the business. However, he was ordered to deliver up the plaintiff company’s
contact list.

Conduct in court may also give grounds for the refusal of the application- ARMSTRONG V SHEPPARD & SHORT, LTD .
Conduct to be taken into account related to the plaintiff’s behavior both before and during the action and includes waiver
(ARMSTRONG), laches and acquiescence- SAYERS V COLLYER. The principle in equity is vigilantibus dormientibus
aequitas seccurit.

Classification of injunctions

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According to Maitland, an injunction is an order made by the court forbidding a person or class of persons from doing a certain act
or acts of a certain class, upon pain or going to prison for an indefinite time as comtemours of the court. It may either be
interlocutory or perpetual on one hand or prohibitory or mandatory on the other hand.

Interlocutory injunctions are restraining orders issued during the pendency of an action. A perpetual injunction is issued at the
conclusion of the trial when the rights of the parties have been fully established. A prohibitory injunction forbids the carrying out of
a specified activity. A mandatory injunction orders the defendant to carry out some specified action. CO-OPERATIVE INSURANCE
SOCIETY LTD V ARGYLL STORES

An interlocutory injunction may operate until the trial in order to preserve the status quo. SMITH V PETERS , ODONKOR V
AMARTEI. It lies against either party but a perpetual injunction only lies against the unsuccessful party. Mandatory injunction are
far less common and more drastic in their effect than prohibitory injunctions.

Super injunctions have emerged in a number of privacy cases where applicants have not only sought injunction orders to prohibit
the publication of offensive or defamatory material but also prohibit others from disclosing the existence of the injunction itself.
RJW V GUARDIAN NEWS AND MEDIA LTD, DONALD V NTULI. It is an interim injunction.

An anonymized injunction is an interim injunction restraining the defendant from publishing material regarding the applicant

The principal reason is usually to prevent the wrong doers from being tipped off before they can be served. Another reason is to
prevent the destruction of the evidence. However in certain cases anonymity cannot be maintained. GIGGS V NEWS GROUP
NEWSPAPERS LTD AND IMOGEN THOMAS

Perpetual injunctions

A perpetual injunction is also known as a permanent injunction and is an order obtained after the plaintiff’s right has been
established and he has shown that there is an actual or threatened breach of it by his opponent. The fact that it is called perpetual
does not mean that it will literally remain in force forever, though it is capable of so operating. It only means that the order has
been made as a final rather that temporal decision to the dispute. A perpetual injunction can however be modified or discharge if
the circumstances change.

The first prerequisite is that the applicant must have established the existence of the right in himself. This is usually at the
conclusion of the substantive claim which ends in his favor.

The second prerequisite is that the applicant must show that his right as established has been violated or is threatened with
violation by the defendant.

A permanent injunction cannot be granted against a successful party as that would interfere with property rights.

Quia timet injunctions

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The concept of quia timet injunctions allows a party to enjoin his adversary enjoined although the breach complained of has not
happened but it is merely feared. Where a plaintiff fears that a threatened violation of his right will be committed by the defendant,
he may seek an injunction to restrain the defendant’s conduct even before the violation can be committed. An injunction to restrain
to restrain an opponent from committing a threatened infringement of the applicant’s rights is known as quia timet injunction. A
quia timet injunction may either be an interlocutory injunction or permanent injunction depending on the facts of the situation.
STAFFORD BC V ELKENFORD, AG V LONG EATON UDC. The grant of a quia timet injunction is subject to all the principles already
discussed for perpetual and interlocutory injunctions. In addition, the applicant must prove imminent danger of a substantial kind.
AG V NOTTINGHAM CORPORATION,

The application of the principle to factual situations is however fraught with problems as it may be difficult for the court to
determine whether the applicant is merely shouting ‘timeo’ without any basis for his fear.

Sometimes an injunction may be refused because of assurances from the responsible body to take necessary steps to avoid a
nuisance.

BRIDLINGTON RELAY LTD V YORSHIRE ELECTRIVCITY BOARD

The plaintiff company, who carried on a business of sound and television broadcasts, erected a mast on its own land for that
purpose. The mast came into use in December, 1962. In November, 1963, the defendant, the local electricity board, commenced to
erect an overhead power line, situating two of its pylons within 250 yards of the mast. The plaintiff sued the defendant on a quia
timet injunction to restrain the defendant from operating its power line so as not to interfere with the reception of its radio and TV
broadcasts at the mast. HELD: the interference suffered by the plaintiff can be remedied by the defendant and the defendant has
shown will that they are ready to remedy the damage and suppress the interference of its power line and as such, it will be wrong in
law to impose the quia timet injunction on the defendant

ADJI & COMPANY v KUMANING

The plaintiffs were a syndicate of farmers and they were granted a tract of land by the Otwereso stool for the purposes of farming.
They were in occupation of the land for over 20 years and paid rent and royalties to the stool and the lands office respectively. The
defendant later alleged that the land was held by his ancestors and that the stool were wrong in granting the land to the plaintiff.
He thus petitioned the stool for a declaration of title. The plaintiff however brought an action to the circuit court for a declaration
of title to the land as well as an injunction against the defendant. HELD: The court held that, quia timet actions are broadly
applicable to two types of cases: first, where the defendant has as yet done no hurt to the plaintiff but is threatening and intending
(so the plaintiff alleges) to do works which will render irreparable harm to him or his property if carried to completion; Secondly,
the type of case where the plaintiff has been fully recompensed both at law and in equity for the damage he has suffered but where
he alleges that the earlier actions of the defendant may lead to future causes of action. From the facts of the case, although the
plaintiff did not seek a quia timet injunction, the court exercised its discretion and granted one on the reason that, there was a very
strong probability of future infringement of or interference with the plaintiffs’ rights over the land.

MAMUDU WANGARA v. GYATO WANGARA

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The parties were burkinabes. The plaintiff claimed that he, together with another, were granted land by the Moshiehene of Dormaa
Ahenkoro in consideration for certain services rendered to him. They put up a building in which they lived till his companion was
deported from Ghana. The defendant, after the departure of the deportee asked the plaintiff to pay rent to him, a default of which
will result in his ejection from the house. The defendant based on this instituted an action for a declaration of title to the house.
HELD: The court held that, where there is a legal right which can be asserted either at law, or in equity, a court of equity has
jurisdiction to grant an injunction in protection of that right. The court’s jurisdiction to grant injunction is practically unlimited,
and can be exercised in any case in which it is right or just to do so. From the facts of the case, although the plaintiff did not seek a
quia timet injunction, the court exercised its discretion and granted one on the reason that there was a strong probability of
interference with the plaintiff’s rights over the house by the defendant.

Interlocutory injunctions

An interlocutory injunction is also known as an interim injunction and is an injunction obtained after the commencement of a
substantive action in court but before the final determination of the suit. A party who seeks an injunction after trial must apply for
a perpetual injunction. The High Court has the power under order 50 rule 7 of high court (civil procedure) rules, CI 47 to order an
interlocutory injunction in cases where it is imperative to preserve the status quo of the property pending a final decision.

Sometimes it may be necessary to obtain an interlocutory injunction in order to facilitate the administration of justice at the
hearing of a case- JONES V PACAYA RUBBER AND PRODUCER CO., LTD. For example if continued interference with the subject
matter of the case will lead to destruction or obliteration of the evidence by which a claim may be established an interlocutory
injunction will lie to preserve the status quo ante litem-PUNJABI BROS V NAMIH

At times an interlocutory injunction will be ordered in order not to render nugatory any judgment which may be eventually
delivered in the substantive suit- LARDAN V AG

It can also be granted in order to avoid the breach of peace or damage to the property. It may lie against both parties to the dispute
unlike a perpetual injunction which may lie only against the unsuccessful party.

In all cases, an application for an interim injunction is made by motion with an affidavit setting out the facts constituting the
grounds on which the application is based. Usually a motion is on notice and, if the opponent wished to contest the issue of the
interim injunction against him he must depose to the facts in an affidavit to show why it would be inequitable to issue the order.
Ordinarily, no evidence is led in court in an interlocutory application for an injunction and the court normally relies only on the
affidavits filed by the parties to the relevant facts. This is because evidence brought forth during the preliminary trial may be
different from that available to the court during the actual trial. However, if the court considers that it in the interest of justice to do
so, evidence may be taken for the limited purpose of disposing of the prayer for an interlocutory injunction.

Proceedings of interlocutory injunction may be brought ex parte in cases or urgency- BARCLAYS BANK V GHANA CABLES. An ex
parte injunction is granted without the court having the opportunity 0f hearing the other side, it may be discharged when the
opponent is served with the relevant papers and he opposes the application-LARDAN V AG. It should be noted that an applicant for
an ex parte interlocutory injunction has an exceptionally heavy burden of persuading the court that he other party should be
restrained without being offered the basic right to be heard in opposition.

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A court may grant or refuse an interlocutory injunction if a simple point of construction of statute or a document is involved.

Factors confronting the judge

Apart from acquiescence/laches and requirement of a substantive claim;

● Legal or equitable interest-he must have locus standi. The legal or equitable interest must be vested in the complainant
not merely illegal or criminal in the general sense. Per lord denning in THORNE V BBC.

DAY V BROWNRIGG

The plaintiffs claimed that their house had been called Ashford Lodge for over sixty years and the defendant’s house, which
was adjoined to theirs was called Ashford villa for some 40 years. The defendants had however altered the name of their
house to be called Ashford Lodge and the plaintiffs alleged that this act of the Defendant had caused them great
inconvenience and annoyance, and had materially diminished the value of their property. They thus instituted an action for
an injunction to restrain the Defendant from continuing to use the name of their house. HELD- where there is no damage
or no legal right alleged, the violation of which was the cause of damage. That being so, it is not for the Court to say that
because somebody is doing something which it thinks not quite right, a thing which ought not to be done by one person to
another, it should interfere. The Court can only interfere where there is an invasion of a legal or equitable right.

● Inadequacy of damages- this is when irreparable damage would be caused to the subject matter of the substantive claim
if an interim injunction is refused. In the case of AG V HALLET, it was described by Alderson B as one which if not
prevented by injunction, cannot be afterwards compensated by any decree which the court can pronounce in the result of
the cause.

● Prima facie case-the plaintiff ought to demonstrate that an interlocutory injunction would save him from irreparable loss
and that he was not merely inconvenienced.

AMERICAN CYANIDE V ETHICON LTD

The plaintiff company, the American Cynamide Co., registered a patent in the UK for the use of surgical sutures of a type
that disintegrated and were absorbed by the human body. The sutures were made from a material called the catgut. The
defendant company was a rival company and they were the main suppliers of the catgut. The defendant company sought
to introduce their absorbable own surgical sutures. Based on this, the plaintiff brought a quia timet action against the
defendant for an injunction to restrain a threatened infringement of their patent through the supply of the defendant’s
suture. They first sought for an interlocutory injunction. HELD: The House of Lords reversed the decision and, in restoring
the order of the patent judge, stated that there was no rule of law that the court was precluded from considering whether
on a balance of convenience an interlocutory injunction should be granted unless the plaintiff succeeded in establishing a
prima facie case that he would be successful at the trial. The House of Lords, per Lord Diplock, said that all that was
necessary was that the court should be satisfied that the claim was not frivolous or vexatious; namely, that there was a
serious question to be tried. Secondly, the court should consider whether if the plaintiff were to succeed at the trial in
establishing his right to a permanent injunction he would be adequately compensated by an award of damages for the loss

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he would have sustained as a result of the defendant's continuing to do what was sought to be enjoined between the time of
the application and the time of the trial. Finally, The court stated further that once the affidavit evidence showed that
there was a serious question to be tried, it becomes necessary that the balance of convenience should be considered.

BILSON V RAWLINGS.

The applicant need not show that he would succeed at all events on the substantive issue as held in GLASCOTT V LANG; he
needed only to establish a prima facie case for relief. A strong prima facie case was formerly considered necessary,
although in time it was realized that the remedy ought to retain a flexible and discretionary character and the application
ought to be considered as a whole on the basis of justice, fairness and common sense. EKWAN V PIANIM. In LARDAN V
AG, the interlocutory injunction was discharged because he applicant could not disclose a prima facie case of Ghanaian
citizenship, his affidavit stating that he was born in Kumasi and his mother in Krachi. It is suggested that the test of a
prima facie case should not be whether the applicant will probably succeed on the substantive issue as suggested by
Sarkodee-Addo J in PUNJABI BROS V NAMIH but rather whether there is a serious issue to be decided and whether is
desirable to preserve the status quo as seen in

ANNOBIL V ANNOBIL.

The plaintiff applied for an interlocutory injunction restraining the defendant from further management of a disputed
house and for the appointment of receiver and manager to collect and pay rents into court. The application was opposed
on the ground that the plaintiff’s writ was defective. HELD: In an application for interlocutory injunction the plaintiff did
not have to show that he would be entitled to relief at all events, but that the evidence before the court showed a prima
facie case for relief. An interlocutory application could not be refused merely because the applicant’s writ was defective

● Frivolous or vexatious nature of case-FOOD SPECIALITIES GHANA LTD V TECHNICAS DE MULTICONSTRUCTION

SA

The appellant leased their premises to the respondent for 8 years. However, in the lease, the respondent’s name was
misspelt through the fault of the appellant’s solicitors. After two years, the appellant sued for recovery of possession of the
property due to the misspelt name. The court held for that the lease was nullified. The respondent thus sued for
rectification of the lease and also sought an interim injunction to restrain the appellant from evicting them from the
premises. An interlocutory application could not be refused merely because the applicant’s writ was defective. HELD: one
of the factors which the court had to take into consideration when called upon for an interim order to preserve the status
quo was whether or not the plaintiffs’ claim, on the facts, was maintainable. The court will not grant an injunction if the
action was frivolous or vexatious. From the facts, the balance of inconvenience fell on the respondent and as such the
injunction was granted.

● Balance of convenience- an applicant for an interlocutory injunction must show that the balance of convenience favors
the grant for injunction. In other words, he must show that greater hardship will be caused by refusing the grant for an
interim injunction than by granting it- HILTON V EARL OF GLANVILLE. In some cases, where the court is in doubt, it may
require the applicant to give an undertaking in damages before the injunction is granted. This is usually required if the

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application is brought ex parte. This ensures that in the event of a loss of the substantive dispute, adequate compensation
would be paid to the defendant-SMITH V DAY. In extreme cases, the applicant may be required to pay money into court
against possible damages before an interim injunction is granted- JONES V PACAYA RUBBER AND PRODUCE CO. By the
same way, the party resisting the making of an order of interim injunction against him may be required to give an
undertaking in damages or pay money into court as a condition for not granting an interim injunction against him-
MITCHELL V HENRY. This exercise of jurisdiction should however be judicially guarded so as to avoid the situation
whether a grant or denial of injunction would depend on the economic status of one of the parties. The traditional view
was that an injunction did not normally lie against the state- AG V ALBANY HOTEL. This has been altered by section 8 of
the state proceedings act

There may be special factors affecting the balance of convenience-ROUSSEL UCLA V GD SEARLE & CO LTD

● Conduct of parties- already discussed above

The use of a mere name is not restrainable by injunction-PROPHETESS THANE V PROPHET GEORGE

An interlocutory injunction would not be refused merely on the ground of defectiveness of the writ of summons-ANNOBIL V
ANNOBIL.

Search orders

These were formerly known as Anton Piller Orders. It involved the search of a person’s premises without notice. ANTON
PILLER KG V MANUFACTURING PROCESSES LTD.

The defendants, an English company were the UK agents of the plaintiff company, who were German manufacturers of frequency
converters for computers. The plaintiffs claimed that the defendants were in secret communication with other German
manufacturers and were giving them confidential information about the plaintiffs' power units and details of a new converter, the
disclosure of which could be most damaging to the plaintiffs. The plaintiff sued for an injunction to restrain the defendant from
further infringing on their information. They however brought a motion for an interim order to enter the defendants' premises to
inspect all such documents and to remove them into the plaintiffs' solicitors' custody. It was an ex parte appeal and it was held in
chambers (private). HELD: where plaintiffs had a very strong prima facie case actual or potential damage to them was very serious
and there was clear evidence that defendants possessed vital material which they might destroy or dispose of so as to defeat the
ends of justice the court the court can permit the entering of the defendant premises to search and destroy such documents. (in
exceptional cases)

The courts would assume jurisdiction to grant such order without notice in exceptional and emergency cases. EMI V
PANDIT

The plaintiffs, who owned the copyright in certain sound recordings of Indian music, brought an action against the defendant for
infringement of copyright and passing-off. They obtained an interlocutory injunction restraining the defendant from parting with

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infringing material and also to provide the works in their possession to which they did. The plaintiff had cause to believed that the
defendant still had copies in his possession and they sought an order to search the defendant’s premises without notice. HELD: the
court can order for a search without notice. Such an order would only be made on an ex parte application in exceptional
circumstances where it plainly appeared that justice required the intervention of the court in that, in default of such an order, the
plaintiffs might be substantially deprived of a remedy.

In order 25 rules 2 and 3 and 7 of CI 47, the court may take samples of any property and for directions to be given for any
matters subject to an application for injunction. The court can authorize any person to enter upon any land or building in the
possession of any party to a cause or matter.

Rule 3—Power to Order Samples to be Taken

(1) Where it considers it necessary or expedient for the purpose of obtaining full information or evidence in any cause or matter, the
Court may, on the application of a party to the cause or matter, and on such terms as it thinks just, by order authorise or require
any sample to be taken of any property which is the subject-matter of the cause or matter or as to which any question may arise
therein, any observation to be made on such property or an experiment to be carried out on or with such property.

(2) To enable an order under subrule (1) to be carried out the Court may by the order authorise any person to enter upon any land
or building in the possession of any party to the cause or matter.

(3) Unless the Court otherwise directs, an application by a defendant for an order under this rule may not be made before filing
appearance.

Rule 7—Directions

(1) Where an application is made under any of the foregoing provisions of this Order, the Court may give directions as to the further
conduct of the cause or matter.

(2) Where in an action, not being an action mentioned in subrule (3), the Court considers fit to give directions under this rule before
the application for directions, Order 32 rules 4 to 9 shall, with the omission of so much of Order 32 rule 4 as requires parties to file a
notice specifying the orders and directions which they desire and with any other necessary modifications, apply as if the application
were an application for directions.

(3) Subrule (2) applies to all actions except

(a) actions in which directions have been given under Order 11 rule 20 or Order 14 rule 6;

(b) actions in which an order for the taking of an account has been made under Order 29; and

(c) actions for the infringement of a patent.

For this order to succeed-ANTON PILLER CASE

● The applicant’s case must go well beyond mere suspicion and must have a very strong prima facie case

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● The potential or actual damage to his interest must be serious indeed

● There must be clear evidence that the defendant has in his control or possession the sort of incriminating matter
complained of

In all cases, it is proportionately so not to cause any resulting damage to be excessive to the interests of the defendant. It is required
for the claimant to make an undertaking in damages together with an undertaking not to misuse any information or material
obtained.

The order is usually made against a specified premises with the requirement that the defendant delivers offending materials in his
custody. The court may even permit the removal of collateral items such as vehicles and other purchased with proceeds of sale in
breach of, say copyright in appropriate cases. A supervising solicitor is appointed to see to the execution of the order. The order is
explained to the defendant and failure to comply results in contempt of court.

Freezing injunction

This started out as the Mareva injunction. The case of MAREVA COMPANIA NOVIERA SA V INTERNATIONAL BULK CARRIERS SA in
1975 reversed the longstanding rule that one cannot get an injunction to restrain a man who is alleged to be a debtor from parting
with his property. Before 1975, the creditor would first have to obtain a judgement and then levy an execution against the debtor by
which the latter would have parted with his assets. Under a freezing injunction the assets of the debtor would be frozen if the debtor
can show arguable cause as to his right and also demonstrated a real risk that the defendant may either remove the assets from the
jurisdiction or render them untraceable and unreachable. A freezing injunction seeks to restrain the defendant from either
removing the assets from the jurisdiction or otherwise dealing with them in such a manner as to make them unavailable to the
claimant.

The initial application is often without notice to the defendant, but the claimant is under a duty to make full and frank disclosure .
ORWELL STEEL LTD V ASPHALT AND TARMAC (UK) LTD. It was said in BEKHOR (AJ) & CO V BILTON that if a defendant files an
evasive affidavit the court may make an order for him to be cross-examined on the affidavit, particularly as to whether he has made
proper disclosure. If he has not, then further information may be sought regarding the whereabouts of the assets- HOUSE OF
SPRING GARDENS LTD V WAITE. In every case, the defendant may invoke his right against self-incrimination. A receiver may be
appointed as an adjunct to a freezing injunction- DERBY V WELDON

The court would be held to not have exercised discretion judicially if it considered matters which it ought not to have been
considered or if it ignored matters which it should have taken into consideration, the fundamental rule being that an appellate
court would interfere with the exercise of discretion only in exceptional cases-IN RE BOB KWAME & CO LTD; GYINGYI V BERNARD

An order to restrain a negative contract is obtained almost as of right-lord Cairns in DOERTY V ALLMAN. That is if parties in a
contract have covenanted not to do something, there is no need to look for convenience or injury.

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The plaintiff is not disentitled by reason only that he has suffered small damage- ROCHDALE CANAL V ALLMAN

The court would not make the order if the plaintiff has the means of preventing the act himself or an order impossible of
performance-AG V COLNEY HATCH LUNATIC ASYLUM, ELLIMAN, SONS & CO V CARRINGTON & SON LTD

Although section 15 of the state proceedings act prohibits the grant of an injunction against the police, the act authorizes the
court to make a declaration of the rights of the individual-PEOPLE’S POPULAR PARTY V AG

An order of injunction can be made against a statutory corporation-WEST AFRICAN ENTERPRISES LTD V SYMON RYBENDE & SON
DISTILLERIES

It appears from the case of AG V COMISSION ON HUMAN RIGHTS AND ADMINISTRATIVE JUSTICE that the courts would adopt a
different attitude in relation to the operations of an administrative body with constitutional functions.

Effects of the American Cyanamid case

Guidelines

● Serious question to be tried- under the old rule the claimant was required to show a prima facie case that show that he
had a more than 50% chance of succeeding. The new rule simply required that he must show a serious question to be tried.
The requirement that the application must not be frivolous or vexatious and that the claimant should have a legal or
equitable in the subject matter or litigation as well as likelihood of irreparable loss is all subsumed under this rubric.
● Inadequacy of damages to either side- one does not obtain an injunction to restrain actionable wrongs for which
damages are the proper remedy-LONDON & BLACKWALL RAILWAY CO V CROSS. In the case of SHELFER V CITY OF
LONDON ELECTRIC IGHTING CO, the following were stated as a good working rule:
o If the damage to the claimant’s legal right is small
o And is one capable of being compensated in money
o And may in fact be compensated by a small monetary payment
o And the case is one which it would be oppressive to grant an injunction, then damages in substitution may be
awarded.
● Balance of convenience- the court considers the probable losses to either side during the interlocutory period prior to the
final judgment. The wider public interest may be considered.-MILLER V JACKSON
o Status quo- where other factors appear to be evenly balanced, measures must be taken to preserve the status quo
o Undertaking in damages- the claimant must provide an undertaking in damages to the defendant to support his
belief of ultimately prevailing after trial. Order 25 rule 9. The giving of the undertaking is a precondition to the
making of the order as seen in sub section 2. In the situation that the claimant is unsuccessful in the final
judgment, the damages of the defendant is assessed and the claimant is liable to pay. The affidavit should deal

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with the claimant’s ability to satisfy an undertaking in damages. Subsequent changes in the party’s financial
position should be disclosed to the court. The court retains a discretion in case it doubts the financial position of
the claimant to require further security to fortify the undertaking. In practice, the courts in exercise of their
jurisdiction tend to dispense with the requirement of an undertaking in damages. This typically occurs in domestic
and matrimonial matters as well as when the state or local authority seeks an injunction to enforce the law of the
land.
● Special cases- special cases may be found where
o There is no dispute as to the facts
o Where the grant or refusal disposes of the action
o Actions against a public body or the state- Smith v Inner London Education Authority
This because the AMERICAN CYANAMID CASE involved the grant of injunctions where there is either an unresolved dispute on the
affidavit evidence before the court or a question of law to be decided.
Where a grant or refusal of an application for injunction is likely to dispose of the substantive case resulting in final judgment to the
successful applicant, the court approaches the application by doing its best to avoid injustice to either party.

Injunction in particular cases

● Contracts- injunctions may be granted to prevent breaches. The attitude of the courts differ, however, as to their
willingness to issue injunctions to restrain the breaches of negative undertakings and positive terms of the
contract
o Negative undertakings- an injunction will lie almost as a matter of course to restrain the breach of a
negative undertaking in a contract. This is because the courts will enforce agreement freely negotiated by
the parties-MARTIN V MARTIN. The principle extends to restrictive covenants which on the doctrine of
TULK V MOXHAY, will be enforced by injunction against even subsequent purchasers, if they took with
notice of the existence of a restrictive covenant. The test of negativity is in substance rather than form. In
form, a covenant to take the whole of the electric energy required for his premises from the plaintiff
appears to be a positive covenant but in equity it has been held to translate to an undertaking not to
obtain electric energy from any other person-METROPOLITAN ELECTRIV SUPPLY CO LTD V GINDER. The
tendency of modern times, however is to approach restrictive covenants with caution. This is because in
many cases a restrictive covenant is embodied in a contract of adhesion and is not negotiable. An
individual person dealing with a giant company is often confronted with a predetermined contract which
he must accept in Toto, without an option to negotiate specific terms. If the restrictive covenant is
oppressive, it is submitted that the disadvantaged defendant should be entitled to relief in equity and that
part should be struck out. A restrictive covenant should not be enforce if it is unfair. A restrictive covenant
should be reasonable and not in restraint of trade. It should not be enforced unless it is reasonable in
time, scope and extent. A covenant to protect the goodwill of a business, or to protect professional

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practice, may be enforced it not unnecessarily extensive in geographical area, the duration of the
protection, or the scope of related activities it encompasses. It must not be unmeasurable burdensome to
the defendant. Furthermore, it must not be harmful to general public as restrictions on a formal
employee may lead to shortage of skill and provision of professional services. A strong public policy
argument would support the right of every citizen to apply to his own best advantage the skills and
knowledge acquired by both his training and the general expertise of his previous employment. A society
stagnates if there is a fetter on the uninhibited flow of services, talent, ideas or expertise.
o Negative and positive terms- where there are both positive and negative terms in the same contract,
the usual approach is to decree specific performance of the positive terms and to issue an injunction to
restrain the breach of the negative terms. An injunction may be granted even if specific terms are not
specifically performable. It is more difficult to carry out a decree of specific performance because it
requires supervision.
o Contracts of service- it is an established rule that specific performance will not be granted of a contract
of service or employment- LUMLEY V WAGNER. This decision can be criticized as it left the defendant
with the choice either to sing or starve. However, an injunction may be granted to restrain the breach of a
negative undertaking in a contract of service.
● Breach of trust- an injunction will readily be granted to restrain the breach or threatened breach of atrust- FOX
V FOX. An injunction will also issue if the trustee either out of his character or course of conduct, is likely to
imperil the trust property-EVERETT V PRYTHERGEH. If for example the trustee is about to sell the property at
an undervalue or during depreciatory conditions, the sale may be restrained.
● Restraint of torts- an injunction can be issued against the commission of practically any tort. The applicant must
first satisfy the court that the action done or threatened constitutes a tort at common law.
o Nuisance- this is a continuing wrong and better satisfied with an injunction that multiplicity of actions.
It must be satisfied that the action amounts to a nuisance else equity will not interfere. This means that it
must be substantial, and not merely a trifling nuisance; for, de minimis non curat lex-ANKERSON V
CONNELLY. A public nuisance is a matter for the AG and he may seek an injunction or initiate criminal
proceedings
o Trespass- a threatened, an apprehended as well as an existing trespass may be restrained by an
injunction-STANFORD V HURLSTONE. However, if the trespass is only a minor or technical one, the
court is likely to refuse an injunction and leave the plaintiff to pursue his remedy at law for damages-
LLANDUDNO URBAN DISTRICT COUNCIL V WOODS. Concerning land, an injunction is usually asked
for against the unsuccessful party as entry upon the disputed land amounts to trespass.
o Libel- the courts have been reluctant to grant injunctions to restrain the publication of defamation due
to the difficult in knowing the effect of words not being known unless it is spoken. In the case of libel
however, it is possible to known in advance the written material which is about to be published. Before
1854, the only remedy available tort of libel was damages. The common law court could not grant
injunctions because they didn’t have the jurisdiction to do so. The Lord Chancellor could also not grant an

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injunction because he had no jurisdiction in defamation or libel which was only known to the common
law courts. In 1854 however, section 79 and 82 of the common law procedure act gave the common law
courts jurisdictions to restrain the publication of libel. Until the judicature acts, the court of chancery
could not restrain libel because cases of libel were not known to the court of equity-BONNARD V
PERRYMAN. Even after the judicature acts, doubts were still entertained and an injunction was refused
in the case of PRUDENTIAL ASSURANCE CO V KNOT. However, after the decision in QUATZ HILL
OCNSOLIDATED GOLF MINNING CO V BEALL in 1882, it had been accepted that an injunction may
now lie against the publication of a libel. The English courts’ jurisdiction to restrain the publication of
libel has its origin in a statute that is inapplicable in Ghana. Therefore, recourse is made to section
15(1) (a) of the courts act which provides that the court has an original jurisdiction in all matters. It is
submitted that ‘all matters’ include an application for an order to restrain the publication of a libel.
Concerning the circuit and district courts the position is not exactly clear. This is because section 42(1)(a)
(i) of the courts act 1993, states that a circuit court has original jurisdiction in in personal actions arising
under a contract or a tort, or for the recovery of a liquidated sum of money, where the amount claimed is
not more than one hundred million cedis. The issue is that the relief of an injunction cannot be quantified
in cedis. it therefore means that an application just to restrain the publication of a libel as a substantive
issue in court will not lie, it must be coupled with an action for other reliefs such as a claim for damages.
For the same reasons, it would appear that the district courts which are lower than the lower courts may
also not be able to rant the injunctions to restrain the publication of libel.
o Confidential information- it would appear that equity has an inherent jurisdiction to restrain the
publication or disclosure of confidential information or private material, if an injury would be thereby
occasioned-PRINCE ALBERT V STRANGE. Publication of confidential marital communication may be
restrained during the marriage and even after the dissolution of the marriage-ARGYLL V ARGYLL. The
use or communication of a confidential trade or commercial information can also be restrained-
SALTMAN ENGINEERING CO LTD V CAMPBELL ENGINEERING CO LTD
The plaintiffs were the owners of copyright in certain drawings of tools for the manufacture of leather punches.
The defendants were instructed by the plaintiffs to produce the tools on their behalf and gave the designs
to them to produce the tools. There was an implied condition of confidentiality of the designs and the
defendants were to treat them as such. The defendant in breach of this confidence converted the designs
to their own use and reproduce same for their own personal use. The plaintiff sued for an injunction to
restrain the defendant from using the designs. HELD: if a defendant is proved to have used confidential
information, directly or indirectly obtained from a plaintiff, without the consent, express or implied of the
plaintiff, he will be guilty of an infringement of the plaintiffs' rights. The information must be confidential
and must have the necessary quality of confidence about it, i.e. it must not be something which is public
property and public knowledge. From this, the court held that the defendant was in breach of the
obligation of confidentiality

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Injunction against the republic

It used to be the case that an injunction could lie against the republic. Similarly, no injunction could lie against a public servant if
such order would have the effect of an injunction against the republic under section 13 of the state proceedings act, 1961-
AKUFO-ADDO V QUASHIE-IDUN,

PEOPLE’S POPULAR PARTY V AG.

The applicants, a registered political party, were refused a permit by the police to hold protest marches with respect to important
political issues, even though a permit had been given to another group to protest against one of the political issues. The police did
not assign any reasons for the refusal. They sought a mandamus to compel the police to give the order and an injunction to restrain
them from refusing the order. HELD- Although section 13 of Act 51 (State Proceedings Act) prohibits the issue of an injunction
against the police it does authorise the court to make a declaration of the rights of the applicant. The applicants were therefore
entitled to a declaration that the police were wrong in refusing the permit; that the applicants were entitled to a permit to hold
meetings, protest marches, etc.; that the police can only refuse if such a procession is likely to cause a breach of the peace; and that
the applicants are entitled to know in writing the grounds on which the police rely in coming to a decision that the marches would
cause a breach of the peace.

The reasons behind such provisions being that

● It was practically difficult to enforce such decrees against the republic being that the executive arm of government
controlled the law enforcement agencies. It was therefore difficult to enforce a decree against the government by the usual
method of attachment or imprisonment for contempt
● It could lead to a breakdown of the constitutional machinery as it may amount to the interference of the judiciary with the
executive branch of government
● The provision ensured that the government is not unduly fettered in the execution of its administrative and executive
decisions

In the case of LARDAN V AG, an interim injunction was ordered to restrain the minister of interior from carrying out a deportation
order issue by him as to do so would render the determination nugatory if he is deported.

Under section 13 of the current state proceedings act, 1998 an injunction may lie against the state. It states, ‘In civil
proceedings by or against the Republic, the Court may make the orders which it has power to make in proceedings between private
persons and may give the relief that the case requires.

The fact still remains that the courts are reluctant to issue an injunction against the state as seen in the reasons given in the case of
CFC CONSTRUCTION CO V ACCRA CITY COUNCIL for refusal of an interim injunction to restrain the council from dumping garbage
and refuse at the complained site.

TITLE: WELFORD QUARCOO v ATTORNEY GENERAL

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FACTS: The plaintiff invoked the original jurisdiction of the court for a declaration that the creation of districts is
unconstitutional and in breach of Article 241(2) and 106(1). HELD: The court held that, the requirements for the grant of
an interlocutory injunction are: first, that the applicant must establish that there is a serious question to be tried;
secondly, that he or she would suffer irreparable damage which cannot be remedied by the award of damages, unless the
interlocutory injunction is granted; and finally that the balance of convenience is in favour of granting him or her the
interlocutory injunction. The balance of convenience, means weighing up the disadvantages of granting the relief against
the disadvantages of not granting the relief. However, where the relief sought 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 to do so,
and provided also that any subsequent nullification of the impugned act or omission cannot restore the status quo

NEW INJUNCTION CASES FROM DJOKOTO

TITLE: GORMAN & GORMAN v ASHONG

FACTS: The appellants are married couple and were joint owners of the disputed house. They entered into a contract with the
respondent for the sale of their house. The terms of the sale was reduced into writing in the form of a receipt. This was signed by the
first appellant only, on behalf of himself and his wife. After the payment of the contract price, the 1 st appellant refunded the amount
paid to the respondent and indicated to him that they were no longer interested in selling the house. The appellant refused to accept
the money and was eventually paid into court. The respondent brought an action for specific performance of the agreement of sale
of the house.

HOLDING: The court held that specific performance will be granted to the respondent because it is equitable and just in the
circumstances of the case. Ansah JSC stated that, “specific performance is an equitable remedy and it is granted at the discretion of
the Court. It may be granted especially with regard to sale of landed property, because there is no other remedy which puts the
plaintiff in the same position as thought eh contract was performed. However, it is trite law that specific performance will not be
granted in certain situation: if damages will be an adequate remedy, where there is want of mutuality, where performance requires
the Court’s supervision, if it will be pointless to grant it, if the contract cannot be enforced in its entirety, if the order will cause
severe hardship to the defendant and if the defendant’s personal freedom will be retrained by it. In essence, the Court will only
exercise its discretion in grant of specific performance only if it is appropriate in the circumstances of the case to do so”. From this
analysis, Dotse JSC concluded that damages will not be an adequate remedy for the respondent and it will not be just and equitable
if the specific performance is refused.

TITLE: KWAKU BONSU v AMA AGYEMANG

FACTS: The defendant agreed to sell his land at Achimota to the plaintiff. After the conclusion of the contract and before the tender
of the purchase price of the land by the plaintiff, the defendant sought to repudiate the contract. The plaintiff sued for an order of
specific performance to enforce the contract and n injunction to restrain the defendant from selling the land to any other third
party. The trial High Court judge held that there was a concluded contract between the parties and as such, the order of for specific
performance of the contract is available based on the evidence. The defendant appealed against this decision of the High Court. The

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Court of Appeal reversed the judgment of the high court and held, per Ofoe J.A, that specific performance is not the right remedy for
the plaintiff because damages will be adequate in restoring his grievances. The court thus substituted the order for an order for
damages. The plaintiff further appealed to the Supreme Court.

HELD: The court held that the Court of Appeal erred in its judgment that due to the mere fact of adequacy of damages, specific
performance shall not be granted. Date Bah JSC in his judgment, held that, The courts will not refuse to grant the remedy in relation
to land simply because it is claimed damages would be an adequate remedy. However, the grant of specific performance is never
automatic and the courts have always preserved the integrity of their discretion to grant or refuse the remedy. The discretion is,
however, exercised according to well-established rules. Once it has been accepted that there is a valid and enforceable contract for
the sale of the land, specific performance will be available and a mere fact of adequacy of damages will not defeat a grant of
specific performance.

TITLE: 18TH JULY LTD v YEHANS INTERNATIONAL LTD

FACTS: The plaintiff sued for declaration of title to a piece of land in Accra. He further requested an interlocutory injunction on
grounds that the defendant will change the nature of the land if not restrained. The interlocutory injunction was granted by the
High Court and on appeal to the Court of Appeal, the appeal was dismissed. This is an appeal to the Supreme Court.

HOLDING: The court held per Anin Yeboah JSC that, in the grant of an interlocutory injunction, the court must first consider
whether the case of the plaintiff is not frivolous and had demonstrated that he had legal or equitable right which a court should
protect. The court is also enjoined to ensure that the status quo is maintained so as to avoid any irreparable damage to the
applicant pending the hearing of the matter. Thirdly, the trial court ought to consider the balance of convenience and should refuse
the application if its grant would cause serious hardships to the other party.

TITLE: AGYEI v SIMILAO

FACTS: The plaintiff sued for an injunction and he instituted an interlocutory injunction.

HELD: The court held that, since the case concern interlocutory injuction, its grant or refusal is at the discretion of the court and an
appellate court will be slow to alter the decision of a trial court.

THE MAXIMS OF EQUITY

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There are general principles which guide the exercise of equitable jurisdiction. They are known as the maxims of equity. They are
not rules as equitable remedies are now based on judicial discretion and not merely according to the individual conscience of the
judge. These maxims are therefore trends and principles observed from the rules of equity. Some of these maxims overlap when
amplified. They are

● Equity would not suffer a wrong to be without a remedy-This is perhaps the most important maxim as it provides the
justification for the intervention of equity. The reason for the intervention is to make sure that all wrongs have their
corresponding remedies. These must be wrongs capable of being remedied by a court of justice and not just any wrongs
(moral wrongs, social wrongs); wrongs which are justiciable. The common law courts did not have a remedy for justiciable
wrongs because of a technical defect and that is why equity intervened.
Trusts
For example, if a settlor transferred title in property to a trustee to use in benefit for a beneficiary, the common law recognized the
trustee as the legal owner and had no remedy for situations where the trustee was doing acts contrary to the terms agreed
upon with the settlor. The beneficiary also had no locus standi. Equity intervened and recognized an equitable title in the
beneficiary thus ensuring that the trustee held the property in benefit of the former.
Auxiliary jurisdiction
This includes discovery of documents which gave the equity courts the power to compel a person on the pain of imprisonment to
make available documents in his possession. The development of this jurisdiction had some difficulties. Earlier, the
principle was that a plaintiff to an action of ejectment was not entitled to discovery. This is because equity leaned against
forfeiture and felt that the plaintiff upon commencing action should succeed on his own strength and not the weakness of
his opponent he could therefore not be asking the court to compel evidence that would favor him. This was reversed in the
case of LYELL V KENNEDY. Also, equity leaned against penalties and forfeiture and so a landlord bring an action was not
allowed discovery but a relief against an action of forfeiture was allowed. Discovery could not be ordered to aid a plaintiff
recovger property from a bona fide purchaser for value without notice. Equity would not disarm a purchaser but assist
him. This was reversed by the judicature acts. In Ghana order 31 rule 10 of CI 47 provides that discovery may be
available to any party to any cause or matter. Other cases of auxiliary jurisdiction in equity include setting aside
fraudulent conveyances; the preservation of status quo during pending litigation and the preservation and perpetuation of
testimony where it was otherwise unavailable or lost through death or disappearance of witnesses or materials. In all
issues the equity did not dispose of the substantive issue
TAHIRU v MIREKU

RAMIA v RAMIA
The appellant married the respondent under Mohammedan laws. He acquired a lease of a plot of land and erected a building on it
which was in the respondent’s name. Later, the marriage hit the rocks and the appellant sought to recover the property
from the respondent. He contended that the respondent was holding the property in trust for him and he was the
beneficiary. The respondent however pled the doctrine of advancement that the appellant parted with the properties to
benefit her and her children. Held- the doctrine of advancement is so well-entrenched in our legal system that any attempt

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to limit its application exclusively to monogamous marriages at so late a stage, a move which tends to make nonsense of its
recognition by our courts which thrive in a society essentially polygamous, should be strongly resisted as being untenable.

REDCO LTD. V SARPONG

Facts- The respondent agreed to purchase a flat from the appellant-company at a cost of ¢72,000. In 1980 the respondent made
part payment of ¢19,000, with the remainder to be paid upon completion. The appellant in 1981 informed the respondent
that the flat would be ready in December 1981 and was asked to pay a second instalment of ¢31,400. The respondent
agreed and paid ¢32,000. At the end of 1981 no flat was allocated to the respondent. Seven years later the appellant
informed the respondent that the flat now cost ¢3 million. The respondent immediately sued on his contract and claimed
specific performance on the ground that although ¢21.000 was outstanding, what had been paid so far constituted
sufficient part performance to warrant the grant of specific performance. In his defence the appellant stated that
extraneous circumstances militated against the completion of the flat by the agreed date. The respondent then moved the
court for judgment in that the defence disclosed no reasonable defence. Judgment was granted and the appellant appealed.
Held- the basis upon which specific performance would be granted in equity was quite settled. Certain contracts were of
such a nature that time became of the essence, and a mere award of damages was not enough. There was ample evidence
that the conditions set out in the contract to be fulfilled by the respondent had all been, or a substantial part had been,
fulfilled which in equity would entitle him to his equitable right of specific performance.

DAY v BROWNRIGG
The plaintiffs claimed that their house had been called Ashford Lodge for over sixty years and the defendant’s house, which was
adjoined to theirs was called Ashford villa for some 40 years. The defendants had however altered the name of their house
to be called Ashford Lodge and the plaintiffs alleged that this act of the Defendant had caused them great inconvenience
and annoyance, and had materially diminished the value of their property. They thus instituted an action for an injunction
to restrain the Defendant from continuing to use the name of their house. Held- where there is no damage, there is no legal
right alleged, the violation of which was the cause of damage. That being so, it is not for the Court to say that because
somebody is doing something which it thinks not quite right, a thing which ought not to be done by one person to another,
it should interfere. The Court can only interfere where there is an invasion of a legal or equitable right.

● Equity follows the law- the court of chancery maintained that equity only supplemented the law and never intended to
override it. Hence if there was a common law rule which covered all aspects of a particular issue, equity would not
intervene to alter that rule. For example before the requirement for words of limitation was done away with a conveyance
without such words did not confer a legal title but an equitable title. However equity did not follow the law slavishly nor
always as said by Cardozo CJ in GRAF V HOPE BUILDING CORPORATION and so if there was a loophole or any
circumstance which the common law disregarded, equity would not follow the law in disregarding but would intervene to
do justice. However after 1925, equity followed the new law that a fee simple or other absolute interest will pass unless

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contrary intention appears. Section 13(2) of the conveyancing decree also follows this rule. Equity created new interests
which did not follow the law
Estate contracts
These are mainly contracts for the sale or lease of land. While the common law would award damages for breach of such contracts,
equity would award specific performance. This right to specific performance creates a right in the land. The purchaser
obtained an equitable interest enforceable against everybody except bona fide purchasers for value without notice. In most
cases notice may be given of an equitable interest by registration so that it prevailed against everyone.
Restrictive covenants
A landowner selling a plot of land may wish to restrict its use to protect the value of his other adjoining land. At common law this
restriction only bound the parties but not the future owners. Equity however allowed restrictions to run with the land so
that it bound future owners unless it was bought without notice of the covenant. TULK V MOXHAY
The mortgagor’s equity of redemption
Under the old law a mortgage was an arrangement whereby a debtor conveyed his land to his creditor as security for a loan. Under
the new law in accordance with section 1 of the Mortgages act, a mortgage is a contract charging immovable property as
security for the due repayment of debt or performance of some other obligation. There was usually a date set for
redemption of the mortgaged property by repaying the loan. At common law, the right to redeem was lost if the mortgagor
failed to repay the loan precisely on the contractual date. At equity the mortgagor can redeem at any time after the
contractual date.
● Where there is equal equity, the law shall prevail-

JARED v CLEMENTS
A purchaser before completion of leaseholds had, through her solicitor, actual notice of an equitable charge created by deposit of
title deeds which her solicitor required to be paid off. On completion, the vendor's solicitor produced the memorandum of
deposit with a forged receipt purporting to be signed by the owner of the equitable charge, which, together with the title
deeds, was handed over to the purchaser, who by the conveyance from the vendor acquired the legal estate. The owner of
the equitable charge had not been guilty of negligence. Held- that the purchaser could not set up the legal estate against
the equitable charge, and must hold the property subject to the equitable charge.

ADU SARKODIE v KARAM & SONS

One Edusei leased his house to the defendants on for a term of ten years with an option for renewal for a further term of ten years.
The rent was paid in advance. No formal agreement was executed but letters embodying the agreed terms of the lease were
signed by the parties. Edusei later sold the house to the plaintiff. Though the plaintiff was aware of the defendants’
occupation of the house at the time of the purchase, he did not inquire of the nature of their interests in the house. The
plaintiff, after the purchase, invited the defendants to attorn tenant to him but they refused on the ground that this was not
necessary as they were already tenants of the plaintiff’s vendor. The plaintiff thereupon issued a writ to eject the
defendants. Held- both parties had equitable interests in the case. The plaintiff because he had notice of the defendants’
occupation of the house but failed to inquire of the nature of their interest. The defendants, because they did not register

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their documents of title of the lease under Act 122. Because the defendants had no legal rights under the lease, the plaintiff
can eject them by coming under section 17 of the rents act.

● Where the equities are equal, the first in time shall prevail
The two above rules are considered together

The first basic rule is that in both law and equity competing interests rank prima facie in order of their creation (qui prior est
tempore, potior est jure). The second rule is that especially as regards to dealings in pure personalty or movable property,
priority may be determined by the order in which the notice of creation is received.
DEARLE V HALL.
The beneficial owner of a trust fund assigned it first by way of security to A, and then outright to B, in each case for valuable
consideration. A had not given notice of his assignment to the trustees of the fund and, accordingly, when B made enquiries
of them, he did not discover the existence of the assignment to A because the trustees were not aware of it. B did give notice
of the assignment to the trustees, and then A subsequently also gave notice to them. Held- as between two equitable
interests, the first in time will only take priority "if the equities are equal". In this case, by failing to give notice to the
trustees, A had allowed the beneficiary of the trust to be able to hold himself out as being the unencumbered owner of the
beneficial interest and had therefore enabled the beneficiary to deceive B into thinking he had not encumbered it. This is a
perfectly straightforward application of the principle that the first in time will only prevail if the equities are equal and is
not considered controversial.

However, an interest ranking first in time may be postponed to an interest subsequent to it by operation of subsidiary rules relating
to
▪ Purchaser without notice- a bona fide purchaser of value without notice of a prior interest in the
property is entitled to priority in equity-PILCHER V RAWLINS. This is because the purchaser’s conscience
is in no way affected by the equitable right of which he has no notice.
▪ Purchaser for value- the person should have given consideration for the property as equity would not
intervene for a squatter or volunteer. An existing debt is held to be value-THORNDIKE V HUNT
▪ Legal estate-the estate obtained by the purchaser must be a legal estate and not another equitable
interest otherwise its priority would be subject to the order of creation. There are exceptions
● Where the purchaser of an equitable interest thereby has a better right to a legal estate. This
may occur if the purchaser of a beneficial interest in an estate has the legal title in a trustee for
the purchaser alone and neither he nor the trustee has notice. The purchaser-beneficiary has a
better right to the legal title because he can if sui juris terminate the trust and direct the trustee
to convey the legal title to him-
SAUNDERS V VAUTIER

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A testator had bequeathed £2,000 worth of stock in the East India Company on trust for Vautier.
According to the terms of the trust, it was to accumulate until V attained the age of 25. The
stock's dividends were to be accumulated along with the capital. Upon reaching the age of
maturity (21 at the material time) he sought access to the capital and dividends immediately.
Held- 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.
● A purchaser of an equitable interest without notice acquires priority if he subsequently acquires
the legal estate. This is because when the equities are equal, the law prevails
● an equitable interest prevails over mere equities so that if a lease was granted for 50 years
instead of 5 years a subtenant granted a 20 years sub lease would be protected.
▪ Notice-the legal estate cannot prevail against the equitable interest of which the purchaser has notice.
● Actual notice- direct information given to a party. This information must be clear and distinct,
must come from persons interested in the property and in the course of negotiations. A purchaser
is not bound to attend to vague rumors or statements by mere strangers. BARNHART V
GREENSHIELDS. This does not mean that information from another source should be
disregarded. LYOLD V BANKS
● Constructive notice- a purchaser will be treated to having notice of all that a reasonably
prudent purchaser would have discovered-BAILEY V BARNES.
the owner of four freehold houses, mortgaged them to people who transferred their mortagages to B. B
sold the houses to C and conveyed them to her in exercise of the power of sale in the mortgages,
freed from the equity of redemption. C mortgaged the four houses and on her death her successor
in title, sold the equity of redemption to D, subject to the prior mortgage. Certain creditors of the
original owner, who had obtained equitable execution on his equity of redemption, brought an
action against B. C, D, and obtained judgment setting aside the transaction between B & C as a
fraudulent execution of the power of sale, and declaring the Plaintiffs entitled to a right of
redemption. L. was not a party to the action, but on receiving notice of it he paid off the
mortgage, and took a conveyance of the legal estate from the mortgagees. At the time when L.
purchased the equity of redemption he had no actual notice of any impropriety in the sale by B 2
C. HELD: L. was not affected by constructive notice of the impropriety of the sale, and that he
was protected against the prior equitable interest of the Plaintiffs by his acquisition of the legal
estate
● This may arise from failure to investigate the known; therefore knowledge of a mortgage would
imply constructive notice of the encumbrances referred to in the mortgage deed. It would arise
even if the purchaser is told the document contains nothing adverse to the title for he must
investigate and satisfy himself-

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PATMAN V HARLAND.
P conveyed to H two freehold plots of land, part of a building estate, subject to restrictive covenants that
only private dwelling-houses should be erected. H conveyed the plots, subject to the covenants, to
Harland. Harland granted lease of one plot to B. Neither B nor her solicitor knew of the
restrictive covenant and proceeded to erect an art studio. Held- B was bound by the covenant as
it constituted constructive notice, and must be restrained from completing the building.

● It may also arise from abstention to investigate whether carelessly or deliberately what a
reasonable prudent purchaser would have investigated. Other instances include failure to inspect
title deed or to inspect the property to see if it is occupied.

MASSEY v MIDLAND BANK PlC

Mr Potts embarked on a venture to offer financial services to the public. He sought an overdraft facility
from the plaintiff bank and asked the defendant to grant a legal charge over her home in the
bank's favour. To persuade her to do so, Mr Potts fraudulently painted a glowing picture of the
venture's financial position and prospects. The defendant and Mr Potts visited the plaintiff's
offices and were interviewed together and were advised that the defendant should be
independently advised by a solicitor before the bank would agree to proceed with the
transaction. The solicitor explained the nature of a second legal charge to her and she
understood the explanation. The new venture went into voluntary liquidation and the plaintiff
served a demand on the defendant who contended that she had been induced to sign the charge
by the misrepresentation and undue influence of Mr Potts and that the plaintiff was affected by
this. Held- there was constructive notice on the part of the defendant as the bank had insisted
she get independent advice from her solicitor before the agreement to which she did. With this,
the defendant cannot be heard to say she was unduly influenced to enter into the contract.

PLUMB v FLUITT
Basnett being indebted to another, and then obtaining a further loan from him, delivered to him the title-
deeds of one of the premises as a security, and signed a memorandum stating himself to have
done so, and binding himself to mortgage the same to him for his further security, when
requested. Being about the same time indebted to the plaintiff Plumb he deposited with him the
title deeds of the other premises in question as a security for the sum owed. The bill also charged
an undertaking to complete this security by a mortgage, when required: but no memorandum to
that effect was entered into. Basnett appearing to be in declining circumstances, and then
indebted to the defendant was pressed by him for payment or security of that sum; and
accordingly, executed to him a mortgage to that amount of both the estates above-mentioned.
Held- a deposit of title-deeds, as a security for a debt, does amount to an equitable mortgage. If

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the plaintiff can prove actual or constructive notice of the deposit in the defendant, it raises a
trust in him to the amount of that equitable mortgage. Constructive notice is an evidence of
notice. However, the court concluded that there was no evidence of constructive notice.

USSHER v DARKO
A prominent lawyer, Sir Edward, after contracting marriage under the marriage ordinance took as his
paramour, one Matilda to whom she bore 6 children. Sir Edward acquired a piece of land and
build=t a house but he registered the house in the name of Matilda. The house was let to tenants
and Sir Edwards collected the rents himself. Later, Matilda sought to sell the house to the
plaintiff. The tenants in the house refused to attorn tenancy to the plaintiff and as such he sued
for their ejectment. Sir Edward applied for and obtained judgment to be joined as a party to the
suit on grounds that he was the beneficiary interested party and Matilda was only holding the
property in trust for him. HOLDING: an intending purchaser of a tenanted land, such as the
plaintiff in the instant case, would be fixed with constructive notice of all that tenant's rights, but
not of his lessor's title or rights; actual knowledge that the rents were being paid by the tenants
to some other person whose receipt was inconsistent with the title of the vendor was notice of
that person's rights. Since the plaintiff knew that the rents of the property had been paid by the
defendants to a person other than Matilda, his vendor, and he failed to inquire who that person
was, he must be held to have bought the house with constructive notice of Sir Edwards's
beneficial title.

● Imputed notice- this is notice indirectly acquired through an agent. 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-FULLER V BENETT. This means that notice
acquired by an agent in a previous transaction would be imputed to the present principal. Where
a solicitor acts for both parties to a transaction, any notice he acquire is imputed to both parties,
unless there was a conspiracy with one party-ROLLAND V HART. If the agent suppresses the
knowledge to commit fraud on the principal, the knowledge would not be imputed to the
principal-CAVE V CAVE

SHARPE v FOY
A husband and wife mortgaged the wife's real estate to secure money advanced to the husband. There
was a settlement on the wife’s prop, tho the mortgagee was informed by the couple that there
was no settlement, and although the person who acted as solicitor for both parties was aware of
its existence, he concealed it with the acquiescence of the husband and wife from the mortgagee.
The mortgage deed, by mistake, was not effectually acknowledged by the wife till after the

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mortgagee had received notice of the settlement. Held- there was no notice imputed to the
mortgagee as he didn’t not know of the settlement. He inquired and was told that there was no
such thing and the defendants had even intimated to hide this facts from him. As such, although
the wife's estate did not pass to the mortgagee till after he had received notice of the settlement,
yet the misrepresentations of the wife constituted a fraud, which bound her estate, and
prevented her from disappointing the mortgagee, and, consequently, the mortgagee had priority
over the persons interested under the settlement.

WILKES v SPOONER
The defendant’s father had earlier entered a lease agreement with a landlord where he had covenanted
with the landlord that he was not to engage in any noisy or offensive trade other than that of a
pork butcher. The father also had another butchering lease with another landlord which he
carried on general butchering, which he later sold it off to the plaintiff under a covenant that he
was not to engage in any competitive butchering business with him. The father later surrendered
the first lease to the landlord. The defendant entered into an assignment contract with the
landlord on the surrendered lease where the landlord covenanted with the defendant that he
would not carry on any noisy or offensive trade as a butcher. The landlord did not know of the
restrictive covenant of the defendant father’s assignment to the plaintiff of being only a pork
butcher but the defendant knew of it. The defendant engaged in general butchering business and
the plaintiff sued for breach of covenant. Held- under the circumstances of the case the landlord
was not affected with constructive notice of the father's covenant, and, consequently, could grant
to the son a lease free from the restriction of that covenant, and that the son therefore could not
be restrained at the suit of the plaintiff from carrying on the business of a general butcher.

▪ Successors in title- the protection of the doctrine of the purchaser for value without notice extends to
any person who claims through such purchaser unless that person was himself previously bound by
equity. Therefore a purchaser without notice of an equitable interest is not bound if he purchases from a
previous purchaser without notice-BARROWS CASE. One justification for the rule is that the conscience of
the subsequent purchaser is not affected. Also, otherwise would mean that the purchaser without notice
can only sell it to another purchaser without notice. However, a trustee cannot sell a trust to an innocent
purchaser free of the equities then buying it back. The doctrines of notice may no longer be of great
significance due to section 25 of act 122. This is because an unregistered document is void until it is
registered. Once registered it constitutes actual notice. Recently, customary law grants are also registered
under section 7 of the conveyancing decree
o Fraud, estoppel and gross negligence- a person with a prima facie claim to property may lose it owing to his
fraud, by estoppel or through his negligence. If a person with a prior equitable interest in a property induces
another fraudulently to purchase that same property, equity which follows conscience would not protect the

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former-NORTHERN COUNTIES OF ENGLAND CO V WHIPP. Fraud may arise when the owner should have declared
his interest in the property instead of remaining silent.

Estoppel may arise from an express or implied misrepresentation by the holder of an earlier interest whereby the owner of
the later interest is deceived-DIXON V MULKERSTON. This is akin to fraud and the previous owner although the
true one is estopped.

If the party with a prior claim has been negligent in asserting his claim, he is not entitled to the protection of either law or
equity. An example is failure to ask for the title deeds without a reasonable excuse. It is not negligence if the legal
owner asks for the title deeds but it put off with a reasonable excuse but it would amount to constructive notice if
the explanation is unreasonable-PATMAN V HARLAND, MANNERS V MEW
o Registration- Section 25 of Act 122 states that upon registration the title registered serves as notice to the
whole world. Section 26 of act 122 with regards to priority states that an instrument registered within the
prescribed period takes effect from the date of its execution but one registered belatedly takes effect from the date
of its registration.
o Over-reaching- this means the transfer of the prior interest to the proceeds of the sale so as to free the interest or
title itself from the prior encumbrances. This usually applies to settlements. A settlement is an arrangement
creating successive interests in a property. It may consist of a trust for sale. An example is when the beneficial
equitable interest is sold. The beneficiary’s interest is now transferred to purchase money in the hands of the
trustee. The equitable interest is therefore said to be over-reached-meaning it has been transferred to purchase
money. A mortgagor’s equity of redemption is over-reached when the property is sold under a power of sale, the
equity being transferred to any surplus money which the mortgagee holds in trust for the mortgagor. Over-
reaching may therefore take precedence over a prior interest. It is doubtful whether the principle of over-reaching
applies in Ghana.

This rule is subject to the important qualification that an assignee who had actual or constructive notice of a previous assignment
when he advanced his money cannot gain priority by being first to give notice. Personalty or movable property under the rule
includes settled funds as well as settled freeholds and leaseholds under which they are subject to a trust for sale. These may be
subject to the rule in DEARLE V HALL in Ghana. The rationale of the rule is that failure to give notice is gross negligence which
disentitles the prior emcumbrancer from the protection of equity. By leaving personalty in the hands of another, without giving that
other person a notice of interest in it, the encumbrancer negligently induces both the holder of property and third parties to believe
that the property is unencumbered. Hence the first person to give a proper notice may have priority over an earlier encumbrancer
who failed to give notice of his interest or claim.

The rule in DEARLE V HALL supersedes all rules on priority and must be considered first before the other rules apply.

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● He who seeks equity must do equity- to obtain an equitable relief, the plaintiff must be prepared to do what is right
and fair to his opponent. Its application may be illustrated by examples of illegal loans, the doctrine of election and
consolidation.
o Illegal loans- an illegal loan is unenforceable because ex turpi causa non oritur action. However, where an illegal
loan was secured by a mortgage, an order for the delivery of the title deeds may be refused unless the mortgagor
agrees to repay the loan-LODGE V NATIONAL UNION INVESTMENTS CO. This rule is of limited application-
KASUMA V BAB-EGBE. If the lender seeks a declaration that the mortgage is void, he may obtain it without
repayment, because that is not an equitable relief. This rule is criticized for its effect of enforcing illegal
transactions.
o Election- this gives the party a choice of either accepting what is given him, together with all the conditions
attached to it, or rejecting the property all together. He cannot take the property while rejecting the condition. So
if a donor his property to a done and in the same instrument purports to give the donee’s property to another, the
done would be unable to claim the whole gift unless he allows the gift to the other to take effect. He can either
keep the gift and part with his property or keep his property and reject the gift. The doctrine of election does not
depend on the intention of the settlor or donor-MENGELL’S WIL TRUST. In a great majority of cases the settlor
mistakenly assumed an ability to transfer property which, in fact, he could not on his own volition dispose.
o Consolidation- in certain cases, a person who has become entitled to two or more mortgages made by the same
mortgagor may refuse to permit the equitable right to redeem one mortgage without redeeming others. This is
important because one of the mortgages may have become worthless. In Ghana consolidation is abolished by
section 19(4) of the mortgages act.
o Notice to redeem a mortgage- under equity, a mortgagor can redeem his mortgage after the contractual date
for redemption. Under common law, the mortgagor was to give the mortgagee a reasonable notice of his intention
or pay interest in lieu of notice. After the contractual date of redemption, the mortgagee was entitled to assume
that the mortgagor would not thereafter redeem. Therefore, if the mortgagor subsequently elected to exercise his
equitable right, he must do equity by giving a reasonable notice before redemption. Section 20 of the mortgages
act does not provide that notice shall be required in such a case.

TITLE: LISSENDEN v C.A.V BOSCH

FACTS: The appellant was employed by the respondent company as an electro-plater. He contracted dermatitis while
engaged in the usual course of his work. He obtained an award for compensation against the respondents and was
paid an amount for partial incapacity for a certain period. He appealed against this award arguing that he was
entitled to be paid the compensation for as long as he is incapacitated. A preliminary objection was raised against
his suit that he cannot be heard to appeal the award as he had already elected to accept the award and had
already approbated the award. HELD- The court held that the mere fact that a workman who has obtained an
award of compensation under the Workmen's Compensation Act has accepted weekly sums payable thereunder
does not preclude an appeal by him on the ground that the compensation should have been of a larger sum than
that awarded.

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TITLE: COMBE v COMBE

FACTS: The plaintiff sought to enforce a promise made to her by the defendant, her husband, to pay her maintenance at a
time they were awaiting the finalization of their divorce petition. Plaintiff thus forbore to apply for maintenance
by the defendant to the divorce court and the defendant defaulted for 7 years. She sued for the arrears of the
maintenance payment. HELD- there was no consideration for the husband’s promise to pay the maintenance and
that her actual forbearance to make such an application for maintenance at the divorce court was not made at
the request of her husband, either express or implied.
● He who come into equity must come with clean hands- the difference between this maxim and the one above
although similar is that the one above looks to the future. This maxim looks to the past because it says the claimant must
be clean before he come to equity. He who has committed iniquity shall not have equity. However, general bad character
will not bar an equitable relief because equity does not require its claimants to live blameless lives. To constitute a bar, the
conduct complained of must have an immediate and necessary relation to the relief sought. If an infant fraudulently
misrepresents his age to obtain money from trustee, he cannot compel repayment when of full age-CORY V GERTCHKEN.
A tenant under an agreement for a lease cannot obtain specific performance of the agreement if he is in breach of any of
the important covenants or provisions contained in the lease-COASTSWORTH V JOHNSON

TINSLEY v MILLIGAN
The appellant lived in the same house with respondent and used funds acquired fraudulently from the Department of Social
Security to pay the bills in respect of the house. The Respondent subsequently repented from the frauds and reported to the
DSS about the frauds. A quarrel between the two parties led to the appellant sending a notice to quit on the respondent.
She instituted an action claiming sole ownership of the property and the respondent counterclaimed for an order for sale
and a declaration that property was held by appellant for both parties in equal shares. Held- the appeal could not be
allowed since equity would not allow a claimant to rely on his act of illegality to seek relief from the court.

● Delay defeats equity- equity aids the vigilant and not the indolent-vigilantibus non dormientibus aequitas succrit. It has
general application in both law and equity. Lord Camden in SMITH V CLAY. Delay which is sufficient to prevent a party
from obtaining an equitable remedy is known as laches. There is laches where it would be unjust to give a remedy because
the party has by his conduct waived his right or although not waiving his right he has by his conduct and neglect put the
other party in a situation in which it would be unreasonable to assert his remedy. Laches therefore, essentially consists of
lapse in time coupled with circumstances which make it inequitable to enforce the claim. The delay must be fatal for it to
amount to laches. The delay is fatal if it is evidence of an agreement to abandon the right or it has resulted in the loss or
destruction of evidence by which the claim may be rebutted. Delay is fatal if it is due to waiting to see if the venture will
prosper- RE JARVIS. Delay is fatal if the plaintiff acted so as to induce the defendant to alter his position on the reasonable
faith that the claim has be released or abandoned-ALCARD V SKINNER, PICKARD V SEARS. This resembles acquiescence.
However, acquiescence is not necessarily caused by delay; it is a conduct from which it can be inferred that a party has

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waived his right. In an application for an injunction to restrain the use of a shop, acquiescence would be raised if the
plaintiff has bought goods there but such conduct would not amount to laches.

To amount to laches, there must be full knowledge, legal capacity and free will. Ignorance, disability or undue influence are
satisfactory explanations for delay.

Laches does not bind successors-BAYAIDEE V MENSAH. Therefore a successor in title though his predecessor would have
be defeated by laches may assert his rights.

Statute now determines where a claim is too stale to be prosecuted as seen in the limitation decree, NRCD 54. Section 6(1)
however provides that the periods of limitation prescribed shall not apply to any claim for specific performance, an
injunction or other equitable relief. This means that the statute does not expressly prescribe a period of limitation for
equitable reliefs. However the courts have always relied on applicable statutes to determine whether a claim is defeasible
by laches. Section 6(2) of the decree states that this section shall not be construed as preventing a court from applying by
analogy any provision in any proceedings where in the opinion of the court the interest of justice requires. If the period
prescribed by the decree has expired, equity would presume that the claim is barred b laches and the burden will lie on the
plaintiff to satisfy the court that there has not been laches. Conversely, prior to the efflux of that time, the defendant bears
the burden of proving laches.

● Equality is equity- in the absence of a clear and sufficient reason for any other basis of division, equity will proceed on the
basis that a division equal in shares is intended. PETIT V SMITH-per Lord Somers- equity delights in equality. The
application of this maxim may be considered in many situations.
o Presumption of tenancy in common- equity has always dislikes joint tenancy with its right of survivorship. In a
joint tenancy, the surviving joint owners become entitled to the interest of a deceased joint owner. The heirs of the
deceased joint owner do not succeed him-FYNN V GARDINER. Equity considers there is no equality and therefore
leans to tenancy in common. Section 14(3) of the conveyancing decree now raises a prima facie statutory
presumption of tenancy in common, thus giving a statutory force to the equitable rule.
o Purchase in unequal shares- if two or more persons together purchase a property with the money in unequal
shares, the purchasers are presumed to take beneficially as tenant in common shares proportional to the sums
advance even if there is a joint conveyance to them, unless they express a contrary intention-LAKE V GIBSON .
Consequently, equity will insist that the survivors hold the deceased’s interest in trust for his personal
representative. However where the purchasers are husband and wife, they take as joint tenants even if they
contributed in unequal shares unless a contrary intention appears-QUARTEY V ARMAH. On the other hand, if the
property was purchased in equal shares, equity follows the law in presuming that they are not take as joint
tenants. This has been criticized- JACKSON V JACKSON. In Ghana, children cannot succeed as tenants in common
and so cannot sell portions of the estate devolving on them on their father’s intestacy.-KHOURY V TOMAKLOE
o Joint loan on a mortgage- when two or more persons have advanced money on mortgage, whether in equal or
unequal shares, equity presumes a tenancy in common between the mortgagees. The mere circumstance of a loan
raises the presumption against a joint tenancy. A surviving mortgagee can give a good receipt to the mortgagor

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and that would be a valid discharge, but this does not affect the rights of the mortgagees inter se and the survivor
is a trustee for the personal representatives of the deceased mortgagee-RE JACKSON. Section 7 of the mortgages
decree treats two or more mortgagees as joint holders with right of survivorship; but this is only in regards their
relationship with the mortgagor and not inter se. mortagagees take as tenants in common inter se
o Partnership assets- when partners acquire property, they are presumed to hold it as beneficial tenants in
common-jus accrescendi inter mercatores locum no habet(the right of survivorship has no place in business
transaction). The rule extends to any joint undertaking carried on in view of profit, even if no formal partnership
exists-BUCKLEY V BARBER, and even if the property was not purchased but devised, if it is used for trade-
LAKE V GIBSON
The Commissioners of Sewers had sold and conveyed Lands to five Persons and their Heirs, who afterwards, in order to
improve and cultivate these Lands, entred into Articles whereby they agreed to be equally concerned as to Profit
and Loss, and to advance each of them such a sum, to be laid out in the Manurance and Improvement of the Land.
HELD- where Two, or more, purchase Lands, and advance the Money in equal Proportions, and take a Conveyance
to them and their Heirs, this is a Joint tenancy, that is, a Purchase by them jointly of the Chance of Survivorship,
which may happen to the one of them as well as to the other; but where the Proportions of the Money are not
equal, and this appears in the Deed itself, this makes them
in the Nature of Partners; and however the legal Estate survive, yet the Survivor shall be considered but as a Trustee for the
others, in Proportion to the Sums advanced by each of them.
o The right of severance of a joint tenancy- even in cases where under both law and equity, there is a joint
tenancy, equity will readily treat the joint tenancy as severed so as to exclude the incident of survivorship. Actual
alienation of is share amount to severance; a mere agreement to alienate severs it at equity but not at common
law, provided it is made for value-BROWN V RAINDALE. The other joint owner remain as such but the portion
alienated can be survived by a successor.
o Statutory presumption- section 14(3) of the conveyancing decree presumes a tenancy in common. This
presumption only apples to lands.

JONES v MAYNARD
In 1941 a husband, who was about to go on service overseas, authorized his wife to draw on his bank account, which was
thereafter operated as a joint accoun0,t in that both parties drew on it for their requirements, while both paid
their earnings and income into it. The husband, whose payments in were much the larger, from time to time
withdrew money to pay for investments made in his own name. There was no settled agreement between the
parties as to their rights in the account. In 1946 the wife left the husband, who shortly afterwards closed the
account and drew out the balance. He obtained a decree of divorce against the wife in 1948. The wife sued the
husband, claiming half of the balance of the account and the investments he made. Held- the principle of equality
ought to be applied, and that the wife was entitled to one half of the final balance and to one half of the value of
the investments existing at the date when the account was closed.

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DIWEL v FARNES
The defendant was the mistress of a deceased man. Whilst his mistress, the defendant contributed with the deceased in
buying a house they were renting. The deceased later sold and proceeds from this sale was used to purchase
another house. After the death of the man, the plaintiff, the widow and administratrix of the deceased claimed
possession of the house. Held- per Wilmer J that, the maxim that equality is equity must be applied in this case. As
such the contributions of the defendant towards the purchase of the house ought to be taken into account and her
beneficial interest ought to be one-half share.

RIMMER v RIMMER
A husband and wife after marriage bought a house in the name of the husband. The Wife provided the deposit and the rest
of the purchase price was borrowed on the security of a mortgage from a building society in the name of the
husband. The principal of the mortgage money was repaid out of housekeeping money provided by the husband
and the remaining by the wife out of her own earnings when the husband was on war service. The wife provided
all the furniture for the home out of her own resources. They separated and the house was sold. An action was
brought by the wife for a share of the proceeds Held – The court held that, on the facts of the present case it was
not possible fairly to assess the separate beneficial interests of the husband and the wife by reference to the
contributions which they had made. As such, the court concluded that it would be fair to share the proceeds
among them equally.

QUARTEY v ARMAR
The plaintiff and the defendant were married couples but they later divorced. During the subsistence of the marriage, the
parties bought two houses. The husband was earning more than the wife. The houses were in the name of the wife
and both of them made contributions to the purchase of the houses. After the separation, the wife sued for a
declaration that she was the owner of the houses. The defendant counterclaimed that the he was the beneficial
owner of the houses since the plaintiff only held them in trust for him. HELD- where two or more persons
purchased property and provided money in unequal shares and they are marriage couples, it is presumed that
they intended to own the property jointly. From the case, since there was no evidence of advancement or intention
that the house was to be held by them in separate shares, they were to own it jointly.

MACDONALD v MACDONALD
The parties to this case were husband and wife who lived in the wife’s mother’s house. The wife and the daughter had made
contributions towards the development of the house and in a will, the wife’s mother bequeathed an interest in the
house to the wife. However, before that, the house had been mortgaged and the husband had been made the sole
mortgagor of the house. The house was then sold and the furniture of the new house was provided for by the
mother and the wife, the money borrowed by means of mortgage was met by the husband till a time when he was
carried off to war. Shortly after, the wife continued payment. In 1948, the wife divorced her husband in question
who soon remarried, and when the husband died, she continued to pay the mortgage installment. Held- with

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regard to the issue who was the bona fide owner of the house, the court held that, the husband, mother and wife
had a substantial beneficial interest in the house which was purchased as a joint family enterprise in order to
provide a home, and since no precise calculation was possible, they should be entitled to having equal shares.
● Equity looks to the intent rather than the form- the courts of equity makes a distinction in all cases between that
which is a matter of substance and that is a matter of form; and if it find that by insisting on the form, the substance will be
defeated, it holds to it to be equitable to allow a person to insist on such substance, and thereby defeat the form-PARKIN V
THOROLD. Equity, unlike common law will not in a contract hold a party strictly to the contractual date for performance if
he is in breach, provided he is ready to complete within a reasonable time thereafter- PARKIN V THOROLD. In equity,
whether an agreement is negative or not depends not simply on the precise language but on the substance of the
agreement. This is important because an injunction is easier to obtain to prevent the breach of a negative covenant in a
contract. A mandatory injunction is more difficult to obtain, especially if damages would be an adequate compensation. In
form, a covenant to take the whole of the electric energy required for his premises from the plaintiff appears to be a
positive covenant but in equity it has been held to translate to an undertaking not to obtain electric energy from any other
person-METROPOLITAN ELECTRIV SUPPLY CO LTD V GINDER. It is by application of this principle that certain interests
will arise even if there is a failure to satisfy the formalities as prescribed by law. An agreement for a lease, where a formal
lease has not be executed can be enforced as an equitable lease. In some cases, implication somewhat overlaps with the
maxim that equity looks on as done which ought to be done.

TITLE: EARLORM v SAUNDERS

FACTS: A father devised land to his wife for her life and the remaindermen to his children. He also asked his executrix to raise
money out of his personal estate with all convenient speed to be paid to his trustees for them to lay out same in purchase of
land or any other security or securities they may think fit. Upon his death, this was done. His wife died soon after and the
estates passed to his children. The first child died, leaving the infant to become the sole remainderman. He also died before
attaining twenty one but made a will of the estates to the plaintiff without mentioning the money raised to be used to
purchase land or any other security or securities.
HOLDING: Lord Hardwicke, Chancellor, held that the infant could not determine the use of the security because he was under
twenty-one and neither could the trustees make such determination without the will expressly saying so. Therefore, the
money raised would be laid out on securities till land is purchased, and the interests and dividends accruing thereto would
go to such persons as would be entitled to the land.

● Equity looks on that as done which ought to be done- equity treats a contract to do a thing as if the thing were
already done. This only applies to persons entitled to enforce the contract specifically and not volunteers- RE ANSTIS .
Therefore a person who enters into possession of land under a specifically enforceable agreement for a lease is regarded as
being in the same position as if the lease had actually been granted to him-WALSH V LONSDALE . An agreement for a lease
is as good as a lease. This however is an equitable lease and therefore subject to all the frailties of an equitable interest.
First, it applies where the contract is capable of being specifically performed. This means that
o The contract must be one made for value

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o There must be a sufficient act of part performance

o No problem of lack of mutuality
o Must not be a contract for personal service, or personal skill or requiring constant supervision by the court
An equitable lease is not good against third parties. Other frailties include: being subject to their priority being postponed under the
doctrine of bona fide purchaser for value without notice, may not be available to a person who has breached an important
provision of the equitable agreement. An equitable lease creates no estate in land but an interest and therefore covenants
which touch and concern the land do not run with the equitable lease upon its assignment. At times a person who wishes to
enforce an equitable lease must do equity by making a concession but no such condition is imposed on a party asserting a
legal claim. Also, delay might defeat an equitable interest.

A wide and general meaning to the principle of WALSH V LONSDALE is therefore misleading. The case of BUSBY V ACQUAH is an
interesting illustration of the nature of equitable interests

● Equity imputes an intention to fulfil an obligation- this is called to aid when a person does an equivocal act. Where a
person is under an obligation to do an act, and he does an act which may be considered as fulfilling another possible
intention, it will be assumed that he prima facie intends to fulfill that obligation. SNOWDEN V SNOWDEN- where a man is
bound to do 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. This is however distinguished from a situation where a debtor owes a number
of debts to a creditor. Section 21 of the limitation decree states that where there exists a number of debts and the
debtor appropriates the sum paid to a particular debt(s), unless there is a contrary intention expressly stated or implied
from the circumstances of their payment shall be deemed to be appropriated parri passu in respect of all the debts which
are not statute barred. If all statute barred, the payment shall be deemed to be appropriated pari passu in respect of all the
statute-barred debts. This however does not defeat the equitable rule that a payment without appropriation is deemed to
be in satisfaction of an existing obligation as found in subsection 2. The payer or the creditor is however free appropriate
which of the debts including statute barred the payment is satisfying.

TITLE: RE LIDDELL’S SETTLEMENT

FACTS: Mrs. Liddell, who was a British subject and the wife of a British subject - both being ordinarily resident in England - took
the infant children of the marriage to the United States and was keeping them there without the consent and against the
will of her husband. Proceedings were thereupon taken in the Chancery Division to enforce the trusts of a settlement
executed by the husband for the benefit of the children, who thereupon became wards of Court; and thereafter an
application was made for an injunction restraining Mrs. Liddell from keeping the infants out of the jurisdiction and
requiring her to bring them to this country. Notice of this was duly served upon her, and eventually an order was made,
directing her to bring the infants to England.
HOLDING: The court held that the making of the order was for the benefit of the infants, who as wards of Court should not be
permanently resident abroad but ought to be brought to this country.

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● Equity acts in personam- equity would not interfere with the property itself as the common law would nor would it
order the sale of a defendant’s property in execution. Equity would only make an order against the defendant personally
and punish him for contempt if he disobeys. The punishment takes the form of attachment or committal for contempt until
he is prepared to comply with court orders. When this proved inadequate, sequestration was developed so that the
defendant’s property would be seized and detained until he obeyed the court. However, this is different from fieri facias as
the goods were not sold. Today because of the fusion of equity and common law jurisdictions, this maxim is of less
significance. A writ of fieri facias can be enforced against a defendant or a person will be nominated to execute a
conveyance for him or on behalf of him with the same legal consequences as if he had executed it himself.

The principle that equity acts in persona, gives jurisdiction to the court over the defendant personally, if the defendant is within the
jurisdiction and the property is situated abroad-PENN V BALTIMORE. These foreign jurisdictions include specific
performance of agreements to mortgage land abroad, rent and account of rents of land abroad if however, the action
involves issues such a title to land situate abroad, the court will have no jurisdiction. No action can be entertained for
trespass to foreign land.

SPECIFIC PERFORMANCE

Specific performance is a decree of the court, in exercise of its equitable jurisdiction, directed at a particular person or persons, to
compel the discharge of an obligation already lawfully undertaken. Refusal to obey the court is deemed as contempt of the court
and would attract punishment. The punishment takes the form of imprisonment until he person is prepared to purge his contempt
by agreeing to do what he has been ordered to do and offering a suitable apology.

In many cases, the payment of damages may be an inadequate compensation where the subject matter is rare or is of a unique
value.

Because specific performance is a remedy in personam, it is available against any person who is within the jurisdiction of the court
even if the contract itself is to be carried out in a foreign country. Although the Ghanaian courts cannot assume jurisdiction in
matters affecting foreign land, yet they may grant specific performance of an agreement to fix boundaries to a foreign land or to re-
convey a mortgaged land where the principal interest and cost have been paid- PENN V BALTIMORE . The essential point is the
defendant should be amenable to the jurisdiction of the court and such jurisdiction may be founded on the mere fact of the
defendant’s presence in the country. For this reason a defense of foreign situs will not lie. However, an order to fix boundaries to
foreign land will not be made, if the boundaries are disputed; for such a dispute must be resolved in an action in rem in the foreign
jurisdiction.

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The remedy of specific performance is subject to all the frailties of equitable rights and remedies. All the rules, principles and
maxims of equity therefore apply. For instance it will not be granted if it will adversely affect the rights of a bona fide purchaser for
value without notice. BUSBY V ACQUAH. Also specific performance will not be granted to a plaintiff who does not come to the court
with clean hands. Therefore specific performance will not be granted to a tenant in breach of an important term of his agreement.

It has been suggested that specific performance is available in Ghana not only as an equitable remedy, but also as a remedy of a
customary law origin. The significance of this preposition is that its grant or refusal will not always be subject to the ordinary rules
of equity. This issue is not free from doubt as there are conflicting court decisions. SOBOTIE V OMABEGHO, LARTEI V FIO --“It does
not follow that every claim which a Ghanaian makes to compel another Ghanaian to fulfill a promise or an agreement is a claim for
specific performance under English principles of equity. Long before the introduction of English law into this country a person could
be compelled by the Council of the Chief to fulfill his promise or comply with the terms of an agreement he enters into with his
neighbour where such compulsion could be effectively carried out. Thus where a person bargains and sells land to his neighbour,
but fails to put him in possession, the elders could compel the vendor to give possession of the land sold to the purchaser, and upon
his default the elders themselves would go upon the land known to belong to the vendor, and out of it demarcate for the purchaser a
portion equal in size to the dimensions agreed between the parties. There is nothing in this case to show that the parties agreed or
must be deemed to have agreed that their obligation in their transaction out of which the suit arose should be governed by
principles of English law.”

The theory behind the equitable remedy of specific performance of an estate contract is that two pieces of land are the same.
Therefore the plaintiff cannot be compelled to accept another piece of land in substitution. The contrary is what Ollennu J proposes
as the remedy of specific performance at customary law. He does not suggest the the elders simply put the plaintiff in possession of
the particular piece of land bargained for. He says that the elders in customary law would go upon the land known to belong to the
vendor and out of it demarcate for the purchaser a portion equal in size and dimensions agreed on by the parties. This is
substitutionary performance and not specific performance. The fact that the substituted land in of equal size and dimensions does
not mean it is of equal value. Furthermore the attachment for contempt which is the weapon of enforcement at equity seems not to
form an integral part of the suggested relied at customary law. When LARTEY V FIO was affirmed by the Supreme Court, the
validity of the substitutionary performance at customary law was not discussed. Ollennu J also did not side any authorities for his
view. It is therefore obvious the issue was inadequately researched. It is therefore submitted that desirable as it may be that specific
performance may be regarded also as a customary law remedy which may be freed from the frailties and constraints of the rules of
equity is of doubtful validity and lacking support in authority.

Contracts specifically enforceable

Before a decree of specific performance must be sought, the party against whom it is sought must have been already bound himself
lawfully to perform the obligation sought to be enforced. The obligation must be one allowed by law. Specific performance will not
be granted of a contract for an illegal or an immoral purpose.

The contract sought to be enforced need not be binding at common law. It is enough that the contract is enforceable at equity. For
example the requirement of writing may make a contract unenforceable at common law but it may be enforceable at equity if there

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is the presence of part performance or fraud or other circumstances justify intervention by equity. There must be an enforceable
contract before a decree of specific performance can be granted-

SHORT V MORRIS

The plaintiff sought specific performance of an agreement relating to the sale of land. He adduced in evidence a document signed,
by the defendant acknowledging receipt of the sum of £97 by way of advance on the purchase price of our joint property at which
they had “agreed to sell to him after agreement on the purchase price which Mr. J. B. Short has put at £850 as against our demand
for the sum of £1,000." It appeared in evidence that the plaintiff subsequently offered, orally, to pay the £1,000 demanded by the
defendant but this was refused by the defendant. HELD – On the evidence, including that of the memorandum adduced by the
plaintiff, no complete agreement was ever reached between plaintiff and defendant. There was thus nothing that could be enforced
by the court as there was no enforceable contract.

Unconscionable transactions

A contract which is oppressive, unfair or otherwise unconscionable will be denied performance even if it is otherwise valid at law.
Such unconscionability and unfairness often arise from the position of the defendant as poor and ignorant. Therefore, an agreement
to purchase a property from a poor and ignorant vendor at a price considerably below the value will not be enforce by specific
performance and may be rescinded.

CAMPBELL SOUP CO V WENTZ

The Campbell Soup Company entered into a written contract with the defendant’s farmers for delivery by the farmers of ‘special red
cored carrots’ exclusively to the company in Camden, New Jersey. This variety of carrots, which the plaintiff company used in large
quantities, was not readily available on the open market. the farmers began selling the carrots to a third party and the company
sued for specific performance of the agreement to sell all the carrots to only the company. HELD: the court refused to grant the
specific performance because the contract on the whole was held to be unconscionable because it was strict since the farmers could
not even sell their carrots to any other unless they are rejected by the company

The need for writing

For a long time, the court of Ghana applied section 4 of the statute of frauds, 1677 which provided that no action shall be brought to
charge the defendant upon any contract or sale of lands unless the agreement upon which such action shall be brought shall be in
writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorized. His has been
superseded by section 2 of the conveyancing decree which is identical in effect.

The provisions of section 3 makes exceptions for transactions which take effect by operation of law, or by operations of equity,
including the doctrine of part performance. Such transactions can be enforced without writing. Since section 2 provides that no
contract….shall be enforceable or no action shall be brought unless there is a signed writing to memorandum of the contract or
agreement, they also exclude an action of specific performance. Therefore unless the transaction is exclusively regulated by the
customary law, it is unenforceable unless it is evidence in writing.

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AKWEI V AGYAPONG

In a suit for declaration of title, recovery of possession and damages for trespass, the defendants, admitting the title of the plaintiff,
pleaded that there is a binding agreement for the sale of the land to the first defendant, and that the defendants were on the land
with the leave and licence of the plaintiff by virtue of the said contract of sale. HELD: a contract for sale under the common law
must, to be enforceable, be evidenced by a note or memorandum. A contract for the sale of land under customary law
is not enforceable unless it is concluded by the offer of drink by the prospective purchaser and the acceptance of it by
the prospective vendor. On the evidence in this case there was not an enforceable contract of sale of land either at
common law or at customary law.

The exception to this is found in section 3(2) which states that the requirement of writing may be dispensed with by invoking the
rules of equity including the rules relating to part performance. SBAITI V SAMARASINGHE. A problem may also arise as to whether
a writing satisfies the statute of frauds or the conveyancing decree-DJAN OWOO.

The defendant entered into an oral agreement to let to the plf an uncompleted premises at an annual rent for use as a school. The
defendant supplied materials for the completion. The def refused to grant possession. Held-though the agreement was never
reduced to writing the evidence showed the essential terms of the agreement and that the plf had performed his part of the
agreement and so the def ought to be compelled to perform her part of the contract

The declared intention of the statute of frauds was to eliminate fraud and perjury by facilitating the proof of the terms of
agreement through the insistence of writing. The unenforceability of unwritten contract was inserted as a compulsive element to
general compliance. The judicial authorities have insisted that the statute of frauds must never be used as an engine of fraud.
Hence, even where the statutory requirement of writing is not satisfied, equity may intervene by invoking the doctrine of part
performance to avoid fraud by one party mechanically relying on the absence of writing.

The doctrine of part performance

This doctrine means that although the formal requirement as to writing has not been compiled with, equity will hold that there is a
binding contract if all the essentials of a contract exist, provided the party who seeks to enforce the contract has performed at least
a part of his obligations under the agreement. The act must have been by the plaintiff. Part performance of the defendant will not
entitle the plaintiff to a decree of specific performance-CATON V CATON. When the plaintiff had performed part of his obligation,
the court deem it fraudulent for the defendant to take advantage of the absence of writing to avoid his obligations after the plaintiff
have altered his position is reliance upon the agreement. The plaintiff must show that the performance of part of his obligation
under the agreement have changed their relative positions as to the subject matter of the agreement.

What will amount to part performance is a bit problematic firstly, it must be shown that the acts relied on where done on the faith
of the contract. It must be referable to a contract such as the one alleged to exist. The traditional approach is that the acts relied
upon must be unequivocally referable to the alleged contract and no other situation

-MADDISON V ALDERSON.

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An intestate induced a woman to serve him as his housekeeper without wages for many years and to give up other prospects of
establishment in life by a verbal promise to make a will leaving her a life estate in land, and afterwards signed a will, not duly
attested, by which he left her the life estate. HELD- there was no contract, and that even if there had been and although the woman
had wholly performed her part by serving till the intestate's death without wages, yet her service was not unequivocally and in its
own nature referable to any contract, and was not such a part performance as to take the case out of the operation of the Statute of
Frauds s. 4; and that she could not maintain an action against the heir for a declaration that she was entitled to a life estate in the
land

Due to this, payment of money had generally not been considered as a sufficient act of part performance. This is because payment
by itself alone is not a sufficient act of part performance. There must be parole evidence to connect the payment with the alleged
statement. However, a receipt for the payment, issued by the vendor or his agent if properly worded, could constitute a written
memorandum under section 2 of the conveyancing decree. Payment of rent in advance, under an oral agreement for a lease, has
been held to be not itself a sufficient act of part performance-THURSBY V ECCLES, but taking possession of the premises is enough-

WALSH V LONSDALE

The plaintiff agreed to take up an offer by the defendant for his mill for seven years. The agreement reached was not in a deed form
as was required and the plaintiff was to pay the rent quarterly. This he started paying till the defendant asked the plaintiff to pay
rent annually. This he couldn’t and the plaintiff issued a distress on the plaintiff. The plaintiff instituted this action claiming that the
distress issued by defendant was illegal and further sought damages and injunction to restrain the defendant from issuing the
distress. Held- despite the defect in the lease, i.e. there was no deed, the court will not look in the formality of the case and would
regard as done which ought to be done. As such the lease was effective

The principle in MADDISON V ALDERSON was adopted in ASARE V ANTWI. However, in DJAN V OWOO, Edusei J held that the
receipts did not satisfy the writing require under section 2(a) of the conveyancing decree because the purchase price was omitted.

In England there has been a clear development to accept part payment as a sufficient act of part performance- STEADMAN V
STEADMAN. The basis of the decision was that the equity court would intervene to relieve against a lack of writing is if there is a
presence of fraud. That is if after part payment, the payer could not be restored to the status quo ante. Therefore, if the payee
tenders repayment of the money he has received and is able to make restitution in integrim there would be no fraud and equity will
not intervene.

In the light of current situation DJAN V OWOO is good law. If, when viewed in the light of the circumstances, the part payment of
money is evidence of the alleged contract, it may amount to part performance of the contract.

The application of the test that the acts of part performance must be unequivocally refereable to only the alleged contract can lead
to injustice. It is submitted by Kludze that the test is no longer desirable.

WAKENHAM V MACKENZIE

After his wife's death, the deceased, orally agreed with plaintiff, that if she would move into his house, and look after it and him for
the rest of his life, she should have the house (which he owned) and contents when he died. It was a term of the agreement that she

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should pay for her own board and coal. Plaintiff gave up her flat and moved to the deceased’s house. She looked after it and him
until he died, and she paid for her board and coal. The deceased died but did not leave the house or contents to plaintiff. The
plaintiff sued for specific performance. Held- the giving up of plaintiff's flat in order to make her home at deceased’s house, her
moving into that house, her acts in looking after deceased and the house and in paying for her board and coal were acts of part
performance which must be referred to some contract, and were referable to the contract that she alleged; accordingly the court
would decree specific performance of the oral contract by B with plaintiff that she should have his house and contents after his
death

There are two distinct theories which explain the equitable doctrine that the absence of writing in a contract relating to land may
be excuse by part performance

● The act of part performance is itself a sufficient evidence of pf the contract, which evidence the writing would have
provided, so that there is no need for writing to be insisted upon. This view prevailed in MADDISON V ALDERSON
● The act of part performance creates an equity in the party who has part performed the contract so that the even in the
absence of writing, he is entitled to have a decree of specific performance in satisfaction to enforce the other party’s
undertaking. It seems this is the theory that prevails todays and lies at the basis of the decision in WAKEHAM V
MACKENZIE

The subject-matter of specific performance

Traditionally the remedy of specific performance was available only in cases of contracts for the sale of land. However, specific
performance is no longer restricted to contracts relating to land or interests in land. The remedy will be granted in any case in
which the court is satisfied that the award of damages is inadequate and it is just to do so. Also, if the offer or another land or goods
of similar nature is inadequate. The jurisdiction was first extended to cover unique chattels or articles of intrinsic value. Section 58
of the sale of goods act gives effect to this. This provision has hardly been invoked in any litigation in Ghana.

The proposition has often been stated that in a contract affecting land, specific performance is available almost as a matter of
course. There is however no sufficient justification for this rule as the rationale of specific performance is that the subject matter of
the contract is so unique and rare that the damages at law would not amount to sufficient compensation for failure to perform. In
modern times there are existing interests in property which are so similar that it is difficult to distinguish them. Some American
courts have refused to decree specific performance in estate contracts because of the determination that in their particular
circumstances there was nothing unique about them. CENTEX HOME CORPORATION V BOAG. Kludze feels the court’s reasoning in
this case is sound and should be followed by the Ghanaian courts. The presumed uniqueness of land must remain only a rebuttable
presumption. For example an intending purchaser of land who has entered into a contract to re-sell and has manifested his
intention to do so is not interested in the intrinsic value of the property but the profit he hopes to make with his investment. This can
easily be assessed by considering factors such as the difference between the sale price and the agreed re-sale price, less the expenses
of re-selling. If there is no firm re-sale price, the market value of the re-sale market may be used for assessing the loss to the
purchaser.

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In such cases a decree of specific performance may be award so as to prevent the new buyer from instituting an action against the
current purchaser. There is not support for this principle other than the uniqueness of land. If the purchaser is unable to obtain title
from his vendor, he cannot be liable to damages under the re-sale contract. The new buyer ought to know from the nature of the
transaction, searches or from an examination of the abstract of title that the re-sale contract is a conditional one. The express or
implied condition being the acquisition of title from the vendor. It is therefore submitted that the original sale need not be
specifically performed. HAZELTON V MILLER

Another issue for the court’s to examine is the vendor’s right to specific performance in an estate contract or whether the matter is
admittedly unique. However unique the land, property or goods is the vendor is only interested in the purchase price. Money is not
unique. Breach of such contract would result in pecuniary loss and pecuniary losses can be assessed. The only reason a court may
decree an order of specific performance in favor of the vendor is the doctrine of mutuality. The doctrine of mutuality means that the
equity will not enforce specifically enforce an agreement unless the remedy was available for both parties. The doctrine of
mutuality has however withered away with time along with the availability of specific performance to the vendor. In the event of a
breach of contract, the vendor must resell the property and if it at a loss, damages would be the difference in price plus the expenses
of the re-sale. If there was no loss, there may be no justification for the award of damages. If there is a special case in which the
vendor will suffer an economic injury for which damages at law will not be adequate, he may upon proof of such special
circumstances be entitled to specific performance. The burden of proof lies on the vendor and is a heavy one without the invocation
of the doctrine of mutuality.

Mutuality

It has been the rule that specific performance would not be granted if there is lack of mutuality. If one party is entitled to the
remedy of specific performance but the other is not there is said to be a ‘want of mutuality’ and this is generally a bar to the
granting of the relief. This applies to an infant so that a relief of specific performance would not be granted even if the infant has
discharged his obligation under the agreement-FLIGHT V BOLLAND. Similarly a vendor with no valid title in the subject matter
cannot obtain a decree of specific performance in his favor because a similar remedy cannot be obtained against him because he
cannot be compelled to do what he cannot do which is to convey a title he does not have-ELLIOT AND H. ELLIOT (BUILDERS) LTD V
PEARSON. In the same instance a contract to sublet when one has no right to do so cannot be specifically performed in the
occurrence of a breach. Recent development in this area indicates a clear change in judicial attitude towards the doctrine of
mutuality.

The rule of mutuality have been criticized mainly because the mutuality must exist at the time of the contract. Maitland believes
that the rule as a defense to specific performance cannot stand examination. He explains that whereby an infant commences such
action he thereby makes the remedy mutual. He also argues that even if he vendor did not have the title at the time of the contract
of sale the decree will be available if the vendor had title at the time of completion. This criticism by Maitland is difficult to support
as he impliedly supports the doctrine of mutuality by saying that the bar can be removed and mutuality obtained when an infant
initiates action or a vendor subsequently acquire title.

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Ames is also a critic of this doctrine and has pointed out that there are so many exceptions to this doctrine that its general
application is not valid. He proposes that ‘equity will not compel specific performance by a defendant if, after performance, the
common law remedy of damages would be his sole security for the performance of the plaintiff under the contract. There is also a
condition of mutuality here but this preposition relates to the time of the performance of the contract. It is submitted this is a
preferred view as it would work justice for both parties, especially in cases where the vendor had the capacity to perform at the
time the contract was made but may have lost such capacity at the time the relief is sought.

The above prepositions only attack the time the mutuality is assessed. However such prepositions are unsatisfactory as there are
many cases where the invocation of the doctrine of mutuality is unnecessary. A recent Ghanaian case appear to re-examine the
doctrine as a prerequisite to the granting of specific performance-LARTEY V BANNERMAN. Amissah JA mindful of the criticism of
the rule on the need for mutuality commented that the rule was indeed criticized and even though it may not satisfy academic and
textbook writers, the primary role of the court was to do justice as between the parties that come before them and if the principle is
of application the relevant case, then it ought to be applied until a better and more just one is found. Kludze vehemently disagrees
with this statement and points out that the rule that a married woman cannot obtain specific performance until she is emancipated
had changed and sees no justification for the retention of the rule in respect of infants. Furthermore, the primary role of textbook
writers is to assist the courts to complete justice and where a rule has outlived its usefulness, the judges sitting in ratified
atmosphere of the court room may be assisted by the opinion of such writers to take cognizance of the changing values of the
society.

The opinion of Amissah J A and the majority opinion was that if the infant had his side of the contract, the decree of specific
performance ought to be permissible as the other party does not suffer any prejudice because of it. This opinion was obiter dicta as
it was submitted that the father was the right plaintiff and not the infant.

In the particular case of the infant, the doctrine of mutuality does great injustice to those who contract with him. The injustice may
be removed by attacking the immunity which an infant presently enjoys against specific performance. The immunity is based on the
supposition that every infant lacks good judgement and need protection. This proposition cannot be justified. The same use to be
thought of married woman but not anymore. It is advised that the same be applied to infants. If an infant’s contract is not vitiated
by fraud, undue influence or other factors attributable to infancy, it should be possible to enforce it against the infant by the decree
of specific performance.

In the case of other instances of incapacity, the test of mutuality should be preferably at the time the cause of action accrues or
possible at the time the contract was made. Whichever time is to apply must depend on the facts of the case.

In England also, the doctrine of mutuality has been rejected-

PRICE V STRANGE

The plaintiff entered into an oral contract with the defendant that the plaintiff should execute works of repair to the defendant’s
property in return for a lease / the plaintiff completed half of the work but the defendant refused to allow him to continue and
repudiated the agreement. the plaintiff brought an action for specific performance for the lease or damages. The trail judge refused
to grant the specific performance on the grounds that the contract was not capable of mutual enforcement. HELD: where the

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remedy of specific performance for breach of contract was sought the mutual availability of that remedy had to be considered in
relation to the facts and circumstances existing at the time of hearing and not the date of contract that, although the plaintiff had
not carried out all the works of repair, specific performance was in the circumstances the proper remedy with the defendant being
recompensed by financial adjustment for the work carried out by her

It is submitted that the doctrine of mutuality be abolished in Ghana as regards to an infant and the disability of lack of title at the
time of the contract.

Damages inadequate

Specific performance will only be granted in cases where damages would be inadequate-DOMINION COAL CO LTD V DOMINION
IRON AND STEEL CO. In cases where damages are adequate, equity which follows the law will not grant an additional or
alternative relief.

Specific performance are usually not granted for movables because they can be obtained on the open market and there damages
would be adequate. However, specific performance will be granted for movables of special value. For example, it may be granted
because of the rarity of the article, its sentimental or intrinsic value, its singular beauty, antiquity or uniqueness-FALKCE V GRAY

The sale of goods act seems to broaden the scope by stating that specific performance would be granted for the sale of specific or
ascertained goods.

Liquidated damages- a provision in a contract for the payment of a specific sum of money as liquidated damages in the event of
default by a party may raise problems as to whether specific performance may be appropriate. The insertion of such position
presumes that the parties have agreed that damages would be adequate in the event of breach and so specific performance would
be inappropriate.

However, in most cases the provision for liquidated damages are not a bar to a grant of specific performance. For such a clause to
constitute a bar, it must be clear that the liquidated damages provision is the sole and exclusive remedy, or that it constitutes
another contract. The provision of liquidated damages without more, does not create alternative rights in the promisor to perform
his promise or pay the liquidated damages as the price for non-performance. This is because the primary object of the contract to
perform the act promised and not nonperformance. Liquidated damages are usually inserted to induce performance of the contract
by making delays and default unprofitable and unattractive.

Courts generally favor liquidated damages clause, especially if it is fair and not penal in nature. This is because it minimizes
litigations and avoids a prolonged litigation as to the quantum of damages to be sought.

Specific performance would only be precluded if the liquidates damages serve as an alternative to performance. Such intention
must be clear

Misdescription

Misdescription of the goods or the land subject to the contract may give rise to certain consequences. Specific performance may be
granted and damages awarded in compensation. It may also be refused depending on the nature of the misdescription.

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If the misdescription is substantial, it vitiates the whole contract which therefore cannot be specifically performed. In essence, there
is no contract to be performed. BRITISH BATA SHOE CO LTD V ROURA &FORGAS LTD specific performance may be successfully
resisted even if the contract contained a provision that errors would not invalidate the contract- RE ARNOLD, ARNORLD V ARNOLD
or that a misdescritption would give rise to damages-JACOBS V REVELL. The principle is that a purchaser cannot be compelled to
take something which is different in substance from that which he bargained for- FLIGHT V BOOTH.

The plaintiff entered into a leasehold agreement with the defendant. the particulars of sale prohibited the use of the premises for
any offensive trade. However, when the lease was drafted, it pohibted the use of the premises for certain businesses which was not
offensive but was to be used by the plaintiff for such purpose. The plaintiff sued to rescind the contract but the defendant
counterclaimed for specific performance of the agreement. HELD- there was such a material discrepancy between the particulars
and the lease, as to entitle a purchaser to rescind his contract

However, if the misdescription is substantial the purchaser can insist on conveyance to him with an abatement in the price. The
purchaser cannot exercise this choice if he knew or ought to have known of the misdescription at the time of purchase or ought to
have known from available information. Specific performance would not be granted if such a partial performance would be unjust
or would cause hardship.

If the misdescription is a minor one, the court may grant specific performance as held in MCQUEEN V FARQUHAR. The
discrepance can be compensated in damages. There may be in such a case, abatement in price or other adjustment of the
consideration, to do justice to the parties.

The above rules are however subject to the stipulations in the contract and may be ousted

Volunteers

It is a fundamental rule that equity will not assist a volunteer. This means that the person should have given consideration. This is
because specific performance enforces a valid contract and consideration is an essential of a valid contract.

However, at law a contract which is under seal is an enforceable contract and it is not necessary that it be supported by
consideration. In such a case, equity would not interfere because he is seen in its eyes as a volunteer.

By section 40(2) of the conveyancing decree, contracts are no longer required to be sealed in Ghana. Sealed contracts not
supported by consideration are rare.

Illegal and immoral contracts

When the contract is illegal or immoral it is not capable of being specifically performed or enforceable-

EWING V OSBALDISTON

It was the law that no play could lawfully be acted for hire, gain or reward within twenty miles of London, without the authority of
letters patent from the Lord Chamberlain. The parties, however, agreed to enter into a partnership in acting plays at a theatre
within twenty miles of London, but without the requisite legal authority. The plaintiff sought to enforce the agreement for the

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partnership. HELD: The court refused to grant the specific performance because it was held that the agreement was illegal since it
contravened the law in place at that time.

Even if the contract is legal in the country where it is made, the courts of Ghana will not grant specific performance if it is immoral
or contrary to the laws of Ghana-HOPE V HOPE for this reason the courts have refused to grant specific performance of an
agreement between a man and his wife for a future separation, unless the couple had been separated and the agreement is part of a
contract of reconciliation-

RE HOPE JOHNSTONE

By a post-nuptial settlement the husband assigned certain leaseholds to trustees upon trust to pay the rents to his wife for life, or so
long as she should continue to be his wife, for her separate use, and upon the determination of the trust in favour of the wife the
husband took an interest in the settled property. Some years after the date of the settlement the husband and wife separated by
mutual consent, and they had not since cohabited. The wife sued for specific performance. HELD - the restriction of the wife's
enjoyment of the rents to the period of cohabitation was not void as against the policy of the law, and that the trust in her favour
determined upon her ceasing to live with her husband.

Contract requiring supervision

The principle is well established that a court would not grant specific performance to a contract which requires constant
supervision of the court- RYAN v MUTUAL TONTINE WESTMINSTER CHAMBERS ASSOCIATION. For this reason specific
performance is not granted in respect of building contracts to repair or work a coal mine. An exception to this rule is that specific
performance may be granted of a building contract in a case where the nature and specifications of the building are with sufficient
precision stipulated in the agreement- WOLVERHAMPTON COOPORATION V EMMONS. The rationale for this rule is that equity
does nothing in vain. Equity will not issue a decree if it is not in the position to enforce it-

BALAGUN V EDUSEI.

The then Mininster of Interior of Ghana and the COP deported certain persons who had applied for the writ of habeas corpus to
contest the legality of their arrests prior to deportation. The applicants were nevertheless deported before the determination of the
suit contrary to the orders of the court. the court found the actions of the minister to be contempt. The Government however passed
a law which indemnify the actions of the contemnors. The issue was whether the court will still find them liable for contempt.
HELD- The trial judge held, without much choice that it cannot find the two liable because the court will not make an order which
was incapable of being carried out through the passage of the law.

Contracts of personal service and personal skill

Until recently, it was a settled principle that the courts would not order specific performance of contracts of personal service and
those involving the use or application of personal skill. This was based on grounds of public policy being that it would be improper
to compel one man to serve another man against his will-DE FRANCESCO V BARNUM . Equity leans against contracts of servitude
regardless of public policy considerations. For the same reason, an employer cannot be compelled by equity to keep a servant and
the proper remedy for wrongful dismissal is damages.-

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PAGE ONE RECORDS LTD V BRITTON.

The plaintiffs, as managers and publishers of a “pop group,” sought an interlocutory injunction to restrain the group from engaging
another as their manager in breach of contract and from publishing music performed by them otherwise than through that
publisher. The plaintiffs also sought an injunction against H.B. Ltd., restraining it from inducing the group to break their contracts.
HELD - the injunction would not be granted, first, because the performance of the duties imposed on the plaintiffs could not be
enforced at the instance of the defendants, and, second, because enforcement of the negative covenants would be equivalent to
ordering specific performance of this contract of personal services by the plaintiffs on pain of the group remaining idle and it would
be wrong to put pressure on the defendants to continue to employ in the fiduciary capacity of a manager and agent someone in
whom they had lost confidence.

The principle of mutuality is involved here.

Akin to contracts of person service are contracts which by their nature require the use or application of a personal skill. Such
contracts cannot be specifically performed because the court cannot supervise the application of the personal skill. In theory the
courts can compel that an actor be present on stage at a particular place or time but has not control that he uses his personal skill
and competence in his performance.

Both situations of contracts of service and of personal skill are illustrated in the case of LUMLEY V WAGNER.

Another explanation for the reluctance of the courts to grant specific performance is that the breach can be adequately compensate
by the award of pecuniary damages.

The principle has, however been rejected in its old from in recent decisions. The validity of such principle was questioned by
Megarry J in CH GILES & CO LTD V MORRIS. In the earlier case of HILL V C A PARSONS & CO LTD, the court granted an
injunction restraining an employer from unlawfully terminating the employment of the plaintiff engineer. The effect of the
injunctive relief was tantamount to an order of specific performance of a contract of service, since the employee could not be
dismissed.

It is against the background of these cases that the case OWUSU-AFRIYIE V STATE HOTELS CORPORATION granted the relief of
specific performance to the plaintiff. The decision is directed at affording a protection to employees who become victims of wrongful
dismissals to satisfy the idiosyncrasies of unscrupulous employers and officials in responsible positions. It was stated by Hayfron-
Benjamin that the courts have undoubted jurisdiction to order specific performance of a contract of engagement. It is not clear
whether this jurisdiction is exercisable by the inferior courts. Under paragraph 38(2) of the then labor decree 1967, the district
court may direct fulfilment of a contract. It is not clear whether this implies a decree of specific performance as it may also mean
that the party in breach be made to pay pecuniary damages.

The jurisdiction has been constantly declined by the courts. Where a court sets on reversing a longstanding principle of law, the
right of reversal must be supported by a reasoned argument. If the jurisdiction is ‘undoubted’, is it conferred by statute or inherent?
It is submitted that this decision cannot be deemed to have reversed the rule so entrenched by the long line of decisions.

RIDGE V BALDWIN

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In the cases of VINE V NATIONAL DOCK LABOUR BOARD and BANK OF GHANA V NYARKO, Hayfron-Benjamin’s decision was
reversed by the court of appeal.

Hayfron’s argument of dispensing with the doctrine was that an order of specific performance does in no way suggest slavery for
the court merely assists the employee to assert his contractual rights. This argument is superficial and does not dispose of the
doctrinal difficulties. Hayfron did not consider in his argument the remedy of specific performance has generally been held to be not
available when there is a want of mutuality-FLIGHT V BOLLAND. If a decree of specific performance can made against the master
to keep his servant it suffices to say that there must also be a decree of specific performance ordered against the servant to remain
in the service of the master. It is this absurdity that the law seeks to avoid for a servant may be enforced to remain in the master’s
employ even though he may not wish to do so and may have better prospects elsewhere. However the recent objection to mutuality
may suggest that specific performance may be granted against an employer to retain his employee but not vice versa.

In some American jurisdictions, particularly where the employer is a public institution, the courts have been willing to decree
specific performance of contracts of service- ENDRESS V BROOKDALE COMMUNITY

Money-lending agreements

As a general rule, equity will not enforce an agreement to lend money-SICHEL V MOSENTHAL. The apparent explanation for the
rule is that a decree of specific performance to lend or borrow money would be difficult to enforce and in most cases would cause
hardship. However, if the money has been advanced against the promise of a mortgage, equity will enforce specifically the
agreement to create the legal mortgage-TEBB V HODGE. The borrower would be regarded in such a case as an equitable mortgagee
of property against the security of which he advanced the loan. Because equity looks on as done what ought to be done, once the
money has been advanced against the promise of a mortgage, an equitable mortgage arises. It would amount to fraud on the part
of the debtor if he refuses to advance the mortgage as promised after money has been advanced.

The rule that equity will not specifically enforce a money-lending agreement may require re-examination. Where an individual has
substantial funds and is known to be wealthy, less hardship will be caused to him by requiring him to advance the money he has
agreed to lend, than by protecting him against the impecunious person seeking a small loan. He person seeking the loan may
require it badly and great harm may befall the person if it is not forthcoming. In this case, justice will be done to the borrower if
specific performance is ordered. There may be problems with this. However it is submitted that in cases where the refusal to honor
the agreement is demonstrably unreasonable, the court should intervene to decree specific performance especially in the cases of
banking institutions and big commercial establishments where no great difficulty would be encountered in ordering them to carry
out their agreement.

There may be compelling circumstances in which a money-lending agreement should be enforced by specific performance against
the lender. VANDEVENTER V DALE CONSTRUCTION COMPANY, COLUMBUS V SIMONS

It is often argued that a money-lending agreement should not be enforced by specific performance because money is not unique and
can be obtained elsewhere. Where obtained at a higher rate, the difference can be assessed as damages. However, the time spent by
the borrower looking elsewhere can have damaging consequences for the project for which the loan is required, alternative sources

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may not always be available and lastly, the refusal of the loan can decrease the credit worthiness of the borrower causing other
lenders to shy away.

The principle of mutuality also applies here in the sense that if the borrower is unable to obtain a decree of specific performance to
enforce an agreement to loan money then a lender cannot obtain specific performance to compel a borrower to accept the loan.
However, today it is submitted that the lack of mutuality is not a bar to specific performance.

No specific performance of part of the contract

As a rule, the court will not split a contract so as to grant specific performance of a part only, unless the contract as a whole is
specifically performable. Therefore, is The agreement covers several matters of which some are specifically enforceable but the
others are not, the general rules is that specific performance will be refused of even those part which are specifically enforceable
unless they are severable-OGDEN V FOSSICK. The only condition in which the court may grant specific performance of a part of a
contract is where the part to be specifically performed is separate and distinct and independt pf the unenforceable part. In
WILKINSON V CLEMENTS, the building agreement provided for piecemeal leases to the builder as he completed the building on
each plot. On the completion on one plot, specific performace was granted of the lease of that plot, though the rest had not been
completed.

Where a part of the agreement is unenforceable because it is tainted with illegality, specific performance will not normally be
granted of the lawful parts unless such parts are distinct and independent and can be severed. Specific performance can also be
granted of only the lawful parts when severed, if such severance was contemplated by the parties. ODESSA TRAMWAYS CO V
MENDEL

Specific performance a discretionary remedy

Specific performance is a discretionary remedy. They are no cases stating that it is decreed as of right. It is crystallized almost into a
rule that the plaintiff in the case of a contract to convey or create an interest in land will as a matter of course obtain a decree of
specific performance in his favor. Still, it is discretionary. There are a variety of reasons the court will refuse the decree. This does
not mean that its grant is arbitrary. It is subject to judicial discretion which must be exercised according to fixed rules and
principles, and matters taken into consideration must include the hardship to the defendant.

The conduct of the plaintiff may induce the court to exercise its discretion in refusing the grant a decree of specific performance
where it would otherwise to be available. He who comes to equity must come with clean hands. Thus a decree of specific
performance would not be granted if it is shown that the plaintiff has not performed all of his obligations under the contract or was
willing and ready to perform them-LEMARE V DIXON. It would be refused if the applicant is in breach of the covenants. The breach
must not be trivial but relate to an important provision of the agreement, in order to entitle the plaintiff to a decree of specific
performance. Other conducts have an effect on the grant of the decree are delay or laches. Time is not of essence in equity so that a
reasonable time after the contractual date will suffice but unreasonable delay would cause an application of specific performance
be refused.

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Equity intervenes only to do justice and so it will refuse to decree specific performance if it will cause unnecessary hardship to either
of the parties. For example where the subject matter of the contract is also the subject for a dispute in title-PEGLER V WHITE

No specific performance against the republic

Although generally, the liability of the republic in contract and tort is now the same as that of a private person . Specific
performance can be granted against the state by virtue of section 13 which states that:

In civil proceedings by or against the Republic, the Court may make the orders which it has power to
make in proceedings between private persons and may give the relief that the case requires.

RESCISSION

Strictly speaking, rescission is not a judicial remedy but the act of the party entitled so to do. But since the parties usually seek the
assistance of the courts detailed rules have been developed, particularly in regard to the restitution of property. Rescission develops
as an equitable remedy since only a court of equity could order accounts and make arrangements for deterioration in property
ancillary to restitution. When a party to a transaction rescinds, he exercises a right to set the transaction aside and to be
restored to his previous position. Once a party rescinds he is entitled to recover and bound to restore property which he may
have acquired under the contract. The right to rescind is not assignable. A contract liable to rescission remains valid until it is
actually rescinded. If in the meantime third parties acquire rights thereunder, this will bar the right to rescission and restitution of
property. However, the illegality of a contract may prevent the restitution of property. –Gascoigne v. Gascoigne (1918) 1 K.B. 223 . A
purchaser may repudiate a contract on grounds of a defect in the vendor’s title. In such circumstances the vendor is unable to
obtain specific performance although he may recover damages if he obtained title prior to the date fixed for completion. Once a
contract is rescinded the plaintiff /victim is restored to the position he occupied prior to the contract. Consequently,
depending on the circumstances of the case, all rights acquired under the transaction including rights to property, possession and
moneys must be returned or given up. Accounts are then taken of profits and depreciation but no damages are recoverable-
Redgrave v. Hurd

Grounds for rescission

A contract may be rescinded for mis-description, mistake, fraud (including constructive fraud) and misrepresentation (both
fraudulent and innocent). Under constructive fraud, gifts obtained by undue influence as well as unconscionable bargains may be
set aside. Contracts uberrimae fidei, including contracts of insurance and family arrangements, may be set aside if full disclosures
were not made to the other party.

The right of rescission may be lost by acquiescence, by the impossibility of restitution in intergrum and by the intervention of
third parties. If a party elects to waive rescission and affirms the contract after notice of the act giving right to rescission, he loses

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the right to rescission, but the facts giving rise to rescission must be fully known by him. Repudiation of a contract is impossible once
third parties have acquired rights for value-OAKES V. TURQUAND. The same result is not achieved if the third party claimants are
volunteers who did not acquire for value. Also a vendor may forfeit and retain any deposit paid under the contract, recovering any
unpaid part of the deposit by way of a claim for damages-DAMON COMPANIA NAVIERA S.A. V. HAPAG LLOYD INTERNATIONAL S. A.

ERLANGER V. NEW SOMBRERO PHOSPHATE CO

A company bought and worked a phosphate mine but did not so work it as to make restitution impossible. It was held that the
company could rescind the sale on grounds of breach of fiduciary duty by one of its promoters on terms of returning the mine and
accounting for the profits.

COOPER V. PHIBBS

A agreed to take a lease of a salmon fishery from B, both parties believing that the fishery was the property of B. It was
subsequently discovered that A was actually the owner of het fishery. The contract was set aside in equity on the ground that it was
legally incapable of performance since A was already the owner of the property. The court applied the principle that if the parties
contract under a common mistake or misapprehension as to their respective and relative rights, the result is that the contract is
liable to be set aside as having proceeded on a common mistake. The House of Lords in granting the order of rescission also ordered
that the respondents should have a lien on the fishery for the money which they had spent on improving the property.

SOLLE V. BUTCHER

After making certain structural alterations to a flat, the defendant let it out to the plaintiff for seven years at a rent of 250 pounds
per year. Both parties believed at the time of the letting that the alterations had so altered the identify of the flat as to make it a
new dwelling house, and so released it from the controlled rent imposed by the Rents Acts. In fact this was not the case, and the
plaintiff brought the action against the defendant claiming the rent he had overpaid since the controlled rent of the flat was 140
pounds. The defendant counterclaimed, alleging that he was entitled to eject the lessee as the lease had been entered into under a
common mistake and was therefore void.

The Court of Appeal held that although there was a mistake as to the identity of the flat and this was in the social context a mistake
on a matter of considerable importance, nevertheless the lease was not void at common law. The mistake could be a ground for
relief in equity, even though it did not render the contract a nullity from the beginning. Lord Denning stated:

A contract is also liable in equity to be set aside if the parties were under a common misapprehension either as to the facts or as to
their relative and respective rights, provided the misapprehension was fundamental and that the party seeking to set it aside is not
himself at fault.

JAPAN MOTORS TRADING CO. LTD V. RANDOLPH MOTORS LTD

The plaintiffs entered into an agreement to sell their motor workshop to one J.K.R. Subsequently, J.K.R. floated the defendant as a
limited liability company and a new agreement was entered into between the plaintiffs and the defendants on the same terms as

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between the plaintiffs and J.K.R. The plaintiffs brought an action to recover the outstanding sale price. The defendants resisted and
contended that their earlier agreement with J.K.R. did not bind them.

The court held that the parties themselves agreed to substitute the subsequent agreement for the previous one. Thus with the
consent of all the parties, the transaction in the previous agreement was incorporated in the new one and the defendants were
substituted for J.K.R., thereby discharging him from his obligation under the agreement. It was a kind of novation since it was
clearly the intention of the parties that eth liability of J.K.R. under the original agreement to the plaintiffs was to be discharged in
consideration of the defendants performing the same obligation in favour of the plaintiffs. The only transaction which was,
therefore, binding on the parties was the one contained in the subsequent agreement.

ALLCARD V. SKINNER

The plaintiff, an unmarried woman of 27 years, became a member of a Church of England Sisterhood. While a sister and without
independent advice, she made gifts of money and stock to the Sisterhood. She left the sisterhood in 1879 and 5 years later, she
claimed the return of the gifts on the ground that they were voidable by reason of undue influence.

The court held that at the time of the gift the plaintiff was a professed sister and as such was bound in absolute submission to the
defendant as a superior of the sisterhood She had no power to obtain independent advice and she was in such a position that she
could not exercise her own will as to the disposable of her property. It was held therefore that the gifts were voidable by reason of
undue influence, but the plaintiff was not entitled to recover by reason of her delay and conduct after leaving the sisterhood. Since
undue influence renders a contract voidable, there can be no rescission for undue influence after the affirmation of the contract, or
after a third party acquires rights in the subject matter without notice of the facts.

DERRY V. PEEK

A company obtained permission to run trams by animal power. They applied for permission to run the trams by steam or
mechanical power if the consent of the Board of Trade could be obtained. The Directors of the company believed that the Board
would give its consent as a matter of course since they had already submitted their plans to the Board and not objection had yet
been made. The Directors therefore issued a prospectus saying that the company had the right to run trams by steam or mechanical
power. The respondents purchased shares in the company in reliance on this representation. The Board of Trade refused to give
their consent and the company was wound up. The respondents sued for rescission of the contract based on fraudulent
misrepresentation or deceit.

The court held that to succeed, the plaintiff had to prove fraud and that the element of fraud had not been established here since the
plaintiff had not shown the absence of an honest belief on the part of the Directors in the truth of the statement they made. The
facts showed that the Directors honestly believed that the statement they made was true , since they had sufficient ground to believe
that the permission would be granted.

Rescission

Rescission is the remedy by which one party to a transaction may set aside that transaction. The transaction may be and often is a
contract but rescission may also be available in other cases including settelemnets, giftes and other unilateral transactions. The

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general effect of rescission is that it restores the parties as far as practicable to their former positions prior to that transaction as if
to all intent and purposes the transaction never took place. By this reason rescission is normally accompanied by restitution and is
as a rule subject to the availability of restitution.

Strictly speaking, rescission is not a judicial remedy but the act of the party entitled so to do. But since the parties usually seek the
assistance of the courts detailed rules have been developed, particularly in regard to the restitution of property.

Rescission developed as an equitable remedy since only a court of equity could order accounts and make arrangements for
deterioration in property ancillary to restitution.1When a party to a transaction rescinds, he exercises a right to set the transaction
aside and to be restored to his previous position. Once a party rescinds he is entitled to recover his money or property and bound to
restore property which he may have acquired under the contract. The right to rescind is not assignable. A contract liable to
rescission remains valid until it is actually rescinded. If in the meantime third parties acquire rights thereunder, this will bar the
right to rescission and restitution of property.2However, the illegality of a contract may prevent the restitution of property. 3A
purchaser may repudiate a contract on grounds of a defect in the vendor’s title. In such circumstances the vendor is unable to
obtain specific performance although he may recover damages if he obtained title prior to the date fixed for completion. 4Once a
contract is rescinded the plaintiff/victim is restored to the position he occupied prior to the contract. Consequently, depending on
the circumstances of the case, all rights acquired under the transaction including rights to property, possession and moneys must be
returned or given up. Accounts are then taken of profits and depreciation but no damages are recoverable. 5

Grounds for rescission

A contract may be rescinded for misdescription, mistake, fraud (including constructive fraud) and misrepresentation (both
fraudulent and innocent). Under constructive fraud gifts obtained by undue influence as well as unconscionable bargains may be set
aside. Contracts uberrimae fidei, including contracts of insurance and family arrangements, may be set aside if full disclosures were
not made to the other party.

DEFENCES AGAINST RESCISSION (How is the right of rescission lost)

A claim for rescission may be defeated by the defence of

i. That the plaintiff has acquiesced in the situation

ii. by the impossibility of restitutio in intergrum and

1 Erlanger v. New Sombrero Phosphate Co. (1878) 3 App. Cas. 1218.

2
3 Gascoigne v. Gascoigne (1918) 1 K.B. 223.
4 Halkett v. Earl of Dudley (1907) 1 Ch. 590.
5 Redgrave v. Hurd (1881) 20 Ch.D. 1.

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iii. by the intervention of third parties.

iv. If a party elects to waive rescission and affirms the contract, after notice of the act giving right to rescission, he loses
the right to rescission, but the facts giving rise to rescission must be fully known by him. 6Repudiation of a contract is
impossible once third parties have acquired rights for value. 7The same result is not achieved if the third party
claimants are volunteers who did not acquire for value. 8Also a vendor may forfeit and retain any deposit paid under
the contract, recovering any unpaid part of the deposit by way of a claim for damages. 9

Relief from forfeiture clauses

Equity also offered relief to parties to written agreements. In a limited number of cases where the primary purpose of a provision
for forfeiture in an agreement is to help secure an expressed result equity will grant relief against forfeiture. 10The wilfulness and
general conduct of the defendant/applicant are both taken into account as well as the gravity of the breach and disparity in value
between the forfeited property and the actual damage caused by the breach. 11Generally speaking equity grants relief where in
substance the forfeiture was only a security for the payment of money. 12

In the case of forfeiture of leases, where the lease has a proviso for re-entry, equity would offer relief against the non-payment of
rent even after the landlord has re-entered peaceably with the aid of the court 13as the proviso is regarded simply as a security for
the payment of rent.14The court will not exercise such a jurisdiction where the breach is merely threatened, particularly in cases
where court proceedings have not commenced and the landlord had not taken possession. 15By the principle in the Barton
Thompson Case the jurisdiction may also extend to the hiring of chattels. Equitable relief against forfeiture occurs only rarely. 16

6 Peyman v. Lanjani (1985) Ch. 457.

7 Oakes v. Turquand (1867) L.R. 2 H.L. 325.
8 Re Eastgate (1905) 1 K.B. 465; Tilley v. Bowman Ltd. (1910) 1 K.B. 745.
9 Damon Compania Naviera S.A. v. Hapag Lloyd International S.A. (1985) 1 W.L.R. 435.
10 Shiloh Spinners Ltd. v. Harding (1973 A.C. 691.
11 The Vainqueur Jose (1979) Lloyd’s Rep. 557 at 579 and Shiloh Spinners Ltd. v. Harding (supra).
12 Hill v. Barclay (1811) 18 Ves. 56 and Scandnavian Trading Tanker Co. A.B. v. Flota Petrolera Ecuatoriana (1983) 2 A.C. 694.
13 Howard v. Fanshawe (1895) 2 Ch. 581.
14 Howard v. Fanshawe (supra) at 588.
15 Barton Thompson & Co. Ltd v. Stapling Machines Co. (1966) Ch. 499.
16 See the following cases: Barrow & Isaacs & Son (1891) 1 Q.B. 417 (for breach of a condition not to underlet without consent);
Barton Thompson & Co. Ltd. Stapling Machines Co. (supra0 (to repair); and Bracebridge v. Buckley (1816) 2 Price 200 (to lay out a
specific sum of money on repairs within a specified period).

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Penalties in agreements

It is usual in drawing up contracts to create a penalty which is held over the other party in terrorem.17It may take the form of a
sum payable or the transfer of property in breach. Equity intervenes by cutting penalties down to the actual damage sustained. The
court distinguishes between penalties and liquidated damages, and looks at the substance rather than the form of the contract. 18 In
resolving the question whether a provision is a penalty rather than one relating to liquidated damages, the court construes the
instrument in the light of the terms and circumstances of each agreement. 19On the basis of the above the sum will be considered a
penalty if it is excessive and unconscionable compared to the greatest conceivable loss to be possibly proved from the
breach.20However, where the payment of a smaller sum is secured by a larger amount, the latter amount is the penalty. 21But it has
never been conclusively settled if, when damages occasioned by the breach exceeds the penalty, the plaintiff is entitled to ignore the
penalty clause and sue for damages.22

RECTIFICATION

Rectification is a discretionary remedy jealously guarded by the courts and based on the inflexibility of the common law and the
inadequacy of the remedy at law.-Thompson v Hickman (1907) 1 Ch. 550. It may be necessitated where, for instance, through a
mistake a written instrument does not reflect the true agreement between the parties. In that case equity may rectify the
instrument to render it consonant with the true wishes of the parties. The rectification is aimed at the manner of expression fo the
transaction on paper. It was emphasized in MACKENZIE V. COULSON that courts of equity do not rectify contracts, but rather they
rectify instruments purporting to have been made in pursuance of the terms of contracts. Rectification is ordered upon clear
conditions. An order of rectification will not be granted if the result can be achieved through other methods or remedies- WALKER
PROPERTY INVESTMENT (BRIGHTON) LTD. V. WALKER, for instance where the parties voluntarily rectify the instrument, even
if the voluntary rectification lacks certain advantages-WHITESDIE V. WHITESIDE. All contracts and documents inter partes,
including marriage settlements, bills of quantities, bills of exchange, etc., may be rectified.

Once rectification is ordered no new document need be executed. A copy of the order is imposed on the rectified instrument and that
suffices and operates retrospectively–WHITE V. WHITE. Thus contracts under the document may become retrospectively valid-EARL

17 Clydebank Engineering and Shipbuilders Co. Ltd. v. Don Jose Ramos Yzquierdo y Castaneda (1905) A.C. 6.
18 Kemble v. Farren (1829) 6 Bing. 141.
19 Lombank Ltd. v. Excell (1964) 1 Q.B. 415.
20 Clydebank Engineering and Shipbuilding Co. Ltd v. Don Jose Ramos Yzquierdo y Castaneda (supra).
21 Kemble v. Farren (supra).
22 Wall v. Rederiaktiebolaget Luggude (1915) 3 K.B. 66.

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OF MALMESBURY V. COUNTESS OF MALMESBURY. The instrument is read as though it were originally drawn in its rectified form.
However unless corrected it is no defence to claim that the instrument does not truly reflect the wishes of the parties.

Rectification

Rectification is a discretionary remedy jealously guarded by the courts 23 and based on the inflexibility of the common law and the
inadequacy of the remedy at law.24 It may be necessitated where, for instance, through a mistake a written instrument does not
reflect the true agreement between the parties. In that case equity may rectify the instrument to render it consonant with the true
wishes of the parties. The rectification is aimed at the manner of expression of the transaction on paper. It was emphasised in
Mackenzie v. Coulson25 that courts of equity do not rectify contracts, but rather they rectify instruments purporting to have been
made in pursuance of the terms of contracts. Rectification is ordered upon clear conditions. An order of rectification will not be
granted if the result can be achieved through other methods or remedies, 26for instance where the parties voluntarily rectify the
instrument, even if the voluntary rectification lacks certain advantages. 27All contracts and documents inter partes, including
marriage settlements, bills of quantities, bills of exchange, etc., may be rectified.

Once rectification is ordered no new document need be executed. A copy of the order is indorsed on the rectified instrument 28 and
that suffices and operates retrospectively. Thus contracts under the document may become retrospectively valid. 29 The instrument is
read as though it were originally drawn in its rectified form. 30 However, unless corrected it is no defence to claim that the
instrument does not truly reflect the wishes of the parties.

Construction

If the error is merely grammatical or clerical the court may correct it without ordering rectification. 31It was said in that case
(Wilson v. Wilson) that “Both courts of law and of equity may correct an obvious mistake on the face of an instrument without the
slightest difficulty.” Thus in one case where the mistake was obvious, a misplaced ‘not’ was simply ignored. 32If rectification is sought
on the basis of a mistake, the mistake must be considerable and sufficient to invoke the doctrine. The general rule is that a mistake

23 Whiteside v. Whiteside (1950) Ch 65 at 71, per Lord Evershed M.R.

24 Thompson v. Hickman (1907) 1 Ch. 550.
25 (1869) L.R. 8 Eq. 368 at 375, per James V-C.
26 Walker Property Investment (Brighton) Ltd. v. Walker (1947) 177 L.T. 204.
27 Whiteside v. Whiteside (supra).
28 White v. White (1872) L.R. 15 Eq. 247.
29 Earl of Malmesbury v. countess of Malmesbury (1862) 31 Beav. 407 at 418.
30 Craddock Bros. v. hunt (1923) 2 Ch. 136 at 151.
31 Wilson v. Wilson (1854) 5 H.L.C. 40 at 66.
32 Bache v. Proctor (1780) 1 Doug. K.B. 382 at 384.

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must be common to all parties. 33Several elements are essential to the operation of the doctrine. There must first be the existence of
an agreement made operative by execution and that the executed instrument fails to carry out the intention of the parties; and
finally, that if rectification is ordered it would carry out the intention of the parties. However, a mistake need not always be common
to both parties, for many mistakes are unilateral. Generally speaking, rectification is not available for a unilateral
mistake.34However, even for unilateral mistakes the doctrine can be invoked in the case of fraud (both actual and constructive),
estoppel and unilateral transactions. Once fraud is established it does not matter that only one party is mistaken; 35for fraud vitiates
everything. By way of estoppel if one party to a transaction was aware of a mistake in the instrument in his favour but conceals it
he and his successors in title would be precluded from claiming that the mistake was unilateral and therefore the other party is
disentitled from rectification;36the evidence for this is one verging on sharp practice. 37In another class of cases, the courts have
tended, in the light of a unilateral mistake, to put the defendant to his election as to whether to accept a variation mending the
contract or to submit to rescission.38If a transaction is unilateral and sufficient evidence of a mistake is adduced, then the unilateral
mistake provides a basis for rectification,39 as in the case of a deed poll.40

It was held in Countess of Shelbourne v. Earl of Inchiquin 41that to successfully seek rectification one’s case must be based on
“strong irrefragable evidence” which was explained to mean “something more than the highest degree of probability”. 42Put simply,
there must be ‘convincing proof’ of the mistake on the part of all the parties. 43Rectification will not be ordered if a contract is no
longer capable of performance.44 Rectification may not be ordered to the prejudice of a bona fide purchaser for value without notice
who takes an interest conferred by the instrument. 45 The claim for rectification is also barred by laches and acquiescence.46

Accident

In equity the concept of ‘accident’ covers any unforeseen event not attributable to the defendant’s misconduct, negligence or
culpability but which nonetheless occasions loss. This form of relief is extended to executors where the estate incurs loss not
attributable to the executors. Equity grants relief in the event of an accident which renders unjust and strict application of common

33 Murray v. Parker (1854) 19 Beav. 305.

34 Sells v. Sells (1860) 1 Dr. & Sm. 42.
35 Ball v. Storie (1823) 1 Sim. & St. 210 at 219.
36 Whiteley v. Delaney (1914) A.C. 132.
37 Riverlate Properties Ltd. v. Paul (1975) Ch. 133 at 140.
38 Solle v. Butcher (1950) 1 K.B. 671; Paget v. Marshall ((1884) 28 Ch.D. 255; Gun v. M’Carthy (1884) 13 L.R. Ir. 304; Bloomer v. Spittle
(1872) L.R. 13 Eq. 427; Garrard v. Frankel (1862) 30 Beav. 445; and Harris v. Pepperell (1867) L.R. 5 Eq. 1.
39 Wright v. Goff (1856) 22 Beav. 207.
40 Bonhote v. Henderson (1895) 1 Ch. 742.
41 (1784) 1 Bro. C.C. 338 at 341.
42 Fowler v. Fowler (1859) 4 De G. & J. 250 at 265.
43 Joscelyne v. Nissen (1970) 2 Q.B. 86 at 98.
44 Borrowman v. Rossell (1864) 16 C.B. 58.
45 Smith v. Jones (1954) 1 W.L.R. 1089.
46 Beale v. Kyte (1907) 1 Ch. 564.

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law rules. Again, where a party losses valuable documents such as title deeds or share certificates and law rules as to admissibility
of secondary evidence fail him, equity might come to his aid. Unforeseen events aside, the principle also applies to relieve a party to
a transaction of his mistake. For instance where a new appointment to the same individual is made in complete forgetfulness of a
previous appointment-LADY HOOD OF AVALON V. MACKINNON. The new appointment may either be cancelled or rescinded under
this principle. The principle was in the cases of PAINE V. MELLER and CASS V. RUDELE held to cover fire and earthquake
respectively. The principle excludes accidents which prevent a party form fulfilling his contract. Thus if premises are destroyed by
fire it will not relieve a tenant of the obligation to pay rent.-LEEDS V. CHEETHAM. However, it ought to be observed, finally, that
mistake is today generally subsumed under common law principles.

Laches

Laches is based on the principle that a plaintiff in equity is bound to prosecute his claim without delay. As equity “aids the vigilant
and not the indolent,” –Vigilantibus et non dormientibus lex succurrit, a plaintiff is said to be barred by his laches if he sleeps on his
right and acquiesces for a great length of time-Smith v. Clay (1767) 3 Bro. C.C. 639. Equity does not fix a specific time limit but
considers the circumstances of each case and the conduct of the parties, particularly acquiescence ( in this sense involves not a mere
passiv ‘standing by’ but “assent after the violation has been completed and the plaintiff has become aware of it.”, by the plaintiff and
any resulting change of position for the defendant. Laches may only be employed as a defence where there is no statutory bar-RE
PAULING’S SETTLEMENT TRUSTS. If the claim is covered by a statutory bar the plaintiff is entitled to the full statutory period
before his demands become stale. However a number of cases suggest that laches can be bar to an interlocutory injunction
especially where expenditure has been incurred by the defendant.

Election

It may be said that the sum effect of the various maxims of equity is that a person may not approbate and reprobate. This principle
is probably best illustrated by the doctrine of election by which a person may not choose between different parts of a single
transaction by taking a benefit and rejecting an associated burden. This arises when a testator attempts to persuade the owner of
another property to transfer it to another by leaving the owner of the property a substantial legacy upon the condition that he
transfers the property to whomsoever the testator wishes. The owner may choose to keep the property and lose the legacy.

The Court of Chancery simply developed a better method on the basis of the principle that whoever accepts a benefit under an
instrument must accept the instrument in its entirety and renounce every right inconsistent with its provisions. By the eighteenth
century the principle was expressed in the form that a volunteer under a will must give effect to everything under the will. Thus one
is said to be “put to his election” if a will grants him a mansion and at the same time purports to give the first beneficiary’s own
jewellery to another person of the testator’s choosing. If the first beneficiary elects against the will the property owner does not
necessarily forfeit everything. His obligation is only to give the beneficiary such as compensates the other beneficiary for the
jewellery. This new doctrine arose in the nineteenth century when election came to be associated more with the testator’s mistake
rather than with eccentricity and ineffectiveness of deposition. Thus election came to be associated more with compensation than
with forfeiture of gift. To be effective, the property in question must be alienable. The doctrine of election arises even if the testator
mistakenly believed the property to be his own-RE HARRIS. However, the doctrine fails to operate if the will shows clearly that the

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testator has no desire to compel a particular beneficiary to elect between two alternatives. The doctrine also fails if the gift offends
against the rule against perpetuities.

Contempt of court

Fraud

Given equity’s concern for fairness its protective cover naturally spread to the area of fraud. Two types of fraud are recognized at
equity: actual and constructive fraud.

Constructive fraud covers conduct falling below the standards demanded by equity which started as a court of conscience.

Account

The procedure for an action for account was at common law extremely unsatisfactory. By operating in personam, equity’s
procedure, based principally on discovery and better administration, proved so superior that the common law practice fell into
disuse. An account may be ordered in aid of both a legal and an equitable right. The former occurred principally in cases of
principal and agent on the ground of the confidence reposed by the principal in the agent and the difficulty of discovery, except by
oath, of establishing how the agent had exercised his agency. An agent cannot normally obtain an account against the principal as
he usually has all the data necessary to support his claim and has no need for discovery. 47Equity also orders an account against the
infringer of a patent who in almost every case more or less puts himself in the position of an agent, although the owner cannot
claim both profits and damages since by taking an account of profits he also condones the infringement. 48Equity also assumes
jurisdiction over mutual accounts: where each party had received and paid moneys on the other’s account. 49Account may be
ordered incidental to an injunction. For instance, where an injunction was granted to stop legal waste the court may also choose to
order an account of profits derived from previous waste. Equity intervenes in accounts between co-tenants and in mortgage
repayments where the borrower has an interest in the value of appreciation as well as in the assessment of rent and the concept of
fair rent. The court has an equitable jurisdiction to award interests where money had been misapplied or withheld y a party in a
fiduciary position,50and may award compound interest in exercise of such jurisdiction, particularly where it is established that the
money had been employed commercially. 51However, as interest may not be awarded without it being specifically claimed in the
pleadings, where compound interest is sought, it ought to be expressly endorsed on the writ. The usual procedure for account,
particularly where the action includes other claims, is by way of summons for further directions. Once an account is filed, the
accounting party normally also files an affidavit in verification together with a notice of lodgement. The other party may then file a
list of objections and take out a summons for additional account, following which the accounting party may be cross-examined and
a referee appointed.

47 Padwick v. Stanley (1852) 9 Hare 627.

48 Neilsen v. Betts (1871) L.R. 5 H.L. 1 at 22.
49 Phillips v. Phillips v. (1852) 9 Hare 471.
50 Re Young and Harston’s Contract (1885) 31 ChD 168; Re City Equitable fire Insurance Co. (1925) 1 Ch. 407.
51 Wallersteiner v. Moir (No. 2) (1975) Q.B. 373; (1975) ! All E.R. 849.

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There are two major defences to a claim for account; namely, (a) account stated and (b) settled account. A defence of account
stated is to the effect that the parties have already in writing stated and adjusted the items of account and struck a balance. If
fraud, mistake, accident (or even serious error) is established as a result of which both the account stated and the balance are false,
equity will not take such account to be conclusive. Equity orders that the account be reopened and freshly taken. An accounting
party may rely on the further defence of a settled account to a claim for an account but this may be impeached by the opposite
party. A settled account is a statement of the accounts between two parties which they have both agreed and accepted to be correct.
Once the accounting party delivers such account there must be evidence that the other party has accepted it as correct. Acceptance
need not be express. Therefore contemporaneous and subsequent conduct may constitute acquiescence. 52 Such an account should be
final in the sense that it ought to show either what balance is due or that no balance is due. An informal release from all demands
may constitute a settled account. The plaintiff may ask for the account to be set aside for error, or he may obtain leave to ‘surcharge
and falsify’, even upon proof of one ‘definite and substantial error’. 53In such circumstance, the account stands for what it is worth,
but it is open for either party to seek to amend it by adding items to his advantage which were omitted (surcharging it) or striking
out disadvantageous items (falsifying). In other words, one ‘falsifies’ by showing that some items are erroneous (for instance, that
the defendant received moneys with which he has not debited himself) and he ‘surcharges’ by proving and adding items that had
been omitted. Failure to lodge accounts may result in committal proceedings. It was held in Marfo v. Adusei54that an action for
account can only succeed if a plaintiff has expressly stated facts showing that he is entitled to an account or that a fiduciary
relationship exists between him and the defendant rendering the latter an accounting party.

The foregoing, beginning with unconscionable bargains, represent areas of the law where the influence of equity, although
considerable, has been rather attenuated. The doctrines of equity are far more evident in the rules regulating the grant of
injunctions and orders for specific performance than for any of the above.

TRUST

It is difficult to come up with a definition for trust. The definition given by Coke of a trust land that is a confidence reposed in some
other, which is not issuing out of the land, but as a thing collateral, annexed in privity to the estate of the land, and to the person
touching the land, skillet, that cestui que use shall take the profit, and that cestui que use for breach of trust his remedy was only by
subpoena in chancerie. This definition has been criticized by Maitland. He says that Coke’s definition does not assist us in
understanding the nature of a trust, because the words confidence and trust used in the definition does not illuminate, which may

52 Clark v. Glennie (1820) 3 Stark 10.

53 Parkinson v. Hanbury (1866) L.R. 2 H.L. 1, 19.
54 (1963) 1 G.L.R. 225.

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be created in favor of infants and unborn children or other beneficiaries who know nothing of the existence of the trust, may not
necessarily imply that a trust or confidence is reposed in the trustee by the beneficiary. Neither does the question of confidence or
trust in the trustee by the settlor or beneficiary arise where a trustee arises by implication of law and not by the act of the arties (as
in a constructive trust). A fundamental objection to coke’s definition also is that a trust today creates a proprietary interest in the
property in the beneficiary which is more than a chose in action or mere lathing collateral to land or annexed in privity to the estate
in the land, an interest which since in 1875 is enforceable in any court, and which is not restricted in its alienability or assignability.

In GREEN V RUSSELL, Romer LJ accepted this definition by Underhill:

A trust is an equitable obligation, binding a person(who called a trustee) to deal with property over which he has control (which is
called a trust property) for the benefit of persons (beneficiaries or cestui que trust) of whom he may himself be one, any one of
whom may enforce the obligation.

The above definition contains the essentials of a trust however, it excludes charitable trusts which may not be enforced by an
individual person but the AG. Also it suffers from the defect that it conceives of trust as being created only for the benefit of
individual human beings or groups. A trust may be for any object permitted by law; such as the maintenance of a tomb or for the
support of dogs and horses.

Keeton’s definition of trust is:

All that can be said of a trust, therefore, is that it is relationship which arises wherever 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 or for
some object permitted by law, in such a way that the benefit of the property accrues, not to the trustee, but to the beneficiaries or
other object of the trust.

Although defining a trust may be difficult, the explanation of its nature may not be equally difficult. Perhaps a description and a
distinction of it from related but distinguishable concepts would be more rewarding as observed by Hansbury.

Trust and other relationships distinguished

A trust may be distinguished from certain other legal phenomena which may resemble trust, which must be differentiated from it.
They are historically different as bailments, agency, contracts and powers were matters exclusively for the common law courts.
However, since there is a fused jurisdiction, substantive distinctions is more relevant.

Differences (trust) Similarities Differences (other)

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BAILMENT-
Blackstone define bailment as a delivery of goods in trust. It means to deliver goods in trust, upon a contract expressed or implied, that tha
part of the bailee. This definition has been criticized by Keeton and Hansbury as it does not answer whether a bailment is a trust or
not be governed by a contract and it certain cases the bailor may just be relying on the bailee to exercise a certain standard of care in

Property is held by a bailee subject to duties towards the bailor,

just a trustee holds property with his duties towards his
beneficiary

Recognized at equity Recognized at common

Any type of property may be held on trust Only movable property

Trustee has legal title and therefore an unauthorized transfer Title remains in bailor b
will confer title on a bona fide purchaser for value
without notice of the trust

AGENCY

Subject to obligations towards the principal or the beneficiary

An element of accountability as regards the property held by the

agent or trustee

Agents/trustees may act personally in the discharge of their

functions without undue delegation

Fiduciary relationship

Arises in equity Arises at common law

rules of equity

Do not usually import any contractual relationship between the Apart from an agency
trustee and the beneficiary other consens
and his agent

Ownership of property vested in him Has only possession of t

A trustee cannot involve his beneficiary in liability An agent can make h

general scope o

CONTRACT
- a trust is an entirely different concept from contract. The only reason perhaps for the difficulty of distinction in certain cases is that a trust m
the settlor and the trustee

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There is no contract between the trustee and the beneficiary and Agreements supported
no consideration. This is clear in trusts created by will seal
or settlement. Even a trust arises out of contract it is
between the settlor and the trustee

Trust is enforceable by the beneficiary who was not a party to its Only a party to the cont
creation TYRE CO, LTD
in Ghana as se
confer dome b
the contract m
person as tho
However, it is
under the act
to enforce a tru

A trust liability falls on the trust property and not the trustee A contract debt is enf
personally. Trust property may be traced into the hands insolvency may
of any person benefiting from the breach of the trust,
rather merely recovering damages for the breach of
contract

Trustee not liable for accidental loss Contractor may be liabl

ADMINISTRATION

Administrator holds property on behalf of the legatee or devisee

in a way similar to the relationship between a trustee
and a beneficiary

Invented by the chancery Originated in the eccles

A trustee is appointed to hold the property for the benefit of the Function of an adminis
objects of the trust. Snell- the function of personal debts and distr
representatives is to wind up, and the function of
trustees is to hold

The power of disposal is joint in both cases of immovable The power of disposal o
property or realty

POWERS

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Authority vested in a person to deal or dispose of property not his own

Equitable Legal

Imperative- it means the trustee is obliged to perform his duty Discretionary- power
else he will be liable for breach of trust. This distinction refused to act
is blurred when the trustee is to exercise discretion absence of frau

Beneficiaries under a trust own equitable proprietary interest Object of power own n
which are generally alienable and inheritable be exercised in

The equitable doctrine of conversion (conversion of land to Doctrine does not appl
money and vice versa) applies. This is because the sell
obligation is enforceable and equity requires as done
what ought to be done

It is sometimes difficult to distinguish a mere power from a power in the nature of a trust. If there is a gift of appointment, in other words, if
exercise of the power, it is mere power. It, however, there is no gift over, that is if it is the intention of the do not that in any event t
power, it is probably a power in the nature in equal shares if the donee of the power does not exercise the power of appointment
existence of a gift over is not a hard and fast rule for determining whether it is a mere power or not-RE WEEKES’ SETTLEMENT. T
life intrest in certain real and personal properties, with a ‘power to dispose of all such property by will amongst our children in acco
regards the other property which I have under my marriage settlement’. The will contained no gift over in default of appointment
exercising the power, although there were children. It was held that a mere power and not coupled with a trust and the children wer
default of appointment. However, the decisions are not uniform-BURROUGH V PHILCOX. The testator gave power to his survi
personal estates amongst my nephews and nieces or their children, either all to one of them, or as to as many of them as my surviving
was made. As there was no gift over, a trust power was implied and so members of the class designated by the testator took equally.

Classification of trusts

Trusts may variously classified and sub-divided. These divisions are primarily for the purposes of convenience, although they may
have some legal significance

● Public and private trusts- this distinction is according to the end and purpose of a trust. A trust is private if it is for the
benefit of an individual or class of individual persons, even if the benefit may be incidentally conferred on the general
public. It is ordinarily enforceable by the beneficiaries. A public/charitable trust is a trust whose primary object is the
promotion of the public welfare although it may incidentally benefit an individual or a class of individuals. It is enforceable
by the AG.

● Express, constructive, implied, and resulting trusts- subdivision of private rights

o Express trusts- it is a trust created by an express declaration of the person in whom the property is vested. It is
created by an act of the settlor. It can be either executed or executory

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▪ Executed- an executed trust is an express trust in which he testator or settlor has marked out in
appropriate technical expressions the interest to be taken by each of the beneficiaries. The language of
executed trusts is governed by strict rules of construction and equity follows the law, such as regards of
limitation.
▪ Executory- an executory trust is an express trust in which the testator or the settlor has created a trust
in favor of beneficiaries though he may indicate scheme for settlement, the details to be filled by the
trustees.
▪ Completely constituted and incompletely constituted- a trust is completely constituted when the
trust property has been vested in trustees for the benefit of the beneficiaries. Until the trust is vested in
the trustee, the trust is incompletely constituted or in fieri. The crucial issue here involves the methods of
vesting the property, which are usually not matters for equity but for the common law, and will also
depend on the nature of the property. In the case of a trust of land, there is the need for a writing at law
in order to transfer the interest in the land to the trustee. Therefore, a trust of land cannot be completely
constituted without a wring to satisfy the requirement of the conveyancing Decree or the statute of
Frauds. Freehold property must be conveyed by a conveyance and leasehold property conveyed by a
written assignment, and shares by an appropriate transfer. Movable property which is subject to a trust,
however, does not require writing and the trust may be completely constituted by mere delivery or by
deed. A completely constituted trust is not necessarily an executed trust.
If the trust is incompletely constituted, there is technically no trust; for generally it cannot be enforced.
The only possible exception is that the beneficiaries under an incompletely constituted trust can enforce it
if they have given consideration; for, although equity will not assist volunteer, and equity will not perfect
an imperfect gift, a party who has given value may seek the aid of equity. Also, where the donor has done
all in his power to vest the legal interest in the trustee but some other third party has not done his part,
equity will regard it as a perfect gift and enforce the trust-RE ROSE.

A completely constituted trust may be created in two ways;

o By conveying the property to trustees

o By the owner declaring himself a trustee of his property. In this case, the trust becomes
completely constituted and there is no need for vesting; for, the settlor trustee already has title.
However, where the owner of landed property declares himself a trustee of the property for a
beneficiary (cestui que trust), the declaration must be evidenced in writing signed by himself or
his agent duly authorized in writing, in order to satisfy section 1 of the Conveyancing Decree
1973. If the trust relates to property other than land, writing is not required and the trust may
be orally declared or even merely inferred from conduct.
Once completely constituted, the trust may be enforced by any beneficiary, whether he has given value or
is a mere volunteer. However, an incompletely constituted trust can only be enforced by beneficiaries who
have given value and not by volunteers

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o Implied trust- An implied trust arises where there is a presumption that there is an intention to create a trust,
even though there is no 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. This may also sometimes be known as a presumptive trust. The rationale of the presumptive or
implied trust is that if a trust was not implied, the intended trustee could take the property as purchaser with a
right of beneficial enjoyment which will amount to fraud- QUARTEY V ARMAH,
KWARTENG V AMASSAH
The deceased executed a gift of a house in Accra to the plaintiff, his daughter in consideration of the love and
affection the plaintiff showed to the deceased. After the registration of the gift deed, the plaintiff mortgaged the
house to a Bank and gave the money to the deceased which he used to complete the house. The deceased was in
possession of the house and was collecting rent. After his death, it was discovered that he had made a will and left
his properties to the defendants. The plaintiff sued that the deceased had no basis for the grant of the property to
the defendants because he granted it to her as a gif. The defendant counterclaimed for title and argued that they
had been rightfully been granted the house because the plaintiff only held the house in trust for the deceased.
HELD: where a man purchases shares and they are registered in the name of a stranger there is a resulting trust
in favour of the purchaser; on the other hand, if they are registered in the name of a child or one to whom the
purchaser stood in loco parentis, there is no such resulting trust but a presumption of advancement. The
presumption may be rebutted but should not, give way to slight circumstances. From this, the court concluded
that, the principles applicable in the cases of purchase in the names of children are equally applicable in the case
of a direct gift.

o Resulting trust-A resulting 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 its entire estate. The residue result to the transferor. Sometimes a resulting trust is difficult to
distinguish from an implied trust because the intention is only presumed. The difference, however, is that in the
case of a resulting trust the beneficial interest comes back to the settlor. This need not be the case for an implied
trust. KWARTENG V AMASSAH

● Presumed resulting trust- there are two ways a resulting trust may be presumed. The firsts is where
the purchaser of property purchases the property in the name of a stranger. In the sense of the person
not being a spouse or child. In this case equity presumes a resulting trust- QUARTEY V MARTEY,
KORANTENG V AMASSAH,
USSHER V DARKO.
A prominent lawyer, Sir Edward, after contracting marriage under the the marriage ordinance took as his
paramour, one Matilda to whom she bore 6 children. Sir Edward acquired a piece of land and built a
house but he registered the house in the name of Matilda. The house was let to tenants and Sir Edwards

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collected the rents himself. Later, Matilda sought to sell the house to the plaintiff. The tenants in the
house refused to attorn tenancy to the plaintiff and as such he sued for their ejectment. Sir Edward
applied for and obtained judgment to be joined as a party to the suit on grounds that he was the
beneficiary interested party and Matilda was only holding the property in trust for him. HELD: an
intending purchaser of a tenanted land, such as the plaintiff in the instant case, would be fixed with
constructive notice of all that tenant's rights, but not of his lessor's title or rights; actual knowledge that
the rents were being paid by the tenants to some other person whose receipt was inconsistent with the
title of the vendor was notice of that person's rights. Since the plaintiff knew that the rents of the
property had been paid by the defendants to a person other than Matilda, his vendor, and he failed to
inquire who that person was, he must be held to have bought the house with constructive notice of Sir
Edwards's beneficial title.

The person does not give any valuable consideration. He is a volunteer. He would be holding it in trust in favor of
the transferor. This presumption would not apply in the case of a wife or a child. In that case there is a
superior presumption of advancement. This presumption is that where a husband acquires property in
the name of a wife or a child, he is presumed to have made a gift of the property. This presumption is
rebuttable. KORANTENG V AMASSAH, RAMIA V RAMIA. The presumption applies only when the
husband is the one doing the buying. QUIST V GEORGE

o Constructive trust- A constructive trust arises by operation of law as distinguished from the act of the parties. It
is a trust imposed by equity irrespective of the intention of the legal owner. It is imposed when the circumstances
are such that equity would consider it to be an abuse of confidence for the owner to hold the property for his own
benefit. An example is where a trustee has made a profit, however innocently, through his office, he would hold
the profit on a constructive trust for the benefit of the beneficiaries of the original trust. DZIDZIENYO V.
DZIDZIENYO. Because a constructive trust is a trust imposed by equity, there are no prescribed formalities for its
creation.

There are a number of situations where the court will presume a constructive trust

1. Unauthorised profit by a trustee or other fiduciary. In this case, any profit made by the trustee doesn’t
inure to his own benefit but he holds on a constructive trust to other persons. DZIDZIENYO V. DZIDZIENYO,
EBOE V. EBOE

The plaintiff and the defendant are brothers of the full blood. The plaintiff came to Ghana (then the Gold Coast) in
1928 to trade. In about 1934 he brought defendant from Lebanon to assist him. In 1942 the plaintiff left for
Lebanon, leaving his business, a motor spare parts shop in Accra, and others at Koforidua and Suhum, in the

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charge of the defendant with full powers to run them as he thought fit and to remit the profits to him in
Lebanon from time to time. The plaintiff had wanted to return to Ghana, but he failed to obtain a return visa.
The defendant also had power to operate the plaintiff's banking accounts. Within a few months of the
plaintiff's departure the defendant without the knowledge of the plaintiff sold the business in Accra to one
Salim Sangarri. He also sold the plaintiff's other stores at Koforidua and Suhum, again without the plaintiff's
knowledge. With the monies realised from these sales, the defendant entered the textile trade and other
businesses. Through correspondence, he gave the plaintiff the impression that he was running all those
businesses on the plaintiff's behalf when the contrary was the truth. In 1960 the plaintiff instituted the
present action against the defendant for a declaration that the defendant holds his business interests and
assets in trust for the plaintiff, an order for accounts and payment to him of what may be found due.

Held-

(1) On the facts the defendant was a general or universal agent of the plaintiff — an agency of a fiduciary
nature;

(2) Such an agency created the defendant a trustee holding in trust for the plaintiff the business moneys and
all other properties which came into his possession or under his control;

(3) On the evidence the business interests of the plaintiff did not cease in 1947 as alleged by defendant.
Consequently the agency and the trusteeship have never determined: they continue to subsist (5) where a
claim is based on a fiduciary relationship, time ceases to run, and the Limitation Acts do not apply. In the
instant case, even though the agency is not created by an express trust the claims by the plaintiff being claims
arising out of a fiduciary relationship are not statute barred;

(6) As the defendant's present business interests and assets are all the result of an investment originally made
with funds of the plaintiff which the defendant held as a trustee, those interests and assets continue to be held
by the defendant as a trustee for the plaintiff; the plaintiff can follow and recover them.

2. Where third parties receive or deal with trust property knowingly, they will hold such property on
constructive trust in favour of the beneficiaries. Where a third party will only be held not to be holding
the property on constructive is where such a third party is equity’s darling that is BNPVWN – Bonafide
purchaser for value without notice. SELANGOR UNITED RUBBER ESTATES V. CRADOCK

Trusts of perfect and imperfect obligation

Trusts which are not enforceable by or on behalf of any cestui que trust are known as trusts or imperfect obligation or honorary
trusts. As a rule, such trusts are declared invalid because a trust must have beneficiaries or objects. Examples of such trusts are

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trusts for the maintenance of good international relations. As a rule, save charitable trust, equity will not hold a trust valid, unless it
is for the benefit of ascertained or ascertainable beneficiaries and can be enforced by the court. Charitable trusts are not trusts of
imperfect obligation because they are enforceable by the state. MORICE V BISHOP OF DURHAM, RE THOMPSON exception)

Trusts of perfect obligation are trust enforceable by or on behalf of the cestui que trust.

Creation of express trust

1. Capacity to Create Trust – Generally, the capacity to create a trust is co-extensive with the capacity to hold and dispose
of a legal or an equitable interest in property. It involves the nemo dat quod non habet rule. Any person or corporation
capable at law or in equity of alienating an interest in property, whether inter vivos or by a testamentary disposition is also
capable of creating a trust covering that interest in property. The capacity to hold an interest in property in Ghana is
regulated by the customary law, the common law and statutes. Only a person of unsound mind cannot create a trust and
such purporting would result in the trust being void. It seems in Ghana, an infant can create a trust because both under the
customary law and common law an infant can hold an interest in property. Under the common law, an infant can also
dispose of property held by hi,. However, such disposition of property or settlement made by him is voidable and he may
repudiate it during his infancy or within a reasonable time of his attainment of majority- EDWARDS V CARTER. Where the
alienation is prejudicial to the infant’s interest, it will be set aside. At common law the age of majority is 21. At customary
law there is no precise age of majority and it would appear that the criterion is the individual’s majority and position in
society, though it has not been difficult to recognize the incapacity of infants below the age of puberty or of very tender
years. Under section 1 of the wills act, a person of 18 years and above can make a valid will however this provision is only
for the capacity of making wills and does not affect the general question of majority for other purposes of the will.

2. Formal Requirement – equity does not insist on formalities. Equity does not say that in creation of trusts, particular
formality should be applied. What is important is the intention to create the trust. In relation to immovable property
however, some formality is required. In immovable prop, where the transfer is done inter vivos, then sections 1 and 2 of
the conveyancing decree must be complied because it involves the transfer of an interest in land. (Which provides that an
interest in land shall be by a writing signed by the person making the transfer or his agent duly authorized in writing,
unless relieved against the need for such a writing by the provision of section 3, without this no interest shall be
conferred).

FRANCOIS V. BANK OF WEST AFRICA.

A deceased man created a bank account in the defendant bank in which he named it in the memory of his late daughter. He
deposited various amounts of money in the account. He later wrote to the Colonial secretary of the Gold Coast that he
intends to use the money to help fund a hospital. In his will however, no mention was made of the fund. his executors
brought an action for the money to be added in his estate. The issue was whether the deceased’s actions created a perfect
trust. HELD: the testator had created a Trust Fund, with himself as trustee to dispose of the fund in the achievement of the

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object for which he had created it. It was a perfectly created trust, in that there was an expressed declaration of trust,
intended to be final and binding upon himself

The Three Certainties

Strictly speaking, there are no special requirements for the creation of a trust. Equity, which does not delight in technicalities and
formalities, permits great freedom in the creation of trusts. What is important is the manifestation or expression of an intention to
create a trust. however, in order to conclude that the owner of a property has effectively manifested an intention to create a trust of
it, some requirements must be known to exist. In KNIGHT V. KNIGHT, Lord Langdale M.R. set out the three essential
requirements of an express trust; certainty of words, certainty of the subject matter and certainty of beneficiary or object to the
trust.

Whenever a trust is being created, whether orally in the case of personal or whether by an inter vivos disposition under the
conveyance decree or in a will whatever mode is applied, for a trust to be created expressly created, the three certainties must exist;

o There must be certainty in respect of an intention to create a trust

o Certainty of subject matter
o certainty in respect of the beneficiaries or objects of the trust

*These three certainties do not apply to constructive, implied and resulting trusts.

1. Certainty of words or intentions – before a trust can be held to have been created, it must be so clear by the words used
by the transferor that he intends to create a trust. No particular form of words or expression is necessary for the creation
of a trust. A trust can be created by any language which is clear enough to show the intention to create it. It is however
necessary that there can be inferred from the words an intention to create a trust. If there is no certainty of words in this
sense, no trust arises and the donee takes the property as the beneficial owner.

Precatory words which include words of wish, hope, desire and entreaty do not create trust. In KNIGHT V. KNIGHT,
Langdale M.R. stated that a trust could arise if the settlor ‘recommended, or entreated, or wished’ the done to dispose of the
property in favour of another; for, ‘the recommendation, entreaty or wish shall be held to create a trust. However, the
modern attitude is that mere precatory words do not create a trust. RE ADAMS AND KENSINGTON VESTRY, ASANTE V. UG

GYASI V. QUAGRAINE

The testator appointed his nephew the ‘sole heir of his movable and immovable property and ‘administrator’ of his will. He,
however, explained that ‘by administrator, I do not at all mean to place him conjointly with my four executors, but only to
administer also to the needs and requirements of the members of my household and those of my near relations abroad in
the same way and manner as in life, I would do myself as particularized in my said will’. He did not define what he meant by
‘sole heir’.

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Held- no trust was created by the precatory words. The nephew, as ‘sole heir’, therefore, took the absolute beneficial
interest in the properties. It was further observed that an intended trust would also have failed for lack of certainty of
objects alleged to be benefited were too vague to make it an enforceable trust.

SEY V. SEY

A testator gave a house to his brother Kwamin Abadoo and stated ‘my brother Kwamin Abadoo is not to sell this house for
any reason thereby to cause my children to go astray. He is to look after my children well and live with them peaceably and
quietly as I have been doing. A contention by one of the children whether Kwamin Abadoo was a trustee of the house for the
children of the testator was rejected by the Supreme Court of Ghana.

Held- By the SC that what the testator said amounted only to an admonition to the done to look after his children. The
words must, however, be construed in context, including the relationship of the parties, to ascertain whether the testator
intended to create a trust.

2. The subject matter must be clearly described or must be ascertainable from the description which has been
made. If the subject matter is not described, the whole transaction would be void. For instance, if it is unclear which of the
several houses of the settlor is intended to be the subject-matter of the trust, the trustee cannot be vested with title to any
of them, and the beneficiaries will receive the income from none of them.

Certainty of subject matter falls into two categories:

● The corpus of the property must be certain – If you have more than one property, you have to specify which of the
properties you want to create a trust with. It has been held that words like ‘bulk of my residue estate’ would not satisfy the
criterion of certainty-SPRANGE V BARNARD, BRIMLEY V TYRON-‘or the bulk thereof’. Where the physical object has
been ascertained, it is necessary that the quantum of the beneficiary interest be certain. It must be certain whether the
beneficiary of the interest is to exhaust all the interest to take it only in a term of years. Section 13(2) states that all the
interest is a property shall be passed unless a contrary intention is evident and so no words of limitation are needed as was
the position before. This is however for only immovables. In the case of movables, the intention of the donor, as expressed by
him or may be inferred prevails. Imprecision of language or uncertainty results in no trust being created.

Where a trust fails because there is no certainty in the sub matter, the whole transaction is void and the property remains
in the settlor, the testator or his estate.

● The interest which the beneficiaries are to take must also be certain – where the corpus is identified but the interest
the beneficiaries are to take is not clear, then the property remains in the settlor, the testator or his estate

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If the corpus can be identified but the quantum of beneficial interest for each beneficiary is not clear the court can use the
maxims- equality is equity, to ensure that if there are many beneficiaries, then it is shared among them equally.

In the event that there is only one beneficiary, the court can also say that the entirety of the property has been vested in the
beneficiary since equity looks to the intent rather than the form

Where a trust fails because, although the subject matter is certain, the interest therein of the beneficiaries cannot be
ascertained, there arises a resulting trust in favor of the settlor or his estate is he be dead. The beneficiaries are not
entitled to any specifiable portion of the subject matter.

3. Certainty of Object or beneficiaries – before there can be a trust, there must be a beneficiary. So the courts have held
that with express trusts, the beneficiaries or objects must be ascertainable without difficulty. A beneficiary need not be an
identifiable person. A trust may be validly created to benefit an object, such as religion or education. The requirement here
is more stringent than the first two – certainty of words and of subject matter. It is only in charitable trusts that some
latitude is allowed by the applicationof the cy-pres dictrine, by which the court may order that the trust may be applied to
the nearest object to that indicated by the testator. If the beneficiary or object is uncertain, the trust is void and there is a
resulting trust.

GYASI V. QUAGRAINE

Charitable trusts

The incidence is not very persuasive in Ghana. Contributions to charity are generally made in Ghana to the national trust fund.

Charitable trust is a trust whose object is to promote the public welfare even if it incidentally benefits an individual or a class of
persons.

It is however difficult to determine the limits of charity. The list of charitable purposes include as set out in the now repealed
statute of charitable uses passed in England:

● The relief of aged, incapacitated (impotent) and poor people:

● The maintenance of sick and maimed soldiers and mariners
● The maintenance of schools and universities and scholars
● The repair of bridges, ports, highways, sea banks, churches
● The care of orphans

Subsequently, in the COMMISSIONER OF INCOME TAX V. PEMSEL,

Lands in England were conveyed to trustees upon trust to use part of the rents and profits for the general purposes of maintaining,
supporting and advancing the missionary establishments among heathen nations of the Prostestant Episcopal Church, and to apply

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the remaining two-fourths for purposes which were admitted to be charitable within the meaning of the Act. The beneficiaries
claimed allowances for their income tax. HELD: the words ‘charitable purposes’ in the Act were not restricted to the meaning of
relief from poverty, but had to be construed according to the legal and technical meaning given to those words by English law and
by legislation applicable to Scotland and Ireland as well as England, and the allowance ought to be granted.

lord Macnaughten set out the classification of charitable trusts:

Charity in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education;
trusts for the advancement of religion, and trusts for other purposes beneficial to the community, not falling under any of the
preceding heads. The trusts last referred to are not the less charitable in the eye of the law, because incidentally they benefit the rich
as well as the poor, as indeed, every charity that deserve the name must do either directly or indirect.

TITLE: GATEWAY WORSHIP CENTRE v SEO

FACTS: The Appellant was a Korean missionary in Ghana. he agreed with the 2 nd respondent that he would raise some money for his
church in Korea if he allows him take pictures of his congrgants as they depict they lived in abject poverty. The respondent agreed
and allowed the appellant take these pictures. Upon return from Korea, the appellant told the respondent that he had been able to
raise some money. However, the appellant refused to give out the said amount raised and proceeded to buy a house. The respondent
brought an action in the Circuit Court, for title to the land based on the above arrangements. The appellant lost two times ad he
appealed to the SC.

HELD: The court held that there was a trust relationship in this case as the done was the settlor, the appellant, the trustee and the
2nd respondent, the beneficiary. The type trust relationship ere is a constructive trust and not an express trust which required the
three certainties. For there to be a valid constructive trust, There must be no express intentions of the parties to create a trust (this
is because the intentions of the parties are totally irrelevant; there being no requirement for an express trustee as in express trusts,
neither is there a requirement for the parties to be ad idem as in the law of contract).There must be in existence a fiduciary
relationship. The fiduciary relationship must specifically be in the context of trust such as to make the fiduciary a trustee in equity.

The Position of the Trustee

The capacity to be a trustee

Anybody capable of holding an interest in a property is qualified to be a trustee of that property. So a trustee need not be a natural
person but also an artificial person. A trustee can be a corporate person as well.

In Ghana, there is no limitation to the number of persons who can be trustees. But clearly, there must be trustees if a trust property
must be administered. So clearly, there is the requirement of a minimum of 1/one. A person may be the sole trustee of property for
himself and other beneficiaries. One person may also be the sole beneficiary of trust of which he is one of the several trustees.
However, one person cannot be a sole trustee of the property and at the same time the sole beneficiary of the trust created in
respect of that property. In that situation, both the legal and beneficiary interest would be united in the same person, a concept
inconsistent with the concept of a trust. The trust would fail and the transferee will take as absolute owner.

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Although an infant may be appointed as trustee, it may undesirable to do so as the infant is not liable for breaches of trust
committed by him during his minority unless guilty of fraud.

Appointment of Trustees

The general rule is that a trust will not fail for only the reason that there are no trustees-RE WILLIS, SHAW V WILLIS. A trust may
be valid even if no trustee was appointed or they are dead. In this case, the person in whom the trust property is vested by reason of
such failure of appointment or refusal is deemed in equity to be the trustee of the property for the purpose of the trust. There is an
exceptional case in which a trust may fail for the failure of trustees. Where the trust is so created that it can only take effect upon a
specific trustee accepting the trusteeship, unless that trustee accepts office, the trust cannot take effect- RE LYSAGHT, HILL V ROYAL
COLLEGE OF SURGEONS. If the specified trustee in such a case disclaims, the property reverts to the settlor or his personal
representative to be held in trust of the settlement/will. On the death of the sole trustee or sole surviving trustee, the trust property
vests in his personal representatives upon the same trust.

Appointment of New Trustees

Once a trust is duly constituted, the settlor cannot make a fresh appointment of trustees unless he has in the trust instrument a
reserved power to do so. Usually the settlor reserves the right of such appointment or sets out a procedure for fresh appointments.
Although all beneficiaries, when they are sui juris and they together exhaust the beneficial interest in the trust may together
terminate the trust, it seems that they cannot appoint new trustees, unless the trust instrument so empowers them to do so.

If there is not express provision, or if there is no person nominated and willing to exercise the power, the remaining trustee or
trustees may appoint new trustees to replace any that has died or retired of have been removed from office by virtues of section 27
of the trustees act which presumably applies in Ghana as an English statute of general application. It is debatable whether the
court can appoint new trustees, however in the absence of a statutory provision, as the court has an inherent jurisdiction it can
appoint a new trustee if the interest of the beneficiaries so require.

The Vesting of Trust Property

The trust property must be vested in the trustees to enable them to deal with the property, carry out their obligation and deal with
outside parties. The mere fact that a person has been duly appointed as trustee does not mean the trust property is automatically
vested in him. There must be a conveyance-WARBURTON v SANDYS. This also applies to newly appointed trustees. Where the
trustee is also the personal representative, no vesting assent us necessary and the property vests in him automatically.

The precise way in which the property has to be vested depends on the nature of the property – movable property or immovable
property. Where the subject matter is immovable property, there must be a written conveyance to the trustees. Or it must satisfy
sections 1 and 2 of the conveyancing decree. Where the trust is being expressly created, then the trust instrument must guide it,
but if it is by a will then the vesting assent should guide it - by the executors and administrators. The courts have an inherent
jurisdiction to make a vesting order if no mode of vesting is prescribed or can be effectively applied.

Unanimity of trustees

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All trustees must be active in the administration of the trust. Merely concurring with co-trustees is tantamount to acting and
attracts a liability for breach of trust if a loss to the beneficiaries is thereby occasioned-BAHIN V HUGHES, but a co-trustee who
merely concurs may be able to obtain an indemnity from the active trustee, especially if there was fraud or where the active trustees
was a solicitor trustee or a beneficiary trustee. In the case of a solicitor trustee, he may escape liability if it is reasonable to infer
that, having regard to all the circumstances, he deferred to the solicitor-trustee’s superior knowledge-BAHIN V HUGHES.

Although there is no principle of vicarious liability of trustees, a non-active trustee may be liable for neglecting to take steps which
would have been enough or effective to prevent a breach of trust-BAHIN V HUGHES for because of the unanimity rule a dissenting
trustee can frustrate attempts by his colleagues to commit a breach of trust.

Trustees cannot act by majority, except in the case of charitable trusts where the majority at a properly constituted meeting can
bind all the other under section 12 of the charitable trusts act, 1869 which is still applicable in Ghana. Therefore, a receipt
given by one or some of the trustees is not a valid discharge. A majority of trustees binds neither the dissenting minority nor the
trust estate- RE MAYO. An ex post facto approval given by all the trustees to an act by some of their colleagues makes the act valid-
MESSENA V CARR. A trust instrument may however validly provide that the trustees may take decisions by majority, in which case
the majority may be able to bind the minority.

Duties of Trustee

Once a person becomes a trustee, a number of duties are imposed on him or her.

The obligations of a trustee

● He must acquaint himself with the terms of the trust. He should study the content of the will or conveyance. If the
terms are complicated, he is to seek legal advice.

● He is to ensure that the property is vested in him

● Where a new trustee is appointed, he must in addition to the aforementioned ensure that there has been no
breach of trust

● He must take legal possession of the trust. This means that he must ascertain the nature and extent of the trust
property as said in HALLOWS V LLOYD by Kekewich J. If the trustee delays to reduce the property into possession or to
institute proceedings for this purpose, so that the debt or claim becomes statute barred or otherwise irrecoverable, he will
be liable for the breach of trust unless he can show well-founded belief that such an action would have resulted in a failure
or would have been fruitless-RE BROGDEN such as where the person from whim it is to be restored financially is incapable
of restoring it. The onus of proof falls on the trustee. This obligation also implies a duty to make sure the property is in a
state of security. The trust property may consists of an equitable interest in which it is subject to all the frailties if equity.
The trustee must get the legal estate and if this cannot be done immediately, he must give proper notices to those holding

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or who would acquire he legal interest. Today, it is enough to register the document creating the interest under the land
registry act which deems under section 25 that such registration would amount to actual notice to all persons for all
purposes. It will amount to a breach of trust is one trustee is left in sole control of even a part of the trust if there are other
trustees. All trustees are take possession. In the event where one trustee misappropriates his part, all the trustees are
jointly and severally liable as they would have facilitated such breach-LEWIS V NOBB. However, each case is dealt o its own
facts as there are some cases where it is not unreasonable to leave property in the sole possession of one trustee.

● Duty to invest for the property to earn some interest. This is an implied obligation so that if it is not expressly stated,
it would be implied. If he fails to do that,

● In doing all of this, he must act a reasonably prudent man. He must exercise the utmost diligence. This may include
the duty to insure the property. KHOURY V JOJO. Provided that this standard of care is exercises, the trustee is not liable for
accidental loss such as when the trust property is stolen from himself or his solicitor-LEAROYD V WHITELEY.

Trustees invested trust money on the security of a 5 per cent. mortgage of a freehold brickfield, with buildings, machinery
and plant affixed to the soil, being advised by competent valuers that the property was a good security for the amount
invested. The valuers' report was in fact based upon a valuation of more than double the amount invested and upon the
supposition that the concern was going, but the report did not state this, nor distinguish between the value of the land and
that of the buildings, machinery, &c. The trustees acted bonâ fide but acted upon the report without making any further
inquiries. The secuirity failed and the trustees sued. HELD: Trustees as part of their duties can avail themselves to the
services of experts and if they do so, they can rely on these services so far as they act in good faith. In the case however, the
court concluded that the trustees did not act with good prudence and as such, they were liable for the loss

● Keeping the title deeds with a solicitor or the bank today may be a perfectly reasonable way of dealing with the property.
In any doubt or difficulty, the trustee may seek legal advice on a pointof law or the advice of an expert in other cases.
However, if the advice obtained is a wrong one which results in a loss to the trust estate, the trustee cannot be absolved
rom liability by merely showing that he acted on such advice as observed by Lord Selbourne LC in the case of STOTT V
MILNE. This is because the final decision must always lie with the trustee and he cannot abdicate the responsibility to an
expert.

● The duty of investment- A trustee is under an obligation to invest the trust in proper securities so it will earn interest or
profit. This is an implied obligation. It is not necessary that the trust Act should expressly provide it before it is done. And a
trustee who does not invest is in breach of trust and will be liable to pay what would have accrued as interest if he had
invested. Areas For Investment Circumscribed By Law- three areas are permissible:

By the trustee act 1861, the areas where trustees may invest trust property

• Public funds

• Government securities- treasury bills, bond, securities

• Any area expressly authorised by the trust instrument

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It was held in RE HAZELDINE that an express power to trustees to invest in such securities ‘as they may think fit’ still
limited them to trustee securities or securities authorized by law for the words of the testator did not imply any restriction.
However, where the plain meaning of the words of the testator did not imply any restriction, the court held that the
trustees had the power to invest in any investment which they though fit, whether or not they were investment authorized
by law for the investment of funds-RE BRAITHWAITE. Everything turns on the true construction of the words. Investments
clauses are strictly and restrictively construed. A trustee lending money on a mortgage should not lend upon a second
mortgage because of the stronger position of a prior mortgage. Even when investing in securities expressly provided, the
trustee must be careful otherwise the trustee is personally liable. The investment must produce profit and therefore
purchasing of property for occupation by the beneficiary of a trust is not an investment because it does not produce
income. Sometimes the power of investment is subject to certain consent such as the consent of the life tenant. The trustee
must not favor one beneficiary- the rule in HOWE V LORD DARTMOUTH. It is the duty of the trustee to hold the scales
evenly between the beneficiaries especially between the life tenant and the remainderman and not to favor one at the
expense of the other for trustees must act impartially. Although the trust may not so provide, where there is a residuary
bequest of personal estate or movable property in a will for tahe benefit of persons in succession, in the absence of a
contrary express or implied intention, there is a duty on the trustees to realize all such parts of the estate as are of a
wasting or hazardous character or a reversionary nature, or are unauthorized by the general law or by the will, and invest
or re-invest the proceeds in some authorized and permanent investment. Property of such hazardous nature may include
live stock. Immovable property is excluded from this rule. It must be a residuary estate or property in bulk. The rule will not
apply if there is express or sufficient implied direction to the contrary. The rule does not apply if it is found in the will that
the property be enjoyed in specie (in the real, precise or actual form specified)- RE WILSON, MORE V WILSON . Similarly,
where a discretionary power of sale is given to the trustees to be exercises when they shall deem it expedient, the
application of the rule is excluded-

RE PITCAIRN.

A testator devised and bequeathed his property to trustees, upon trust for his mother for her life, with remainder to other
persons. And he gave to his trustees, if and when they should consider it expedient, full power to sell and dispose of all or
any part of his estate. Part of the testator's property consisted of the reversion, expectant on the death of his mother, of
funds settled on her marriage of which she was tenant for life. The trustees did not convert this reversionary interest
during the mother's life. HELD: the discretionary power of sale given by the will to the trustees excluded the application of
the rule in Howe v. Earl of Dartmouth, and that the personal representative of the mother was not, after her death, entitled
to any part of the proceeds of the sale of the reversion.

It also does not apply to settlement made inter vivos, the property must be enjoyed as settled-RE VAN STAUBENZEE

Apportionment- when the property has been sold, so that the proceeds must be invested in authorized investment of a
secure nature, the sum received must be apportioned between capital and income so that the tenant for life receives a fair
yield as held in RE EARL OF CHESTERFIELD’S FIELD. From the amount realized, the sum is ascertained which at the
current rate of compound interest from the days of the testator’s death, would after deducting income tax, produce the

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amount actually to be received as held in RE PARRY. The sum so received is treated as capital and the rest as income. The
life tenant receives on the net income produced by the property, unless a contrary intention appears in the will or may be
inferred. The rule to apportionment only applies to movable property and so even if there is an express direction to convert
immovable property, the life tenant in entitled to the whole net income until the sale.

● Duty to keep account and records- a trustee has a duty to keep accurate accounts and must always be ready to produce
them to any beneficiary who requires them-PEARCE v GREEN They must be in a simple form easily understood by the
beneficiary. All reasonable information as to the manner in which the trust estate of a particular share of the beneficiary
has been administered must be given to any beneficiary or a person authorised by the beneficiary on demand. However,
trustees are not bound to disclose to the beneficiaries the agenda, minutes and documents which set out or contain the
reasons for the exercise of their discretion for if the beneficiaries are allowed to examine such document they would know
their motives and reasons of which they are not bound to disclose. If the trustees fail or refuse to furnish the accounts
regarding the trust, the beneficiaries may apply to the court for an order to produce them if the refusal is unreasonable
and therefore in breach of trust, they would be liable to pay the costs of application.

Control by beneficiaries

A trustee is not bound to consult or take directions and instructions from the beneficiary. If however, a trustees discloses to the
beneficiary his reasons for an exercise f discretion, it becomes competent for the court to enquire into their adequacy-

KLUG V KLUG

A testator stated in his will that one third of his estate should be held in trust for his daughter. The daughter was required to pay a
legacy on the properties according to the law, but she was unable to. She approached the trustees for assistance for which they
refused to grant her assistance from the trust property because the daughter married without the consent of the trustees as they
contended that they had a discretion to do so. HELD: the court will interfere with the discretion given to trustees where the trustees
have not honestly excersed that discretion.

The only possible indirect control which beneficiaries exercise over trustees is if all the beneficiaries are sui juris and if they together
exhaust the whole beneficial interest in the trust property, they can terminate the trust and direct the trustees hand over the trust
property as they direct. The beneficiaries may so terminate the trust even if the trust instrument does not contain any provision for
the determination of the trust. This may be an indirect mode of control of the trustees by the cestui que trust but only if the
particular trustees are desirous of remaining in office. This is known as the rule in SAUNDERS V VAUTIER . The reason is that a man
who is sui juris may do what he likes with his own property. Beneficiaries exhaust the beneficial interest in the trust property if they
are the only cestui que trust for whose benefit it is created. If there is a life tenant and a remainderman, neither of them alone
exhausts the beneficial interest but both when acting together may terminate it, because together they exhaust the beneficial
interest in the property.

Trustee profiting from trust

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The general rule is that a trustee may not rather directly or indirectly derive any profit from his trust- WILLIAMS V BARTON . This is
akin to the rule a trustee must not place himself in a position where his duty and his interest may conflict. If the trustee were
permitted to reap a direct or indirect personal benefit he might not adequately seek the interests of the trust. There are three main
parts to this rule:

● Derivation of a direct profit by the trustee from handling the trust property- this is referred to as the rule in
KEECH V SANDFORD.
The trustee was a trustee of the profits of the lease of a market for an infant beneficiary. The lease expired but the landlord refused
to let the child sign for a renewal on the ground that the infant because of his infancy could not enter into a covenant. The
trustee thereafter obtained the lease for himself. The beneficiary sued the trustee when he attained majority for the profit
he had been making due to the lease. HELD: The trustee must hold the lease on trust for the infant. Lord King stated that,
“I must consider this as a trust for the infant, for I very well see, if a trustee, on the refusal to renew, might have
a lease to himself, few trust-estates would be renewed to the cestui que use; though I do not say there is a fraud
in this case, yet [the trustee] should rather have let it run out, than to have had the lease to himself. This may
seem hard, that the trustee is the only person of all mankind who might not have the lease: but it is very proper
that rule should be strictly pursued, and not in the least relaxed; for it is very obvious what would be the
consequence of letting trustees have the lease, on refusal to renew to cestui que use. So decreed, that the lease
should be assigned to the infant, and that the trustee should be indemnified from any covenants comprised in
the lease, and an account of the profits made since the renewal”.

A trustee is in a fiduciary position and must therefore not in any way make use of the trust property or his position as a trustee for
his own benefit, interest or advantage. He must protect the beneficiaries and seek their interest in an unquestionable
dedication. WILLIAM V BARTON. This rule applies to company shares-RE DOVER COALFIELD EXTENSIONS, LTD
A trustee became eligible to be elected a director of a company by virtue of certain trust shares held by him and he was elected a
director. He held the shares in order to represent the owners of the company, and ge therefore executed a declaration of
trust of the shares in favour of the owners. HELD: court held that the trustee was not accountable to the trust estate for his
salary as a director because the salary was paid to him for personal services and qualities and was not merely a profit from
the handling of the shares.
which must be contrasted with RE FRANCIS
● Sale of trust property by a trustee to himself or to a co-trustee- it is an established rule that a trustee may not
purchase a trust property unless there is an express provision allowing it in the trust instrument, under an order of the
court of if the beneficiaries consent to such purchase. It is not very accurate to say that the trustee cannot purchase his own
trust property, but that a purchase of the trust property by the trustee is voidable by the beneficiary within a reasonable
time after discovering the circumstances. It may constitute acquiescence of not done within a reasonable time- CAMPBELL
V WALKER. It does not matter that the sale was fair or honest, at a public auction or that it was sold for a higher than the
open market price. A trustee, however, may purchase the trust property from a third party provided the original contract
was no longer executory at the time he purchased from that third party provided the original sale was bona fide and there

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was no understanding to purchase. This is a strict rule, so strict that the trustee may not retire from the trust just to enable
him to purchase the property. WRIGHT V MORGAN. However, a trustee who had retired for many year previously may
purchase the trust property. There is in theory no objection the purchase by a trustee of his beneficiary’s beneficial interest
in the trust property because in the circumstance it is not a case of the trustee being both the vendor and purchaser. The
beneficiary must be given the fullest information of the state and nature of the property. The sale is not void but viewed in
the utmost suspicion by the court and may be set aside on the slightest indication of an abuse of the trustee’s position or
undue influence. WRIGHT V CARTER
● Payment of trustees for services rendered- generally, a trustee cannot make profit from his trust, trustees and
executors and not entitled to any allowance or remuneration of his services-RE WHITE; PENNEL v FRANKLIN. Trustee
may put in longer hours or engage in peripheral projects or activities to justify increased remuneration or compensation.
They are expected to offer their services voluntarily and gratuitously. This is so even if the services are of a professional
nature-RE BARBER. Actual expenses are however refundable. Furthermore, the instrument creating the trust may provide
for remuneration, but such provisions are strictly construed by the courts. A valid agreement may be entered into with the
beneficiaries, provided they all sui juris, for remuneration; but this is subject to jealous scrutiny by the court for undue
influence or pressure. If the administration of the trust is burdensome, the court had an inherent power (independent of
statute) to authorize remuneration for the trustees’s services- MARSHALL V HOLLOWAY.

Indemnification of trustees

Although a trustee is not entitled to remuneration he can claim to be indemnified out of the trust property against all costs, charges,
expenses and liabilities properly incurred in the administration of the trust. These expenses include travelling, legal and out of
pocket expenses and moneys reasonably expended in the maintenance and preservation of the trust property. Such moneys are
charged on all of the trust property; that is it can be recovered from the capital if the income is inadequate

Powers of trustees

Certain powers are given to trustees in order for them to be able to carry out their duties. These powers are given by law but they
may be ousted by express contrary provision in the trust instrument. These powers must be exercised reasonably and in good faith.

● Power of sale- a trust for sale is distinguished from a power to sel. A trust on sale imposes an imperative or mandatory
duty to sell, although it includes the discretion in the trustees to postpone the sale. If the trustees fail to sell it may amount
to a breach of trust. A power to sell is discretionary and no liability for a breach of trust arises from its non-exercise. The
trustees are bound to sell to the best price reasonably obtainable. Under section 1 of the trustees act, the sale must be a
public auction or by a private contract. However the trust instrument may prescribe the mode of sale which must be
complied with. Trustees have the power to give valid receipts in respect of payments made to the trust estate. The receipt in
writing is a valid discharge. Section 29 of the trustees act provides that the bona fide payment to and receipt of trustees is a
valid discharge and the payer is not responsible or answerable for the misapplication of the money, unless contrary is
expressed in the trust instrument. Where there are several trustees, they must all join in the issuing if the instrument, for

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unlike executors, one of several trustees cannot give a valid discharge-LEE v SANKEY . A sole surviving trustee can give a
valid discharge
● Power to insure- there is no duty upon trustees to insure the trust property against fire, damage or loss in Ghana unless
the trust instrument imposes such a duty. It is however, difficult in modern times to see how in certain cases, the failure to
insure can be reconciled with the general duty to take proper care of the trust property. For instance it was held to amount
to negligence in failing to take a reasonable care of personal effects under trust, when the trustee eared civil commotion
and had insured his own property against such risk but did not insure the trust property-KHOURY V JOJO . Trustees may
apply the insurance money paid to them in re-instatement of the lost or damaged trust property if it is possible. If this is
not possible a suitable alternative should be chosen.
● Power to compound liabilities- trustees and personal representatives if no contrary indications appear either expressly
or impliedly in the trust instrument are empowered to enter into the payment of debts, submit a composition of debts,
allow time for the payment of debts, submit doubtful points to arbitration or otherwise settle any debt, claim or account
relating to the trust. In taking such decisions. The view of the beneficiaries should not be disregarded. It is an exercise of
discretion so that a trustee can choose to abandon a claim but it would amount to a breach if the delay renders the claim
unenforceable. The trustee may consider the financial position of the creditor. The power should not be exercised to the
advantage of the trustees
● Power to delegate- the office of a trustee is one of confidence and cannot be delegated unless the trust instrument
expressly permits delegation or the law allows it. The principle is delgatus non potest delegare. In other words, a person
with a fiduciary duty cannot fulfil it by simply transferring it onto the shoulders of another person and he, therefore
remains liable for the defaults of that other person. However there are certain transaction and things which may require
specialized knowledge and expertise and which a man of business cannot but delegate to a skilled agent. It is ordinary to
employ a solicitor or broker for legal and financial business respectively- SPEIGHT V GAUNT. The trustee must in every case
exercise a proper care in the selection of his agent and in his supervision and they must employ him in his proper
professional field or expertise-
FRY V TAPSON.
The Trustees were empowered to invest on mortgage lent under the advice of their solicitors a sum of £5000 upon mortgage of a
freehold house and grounds at Liverpool valued at a certain price. The trustees did not exercise their own judgment as to
the choice of a valuer, but accepted the suggestion of their solicitors that a London surveyor who had introduced the
security to them, and was in fact the agent of the mortgagor with a pecuniary interest in the completion of the mortgage,
should value the property for the trustees, and they acted upon the report of this valuer, which was of an inflated character.
The mortgagor afterwards became bankrupt, and the property would not realize the sum advanced. HELD: where trustees
employ persons as, they must employ agents as a prudent man of business would do on his own behalf, are not liable for the
default of an agent so employed. But an obvious limitation of that rule is that the agent must not be employed out of the
ordinary scope of his business. If a trustee employs an agent to do that which is not the ordinary business of such an agent,
and he performs that unusual duty improperly, and loss is thereby occasioned, the trustee would not be exonerated.
Provided these conditions are satisfied. The trustee will not be liable for the defaults of the agent. A trustee’s discretion cannot be
delegated- SPEIGHT V GAUNT.

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● Powers of maintenance and advancement- a trust may provide for contingent interest- such as to Adwoa when she
attains 18. In such a case, the income from the trust may be used to maintain the child until she attains 18 years. This is
maintenance. Sometimes it may be desirable to use the income or even part of the capital to establish the beneficiary in life.
That is advancement. Advancement may be described as any use of the money or property which will improve the material
situation of the beneficiary. TAYLOR V TAYLOR. Moneys given on marriage, or entry into a profession, and to purchase a
business have been held to amount to advancement. The payment of a child’s debt was held to amount to an advancement
but this not conclusive as the circumstances may point otherwise. The court has the inherent power to approve the use of
the income or capital for the maintenance of an infant or contingent beneficiary in the interim before the gift is vested-
WELLESLEY V WELLESLEY. The power of maintenance or advancement in Ghana is limited to income unless authorized
by the court or unless the trust instrument authorizes it. Section 26 of the trustees act allows trustees to apply all or part of
the income for the maintenance or education of an infant beneficiary at the sole discretion of the trustees. If such discretion
is exercises, the court will not interfere.

Breaches of trust

A trustee is in breach, if he does anything contrary to the duties imposed on him by the trust, whether by the general law or by
particular provisions of the trust instrument or if he does anything in excess of the powers conferred on him or of the duties imposed
on him.; or is he neglect several trustees concurs or acquiesces in any such act of breach of trust b his colleagues, he is also guilty of
trust; similarly, a trustee is guilty of a breach of trust if by his inaction, facilitates a breach of trust when he could have prevented
such a breach. It is impossible to give an exhaustive list of the infinitely various types of breaches of trust. It depends on the nature
of the trust and the duties imposed on him. They include fraudulent conversion, intermeddling with the trust property for improper
purposes and wrongful exercise of discretion. If a breach is fraudulent, the trustee is criminally liable. A person is guilty of a
fraudulent breach of trust is he dishonestly appropriates a thing the ownership is which is vested in him as a trustee for or on behalf
of any other person- section 129 of act 29. A person in breach of trust is a crime but such criminal liability does not relieve him of
his liability to the beneficiaries in a civil action in respect of the same breach.

A trustee who is in breach of trust is liable to make good to the beneficiaries the loss to the trust estate occasioned by his breach.
The exception is if in the case of a constructive trustee he breaches a trust within a period of which he does not know he is a
constructive trustee. It would appear that ignorance that one is a constructive trustee, which is based only on a mistake of law, may
not entitle one to the exemption from the liability of law. It is not necessary to prove fraud or intent on the part of the defaulting
trustee in trying to obtain a civil remedy. An explanation based on personal incompetence is not a defence. The standard is an
objective one. It is not the objective of equity to punish the trustee but only to compensate the beneficiaries for any loss suffered by
the. Whether directly or indirectly as a result of the breach of trust.

Injunction to restrain the breach of trust

Any beneficiary who is apprehensive of a threatened breach of trust may obtain an injunction restrain the trustee-BALLS V STRUTT .
An injunction will lie to restrain a wrongful sale of trust property, a wrongful appointment by trustees of an unqualified person as a

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minister, a threatened distribution of the trust in violation of the trust or the grant of an unauthorized mortgage by trustees-
RIGALL V FOSTER

Liability for breach of trust

Liability is personal, not vicarious. Where there are several trustees, each trustee will in theory be liable for only his own breaches
and not those of his co-trustees-TOWNLEY V SHERBORNEit is difficult to apply the distinction between a personal and vicarious
liability as a trustee can be liable for a breach himself if he fails to prevent the breaches of his co-trustees. The rule of liability for a
co-trustee can be circumscribed by an indemnity clause which would provide that a trustee is not to be liable for breaches
committed by colleagues in which he did not participate or for which no fault can be traced to him. The trustees act makes it an
implied indemnity but it is strictly construed. A trustee is liable if he conceals a breach of trust by his colleagues which he knows or
subsequently discovers-BOARDMAN V MOSMAN

Retirement- a trustee is liable for breaches committed by him while in office even after retirement-FLETCHER V GREEN. He is
however not liable for breaches committed after his retirement unless it can be shown that not only did his retirement facilitate the
breach but also that the breach was intended or contemplated by the retiring trustee. Measure of liability- the measure of liability is
limited to the actual loss caused to the trust estate directly or indirectly and up to the measure only but not more. The rules in the
law of contract and torts as to remoteness and foreseeability of damages is of no application. What matters is that there is actual
loss to the estate because of the breach. Even though there may be a breach there is no liability if there is no loss.

Measure of liability

The liability for a breach of trust is limited to the actual loss to the trust estate, directly or indirectly and up to that measure only.
The rules in the laws of contract and torts concerning remoteness and foreseeability have no application. What matters is that some
loss has occurred because of the breach of the trustee. Even though there may be a breach of trust, there is no liability if no loss
occurred. It is for this reason that it has been observed that an ideal trustee is one who commits judicious breaches of trustee-
PERRINS V BELLANY. In the case of an unauthorized investment or any other breach of trust, the beneficiaries may decide to
adopt it, and if they are sui juris, such an adoption relieves the guilty trustee from any liability-WRIGHT v MORGAN . Where a trust
property is improperly sold, the trustees may be required to account for the proceeds of the sale or to replace the property, at the
choice of the beneficiaries. If the property is to be restored the measure of liability is the extra money required for the re-purchase. If
a trustee refuses to sell at a good price but subsequently sells at a lower price, he is liable for the difference in price, even if the
breach was only to due to keeping an authorized investment-FRY V FRY

Trust funds should be invested without delay in order to earn an interest or income and a failure to invest means that the trustee
may be liable for the los equivalent to what the income on investment would have been. If the trust fund cannot be invested
immediately, it should be put in the bank to earn interest otherwise the trustee is chargeable with the interest which is the current
bank rate of interest offered by commercial banks.

If a trustee invests the trust funds in his own business he becomes a constructive trustee for all the benefits accruing, subject to all
just allowances for his own time, energy and skill, and the assets he has contributed-RE JARVIS. A trustee cannot set off a gain in
one transaction against a loss made in another transaction-DIMES V SCOTT.

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Liabilities of trustees inter se

Where two or more trustees are liable for a breach of trust, their liability id joint and several-FLETCHER V GREEN. This means that
an action may be instituted to obtain relief from only one or some and not necessarily all of the trustees who are guilty of the
breach. A trustee who has paid more than his fair share of liability may claim contribution from his guilty colleagues-FLTECHER V
GREEN. The general rule is that every trustee who is liable must contribute equally to compensate for the consequential loss to the
trust estate, regardless of the degree of fault- BAHIN V HUGHES. Where a guilty co-trustee is dead the right of contribution may be
exercised against his personal representatives or his estate by the trustees who have satisfied the judgment debt. It was observed in
BAHIN V HUGHES that crystallization of such rule should be approached with caution as the rule permitted one guilty trustee to
claim an indemnity from another because if such existed it would act as an opiate upon the conscience of the trustees so that
instead of the object having the benefit of the trust from the trustees, the trustees would be looking to the others for the right of
indemnity.

Situations where a trustee may claim an indemnity or contribution

● Fraud- where one trustee is fraudulent or morally guilty, such as where he alone misappropriates a trust property or a
trust money, only he is liable. If all the trustees are guilty of fraud, the one who has paid the loss cannot claim a
contribution from the others perhaps because of the common law rule that there can be no contribution between joint
tortfeasors- AG V WILSON.
● Beneficiary-trustee- a beneficiary-trustee who is guilty of a breach of trust together with the other trustees, or has
participated in such a breach must indemnify his co-trustees to the extent of his beneficial interest in the trust property.
This is known as the rule in CHILLINGWORTH V CHAMBERS. If that is not enough to meet all the liabilities, the loss would
be shared equally between all of them. The beneficiary-trustee in effect pays more that his equally guilty co-trustees. One
theory that explains this rule is that as the beneficiary-trustee has participated in the breach, he must be deemed to have
consented to the breach and accordingly, he cannot complain of the loss of his share-volenti non fit injuria. Another
principle is that the consequential loss from the breach is treated as the beneficiary-trustee’s share of the beneficial
interest in the property. So that he is reared as having received his share to the extent to which he as default-
RE DACRE.
W. by his will appointed D. to be one of his executors and trustees and gave a legacy of 2000l. (which had not yet been paid) to D.'s
wife. She died without having received the legacy, and having bequeathed the whole of her property to her husband, whom
she appointed to be her executor. D. died insolvent without having proved his wife's will. By his own will he appointed
executors to whom administration with the will annexed of his wife's estate was granted. On his death it was discovered
that he had misappropriated 1500l., part of W.'s estate. HELD: Where there is an aggregate fund in which the trustee
is beneficially interested and to which he owes something, he must be taken to have paid himself that amount
on account of his share.
● Solicitor trustee- a trustee-solicitor who gives advice in his capacity as a solicitor which results in a breach of a trust is
liable to indemnify his colleagues against the liability for the breach of trust. The breach must have been committed solely
in consequence of the advice of the solicitor-trustee acting in such capacity-HEAD V GOULD

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Defences to breaches of trust

A defence to an alleged breach is an attempt to exonerate the trustee from liability as supposed to an indemnity which is sought so
the trustee would avoid the consequences of the breach. If a defence plea is successful there is no breach and therefore no liability.

● Relief by the court- in Ghana the court has no jurisdiction to grant relief against breaches of trust. If a trustee has acted
honestly and as a reasonably prudent man of business, he is not liable for any breach even if the trust estate suffers a loss.
This is the law that applies in England. In seems that in Ghana this is a lower standard the Ghanaian courts may apply not
to grant a relief but to hold that there has been no breach of trust
● The beneficiary’s acquiescence and release- where the beneficiary has acquiesced in the breach, or has released the
trustee, this is a sufficient defence for the trustee against liability. This is tantamount to adoption of the act. Such act can
only become evident after the breach has been committed and may be expressed or inferred from even the conduct of the
beneficiary, including the lapse of time in instituting the action. The beneficiary must be sui juris and must be in full
possession of the facts relating to the breach-BURROWS V WALLS. An infant cannot consent to a breach and therefore
deemed to not have acquiesced unless the infant is guilty of fraud, such as misrepresentation of his age-OVERTON V
BANNISTER. If there are several beneficiaries of whom only one acquiesced, the others can proceed against the guilty
trustees for their shares, the trustees being indemnified to the extent of the share of that who acquiesced.
● The beneficiary’s consent or participation- a person who has consented to or participated in the infliction of injury on
himself cannot be heard subsequently to complain of his injuries at law or equity. To succeed it must be prove that the
beneficiary is of full capacity, has full knowledge of the facts and freedom in making a decision. It means that an infant who
has concurred a breach may subsequently proceed against the trustee for the breach that has occurred- WILKINSON V
PARRY. A mentally incompetent beneficiary is under an incapacity and cannot give consent. If there are several
beneficiaries of whom only one consented, the others can proceed against the guilty trustees for their shares, the trustees
being indemnified to the extent of the share of that who consented.
● Lapse of time- Section 15 of the limitation act. As the word ‘trustee’ has not been given any meaning, the section applies
to any kind of trustee. The exceptions to this rules are provided in subsection 4 of the section. In this two cases the period of
liability is indefinite. The rationale behind this is to prevent the trustee from benefiting from his own wrongdoing. The
fraud must have been committed by the trustee himself. There is a further exception in section 22 of the limitation act.
22. Fraud and mistake

(1) Where, in an action for which a period of limitation is fixed by this Act

(a) the action is based on the fraud of the defendant or the agent of the defendant or of a person through whom the
defendant or the agent claims, or

(b) the action is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the
plaintiff has discovered the fraud or mistake, or could with reasonable diligence have discovered it.

(2) For the purposes of this Act, concealed fraud by one of concurrent wrongdoers shall not suspend time for another or
others.

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In these cases, the period of limitation begins to run only from the moment the plaintiff discovered, or by reasonable
diligence could have discovered, the fraud or mistake. An assignee or transferee from a trustee in the same position here as
the trustee himself.

● Bankruptcy- a discharged bankrupt is relieved of further liability for a breach of trust by virtue of section 35 of the
insolvency act. This is not a defence, it just means as a result of his bankruptcy, he cannot be sued.

Following property generally

Following property means proceeding against the property itself, in this case trust property to recover it. This remedy lies against a
defaulting trustee who is keeping the assets or against even third parties. In the event of a breach, the beneficiary can recover such
losses from the trustee. This actions in personam and its usefulness lies in the solvency of the trustee. In the case the trustee is
insolvent, the beneficiary can proceed against the trust property or the assets in the hands of the defaulting trustee or some other
person. This right exists both at law and equity. At law it is described as following the property while at equity it is tracing the
property. These are proprietary remedies.

There are some advantages of proprietary remedies over personal remedies

● Satisfaction of the plaintiff’s demand does not depend on the solvency of the trustee in the case of proprietary remedies
● In proprietary remedies, the plaintiff may be able to take advantage of increases in the value of the property or accretions
thereto. The plaintiff is entitled to the whole property and its accretions.
● The plaintiff is unaffected by other liabilities incurred by the defendant. The property cannot be attached if execution is
levied against the defendant to satisfy his debts. The equitable claimant in such a case must interplead to prevent execution
being levied against the property
● The plaintiff may be able to obtain an interim preservation order under order 50, rule 5 of the high court procedure rules
for the preservation of the property pending an action of tracing. It may therefore lead to a substantial recovery of interest
on the assets if they have been in the hands of the defendant for a considerable time before the judgment.
● Recovery is allowed whether the property is in its original or changed form. Such property would only be allowed to be
followed and recovered if it is physically identifiable. For this purpose, the common law treats a person’s money as
identifiable so long as it has not become mixed with other money. ‘Sovereigns in a bag’ would be identifiable and so would
a bank balance, as well as property acquired with the money provided there is no mixture with money from another source.
The true test is whether the means of ascertainment has failed and so money out in a bank account is identifiable and can
be followed at common law so long as it is not mixed with other monies. In contrast the equitable remedy of tracing
requires an establishment of a fiduciary relationship. A beneficiary cannot follow his interest at common law because he
has no standing by reason of his beneficial interest in the property. The only case this would be allowed if the beneficiary is
joined by the trustee in following property in the hands of a stranger. This will not be satisfactory remedy if the trustee is
responsible for the loss or is unwilling to institute proceedings. Another limitation of the common law is that it does not
regard as identifiable any money or property mixed with another. Equity developed its own procedure known as tracing of
trust property.

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Tracing trust property

Where the trustee has wrongfully disposed of the trust property, the beneficiary may attach and proceed against the trust property,
even in a changed form, instead of maintaining only a personal action against the trustee for a breach of trust. Property may be
traced in equity provide three conditions are satisfied – RE DIPLOCK:

The testator by his will directed his executors to apply his residuary estate "for such charitable institutions or other charitable or
benevolent object or objects in England" as they should in their absolute discretion think fit. The executors distributed the resdue
among over 100 charities. However, the next of kin sued the executors on grounds that some of those charities were not valid.

HOLDING: the court held as follows:

The equitable right of tracing into a "mixed fund" is not confined to cases like Hallett's case where the right is asserted against the
original "mixer" who was in a fiduciary relationship to the claimant. that one whose money has been mixed with that of another or
others may trace his money into the mixed fund (or assets acquired therewith) though such fund (or assets) be held, and even
though the mixing has been done, by an innocent volunteer, provided that (a) there was originally such a fiduciary or quasi-
fiduciary relationship between the claimant and the recipient of his money as to give rise to an equitable proprietary
interest in the claimant; (b) the claimant's money is fairly identifiable; and (c) the equitable remedy available, i.e., a
charge on the mixed fund (or assets), does not work an injustice.

Thus:

(a) Where the defendant is in a fiduciary relation to the claimant, and has mixed the claimant's money with his own, the claimant
takes priority. The same result follows if the defendant had notice that the money was in equity the claimant's.

(b) Where the contest is between two claimants to a mixed fund consisting of moneys belonging to both and therefore held on
behalf of both, they share pari passu.

(c) Where the claimant's moneys are handed by way of transfer to a person who takes for value without notice of the claimant's
equity, the claim (like all equitable claims in like circumstances) is extinguished.

(d) In the case of a volunteer who takes without notice (e.g., by way of gift from the fiduciary agent), if there is no question of
mixing, he holds the money on behalf of the true owner, whose equitable right to the money still persists as against him.

(e) But if the volunteer innocently mixes the money with money of his own, or receives it mixed with his own money from a fiduciary
agent, he must admit the claim of the true owner, but is not precluded from setting up his own claim in respect of the moneys which
he has contributed to the mixed fund, the result being that they share pari passu, neither being entitled to priority.

Applying these principles to the cases before the court, where there had been a mixing of trust money with charity money (or where
it had been paid into a special account and remained unmixed) the next-of-kin were entitled to recover, pari passu with the charity
in the case of mixed funds. But where the moneys received by the charity had not been mixed with moneys of the charity but had

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been expended on the alteration or improvements of their own assets, as by erecting buildings on their own land, or in discharging
debts of the charity secured or unsecured, the trust money could not be disentangled, the equitable remedy of a charge would work
an injustice, and the claim of the next-of-kin was no longer available.

● The property is traceable- in equity the money can be traced whether it is mixed or unmixed. The requirement for
tracing is therefore that the property should be traceable in the sense of being identifiable as in existence in its original,
unmixed form or mixed with some other property. So money from a sold trust property which is used to purchase a car is
traceable to the car. Equity regards the mixed fund as capable, in appropriate circumstances of being resolved into its
component parts. Where there are several obligations, it may be difficult to trace the property because of the difficulty of
determining which obligation is being discharged.
o Appropriation by a debtor- a debtor paying money to his creditor has the right to appropriate any payment he
makes to whatever debt he chooses, but he must make the appropriation at the time of making the payment-RE
SHERRY. The choice may preclude tracing if it is paid to discharge a debt not credited to the trust.
o Appropriation by creditor- if the debtor does not make the appropriation to any account, then it is open to the
creditor who had received the money to decide to which debt he will appropriate the payment. If the debtor does
not make appropriation at the time when he makes the payment, he loses the right to make it and the right
devolves on the creditor who may do so at any time up to the very last moment. Possibly the witness box. However,
it must not be appropriated to pay an illegal debt when there is a legal one, or defray a statute barred debt when
there is one that is not statute barred.
o The rule in Clayton’s case- section 21 of the limitations act provides that in such a case where neither the
debtor nor the creditor makes an appropriation of a payment to any particular debt the payment should be
deemed to be appropriated pari passu to the statute barred debts. The old law was that where there was no
express appropriation, the rule in CLAYTON’S CASE applied, that each payment was appropriated to the earliest
debt which was not state barred.
o The rule in re hallet estate- RE HALLET ESTATE. It was contended the rule in Clayton should be applied so
ththat the first deposits should be deemed to have been first withdrawn. If this rule were applied, the deceased
would have been held to have withdrawn the trust funds first, with the result that the insufficient bank balance
would have been regarded as his own money. This would have worked to the prejudice of the trust funds and to the
advantage of the deceased and therefore rejected. It was held that the deceased solicitor was presumed to have
withdrawn his money first. RE HALLET’S ESTATE is therefore for the authority that where a trustee draws on a
bank account which contains both his money and the trust funds, he is deemed to have drawn his money first, even
if his own money was the last to be paid in last. This rule may exclude the rule in Clayton. In a case where the
trustee has mixed trust funds with his own, the onus is on the trustee to prove that he has his own portion in the
mixed funds. Unless the trustee can prove this, the claimant is entitled to the whole of the mixed fund-LUPON V
WHITE. The rule in HALLET is not applied mechanically. The rule is based on the presumption against a breach of
trust. Therefore id the trustee mixed trust funds with his own money and then withdraws a substantial part for a

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profitable investment, it may work an injustice to the beneficiary to assume that the trust money was untouched.
Every case must be decided on his own facts. RE OATWAY. The rule is not confined to bank accounts, but applies to
other property as well, such as shares in a company.
o Dissipation defeats tracing- it is not possible to trace property if the property has been dissipated or spent in
some form which renders it non-existent. For this reason, the payment of a debt precludes tracing because it
purchases no new asset on which one can lay hands, and there is no equity to revive the debt by taking back the
money or otherwise.
● There is an equity to trace- even where the property is traceable, it is necessary to establish an initial fiduciary
relationship before the property can be traced and claimed. The fiduciary relationship must exist between the claimant
and the person through whom the holder derives title. To prove a case of a mere unjust enrichment may not be a good
ground for an equitable right to trace property-RE DIPLOCK. The existence of a fiduciary relationship must be proved and
this can be established by proving a trust or some other fiduciary relationship.
● Tracing may not produce an inequitable result- equity will not allow a property to be traced if it not equitable to do so
or contrary to the rules of equity. It would also be refused if it will cause an injustice. Therefore a right to trace cannot be
exercised against a bona fide purchaser for value without notice of the equitable interest-RE DIPLOCK. There can be no
tracing if the claimants have acquiesced in the wrongful mixing of funds of their wrongful distribution. This is not a case of
laches or delay.

The effect of tracing

The effect of tracing is that the claimant become entitled to the property. He takes the property in the state he finds it. If there is a
depreciation, the claimant takes the property as found but, if the depreciation resulted from a breach of the trust, the claimant is
additionally entitled to maintain a personal action for a breach of trust against the trustee for the loss. However, in some cases the
effect of tracing depends on what the property consists of and the claims against it.

● Unmixed- tracing is relatively when there had been no mixing of the trust funds with other money. In this case, the
claimant may choose to take the property purchased with the trust funds or to have a charge upon it for the amount as
state din the RE HALLET’S CASE. If the proceeds have not been used at all, the claimant has a right to them and this is not
tracing strictly so called. This is the result in both equity and law.
● Mixed funds- in the case of a mixture, there arises the problem of identifying the trust funds in the mixed account or in
other property into which it is converted. Identification of the trust property in the mixed fund is therefore, the first step.
The basic rule is that, where the trustee has mixed trust with funds of his own, the onus is on the trustee to prove which
part of the mixed fund is his own; otherwise, the beneficiary is entitles to every portion of the blended property which the
trustee cannot prove to be his own-LUPTON V WHITE. If the mixing has taken place in a current account, the principle is
to apply that enunciated in the rule in CLAYTON’S CASE. If it is only the trustee’s own money that the trust property is
mixed with, the rule in RE HALLET’S ESTATE applies that the trustee is deemed to have withdrawn his money first.
However if it causes injustice as seen in b the trustee would be deemed to have first used the trust funds in a profitable
investment.

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Entitlement pari passu- where there is a mixture from different sources excluding the trustee’s own money, the rule in CLAYTON’S
CASE cannot apply. This means that each party will take proportionate to his contribution to the mixed fund or the property
acquired with the mixed fund. This will apply if the different funds in the blended property came from different beneficiaries, under
a trust or from beneficiaries and a volunteer or volunteers. There share pari passu both the property and any accretion.

Declaration of charge

If the proceeds from the sale of the trust property has been invested in the purchase of some other property, the successful
beneficiary may elect to take the new property purchase or hold it as a security for the amount of trust money laid out in the
purchase-RE HALLET’S ESTATE. This is known as a declaration of a charge on the property. The proceeds may however, be mixed
with other money in the purchase of new property. In that case, the beneficiary cannot elect to take the property. The beneficiary is
however entitled to a charge on the property purchased, for the amount of the trust money laid out in the purchase.

Tracing trust property held by third parties

Where the trustee has wrongfully alienated the trust property, such as by sale, the beneficiary can trace the trust property,
whatever form the proceeds may take, provided they are identifiable and traceable. A purchaser for value without notice takes the
property free from the equitable interest of the beneficiary and the beneficiary’s only remedy is a personal action against the
trustee for breach of trust. In this case, the beneficiary may elect to take the proceeds together with its accretions or take a personal
action for breach of trust.

Where the sale was wrongful and the purchaser has notice, the beneficiary has two options. A purchaser with notice take the
property subject to the equitable interest. He therefore would have purchased the office of a trustee. The beneficiary may therefore
decide to enforce his right under this option and remain entitled to the beneficial interest.

The other option is to elect to adopt and ratify the wrongful sale and then trace the proceeds in the hands of the trustee. The effect
of adoption is to confer a good tile on an otherwise defective title of the purchaser. The beneficiary cannot elect both. Notice of the
purchase includes constructive, actual and imputed notice. Section 24 of the land registry requires the instrument to be registered
and by virtue of section 25 of that act, registration amounts to actual notice to the prospective purchaser of the existence of the
trust.

Termination of trusteeship

Although a trustee ceases to hold office, the trust itself may remain valid and the trustee may be replaced.

● Disclaimer- nobody can be compelled to accept the office trustee against his wishes, unless it is the case of a constructive
trust or a resulting trust. Therefore a person who is appointed may disclaim the office or refuse to serve. The preferred
method of declaiming is through a deed however it can also be implied from the facts. Where the executor-trustee survived
his testator for nearly 30 years without proving his will or acting, or applying for, receiving, a legacy given him in his
official capacity, but had not formally renounced or disclaimed it was nevertheless held that his conduct amounted to a

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disclaimer- TOWNSON V TICKELL. Any meddling with the trust property may be construed as acceptance. Once one has
disclaimed, one cannot accept the office of a trustee unless re-appointed-
HOLDER V HOLDER,
Victor Holder was an executor of his father’s will. He wanted to renounce executorship, after he had performed some tasks in that
capacity. Unfortunately that technically meant the executorship could not be properly renounced. The remaining executors
put two farms up for auction, on which Victor was a tenant. Victor bought them at the auction. The other beneficiaries of
the trust claimed he could not make the purchase, because it would constitute a conflict of interest. HELD: Victor could not
renounce his trusteeship once he has accepted and performed under it. As such, his purported purchase is void.
● but he retire. A renunciation of a probate by an executor-trustee is not necessarily a disclaimer of the trust, though it can
amount to evidence of a disclaimer. A disclaimer must be of the whole of the trust; a disclaimer of a part of it is ineffective-
RE LORD AND FULLERTON’S CONTRACT
A testator having real and personal property in England and abroad left his residuary estate to trustees upon trust for sale. One of
the trustees disclaimed the trusts of the will except as to the property abroad. The remaining trustees sold land of the
testator in England. HELD: the disclaimer had no effect, and that the disclaiming trustee was a necessary party to the
conveyance.
The disclaimer involves also of any benefit that goes with the office-SLANEY V WITNEY but it does not affect a benefit independently
conferred by the trust, such as a beneficiary under the trust.
● Retirement- one cannot be compelled to remain a trustee. A trustee may for a good reason, ask to be relieved of the office
at any time. Retirement means a discharge from further responsibility and liability under the trust. There are however
limitations. A trustee may retire from a subsisting trust if there is an express power to that effect in the trust instrument, or
by the consent of all cestuis que trust if they are sui juris-WILKINSON V PARRY or by an order of the court. Some
authorities suggest that unless either of these circumstances applies, a trustee can only retire is there is another valid
appointment of another trustee in his place. This is especially true for a sole trustee as otherwise would mean an absence
of a trustee for the valid property. If there are other trustees he may retire with no such appointment. As a rule, no one may
be compelled to remain a trustee. However. A retiring trustee is responsible for the costs of his retirement and replacement
in the case of an unreasonable retirement.
● Removal- in Ghana there is a statutory provision in the public trustee act, which may be used to remove a trustee by the
court. Section 9 of the act provides that:
The Court may remove a private trustee if the Court is satisfied that the continuance of the existing trustee in office may be
detrimental to the execution of the trust though the misconduct or maladministration has not been proved against the
private trustee. The court has an inherent jurisdiction to remove a trustee and to appoint a new one in his place, the
criterion always being the interest of the beneficiaries- RE WRIGHTSON. It is not necessary to prove actual misconduct on
the part of the trustee. There is a ground for removal where the trustee refuses to execute the trust; or is in breach of trust;
or is ignoring one of his recognized duties. Where the trustee has placed himself in a conflict of interest positon, although it
may not amount to a breach of trust, he may be removed. Bankruptcy may be a ground for removal, but only if the nature
of the trust is such that the trustee has to handle trust funds and there is the likelihood that he might misappropriate them,
otherwise mere bankruptcy is not a ground for removal-RE BARKER’S TRUST. Removal can also take place by the

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stipulation of the trust if it so provides. A trustee may be removed by the dictates of the general rules of law or equity.
Where a trustee is removed because for misconduct, or where his request for removal or retirement is unreasonable, he
may be ordered to personally pay the costs of the action resulting his removal- AG V MURDOCH.

MORTGAGES

The principal legislation is the Mortgages Act, 1972 (NRCD 96). There is also the Mortgages Amendment Act, 1979 (AFRCD 37); The
Home Mortgage Finance Act, 2008 (Act 770); The Borrower’s and Lender’s Act, 2008(Act 773). Before the passage of NRCD 96,
Ghana basically applied the English Statue of General Application in relation to mortgages. From 1 st January 1973, the Mortgages
Act came into force. Under the old law, a mortgage was defined as a conveyance of land or an assignment of chattels as security for
the payment of a debt or the discharge of some other obligation for which it is given. SANTLEY V. WILDE. Lindley M.R. stated the
principle on mortgages as follows, “that a mortgage is a conveyance of land or an assignment of chattels as a security for the
payment of a debt or the discharge of some other obligation for which it is given.”

The current definition is in section 1(1) of the mortgages Act 1972, (NRCD 96) ‘a contract charging immovable property as
security for the due repayment of a debt and any interest accruing thereof or for the performance of some other obligation for
which it is given’

Distinction between Statute and Law:

● Relates to only immovable Section 1(1)

● No longer a conveyance but a charge or an encumbrance on the property Section 1(2)
● It is necessarily a contract Section 1 (1)
Section 1(2) provides that a mortgage under Ghanaian law does not operate so as to change the rights of possession or other
interest in the property charged except as otherwise provided by law. This means that although you have mortgaged the property,
you continue to be the owner of the property.

A mortgage may be created over any interest in an immovable property which is alienable-Section 1(3). Therefore a mortgage
may be created over a freehold interest, leasehold, assignment or a sub-lease. The interest mortgaged may be a legal interest,
equitable interest or a customary interest.

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Under section 2, every transaction which is in substance a mortgage of immovable property , whether expressed as a mortgage,
charge, pledged of title documents , outright conveyance , trust for sale on condition , lease , hire purchase , conditional sale , sale
with the right of re-purchase or in any other manner shall be deemed to be a mortgage and shall be governed by the Mortgages
Act. Thus, no matter the transaction under which the mortgage is made, it will be governed by the Mortgages Act, NRCD 96.

KHOURY V. MITCHUAL.

One Robert Mensah, acting for and representing the plaintiffs who were minors in 1941, executed a document leasing a house to
the defendants as lessees at an annual rent of 25 pounds for a term of 40 years. The lease was to take effect from 1 December 1941.
The defendants –lessees paid to the lessor by way of an advance covering the whole period of the term of 40 years the total sum of
1000 pounds. The lease agreement empowered the defendants to break down and rebuild the house at a cost not exceeding 2000
pounds. At the same time the lease agreement was executed, a collateral agreement was entered into by the parties whereby the
said house was mortgaged to the lessees for the sum of 1000 pounds which mortgage deed was to all intent and purpose to assure
the defendants an uninterrupted possession and control of the premises demised for the period of 40 years. In 1943, one Chief (KA)
who had a life interest as to a share in the rents accruing from the house sued the defendants before the Divisional Court. That
action was settled. In 1945 KA brought an application for a variation of the 1943 settlement and this was done per a consent order
of the court. The consent order provided, inter alia, that the lease was for 40 years at a rent of 25 pounds per annum. It also
empowered the defendants to break down and rebuild the house at a cost not exceeding 2000 pounds and to charge same against
the rent account. Subsequently, the defendant the defendants pulled down and then rebuilt the house at a cost of 15,000 pounds. In
1982, the plaintiffs instituted an action in the High Court for inter alia recovery of possession of the house on the grounds that the
defendants lease had expired in December 1981. The defendants denied the plaintiffs’ claim and contended that by the variation of
the 1943 settlement they were entitled to enjoy the property for 80 more years in order to liquidate the 2000 pounds which the
lease and the court order permitted them to spend on the building. The plaintiffs succeeded in the High Court. On appeal, the
defendants contended that the provisions on the lease agreement empowered the defendants to continue with the payment of 25
pounds as the annual rent as provided and to charge that to the rent account combined to give the defendants a further lease of 80
years to defray the cost of the 2000 pounds. In reply, the plaintiffs contended that even though the word “lease” was used, the
transaction was in reality a mortgage and consequently the absence of a clause providing for the reconveyance of the house to the
plaintiffs on repayment of the 1000 pounds or 2000 pounds imposed a clog on the equity of redemption and was therefore unlawful.
In support of their cross-appeal, the plaintiffs submitted that since the defendants were mortgagees in possession equity imposed an
obligation on them to account for profits accruing from the property. The defendant resisted this claim.

Held- That the true position in equity was that the mortgagor’s equity of redemption was inviolable; the maxim was “once a
mortgage always a mortgage.” Accordingly where a transaction was in substance a mortgage, equity would treat it as such even
where it was dressed up in some guise, as by the documents being cast in the form of an absolute redemption arose as from the date
the mortgage was made on 19 December 1941. Since the term of 40 years had completely elapsed, the plaintiffs’ equitable right to
redeem started to run from December 1981 not from December 1941. The court also held that the defendants had infringed the
equitable doctrine against clogging the equity of redemption and obtaining an unconscionable advantage because those doctrines
provided that a mortgage must not be converted into something else. Consequently, where a stipulation for the benefit of the

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mortgagee was part of the mortgage transaction, it was but part of his security, and would necessarily come to an end on the
payment off of the loan.

Per Wuaku JSC “The true position in equity is, as was argued by Mr. Kom, that the mortgagor’s equity of redemption is inviolable;
and that the maxim is “once a mortgage always a mortgage.” Where a transaction is in substance a mortgage, equity will treat it as
such even if it is dressed up in some guise, as by the documents being cast in the form of absolute conveyance.”

Note that anytime there is a mortgage, there is an element of ‘redeemability.’ Thus, redemption is always at the heart of every
mortgage transaction. So once you perform the obligation under the mortgage agreement, you are entitled to redeem the property
back. NOAKES V. RICE. The court stated thus, “redemption is the very nature and essence of a mortgage. A mortgage cannot be
irredeemable. The maxim is once a mortgage always a mortgage.”

Once a mortgage, always a mortgage is a maxim which stresses the principle that, in equity, a mortgage is intended solely as
security for a loan and not as a means to secure a collateral advantage for the mortgagee. In other words, and as SETON V. SLADE
establishes, once the mortgagor has paid back his debt to the mortgagee, the purpose of the mortgage has come to an end and the
property should be released unencumbered.

The principle is this-that a mortgage must not be converted into something else; and when once you have come to the conclusion
that a stipulation for the benefit of the mortgagee is part of the mortgage transaction, it is but part of his security, and necessarily
comes to an end on the payment of the loan”- NOAKES & C. LTD V RICE. Thus, if a company lends money on condition, for example,
that the mortgaged property is used only for the sale of the mortgagee’s products, he cannot insist on this tie continuing when the
mortgage is redeemed, or prevent redemption for fear of losing that tie.

Under section 14, you cannot secure an illegal transaction to secure a mortgage. ‘Where the performance of an act or acts secured
by the mortgage is illegal or derived from the contract which is illegal, the mortgage to that extent shall not be enforceable.’ Where
the performance of an act secured by the mortgage derives from a contract which is void or
voidable at the mortgagor’s option, the mortgage is not, to that extent, enforceable but a court may order restitution as a condition
to the return of the title documents or the removal of a clog on the title to the mortgaged property.

Features of a Mortgage under NRCD 96

1. Charge must be over an immovable property

2. Not a conveyance
3. Redeemability

The creation of mortgages

It can be created in one of three ways –legal mortgage, equitable mortgage or customary as a pledge.

● Legal Mortgage- The mortgage must be in writing, signed by the mortgagor or his authorized agent – section 3(1)(a) of
NRCD 96. ‘No mortgage shall be enforceable unless it is evidence by a writing signed by the mortgagor or by his agent duly

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authorized in writing to sign on his behalf’. Apart from the mortgage being in writing and signed, it must also be
registered. If it is not registered, it does not qualify as a legal mortgage –sections 24 & 25 of Act 122, the land Registry Act.
ASARE V. BROBBEY. The interest over which the mortgage is created must be capable of existing as a legal interest.
● Equitable Mortgages- section 3(1) (b) & (c) - An equitable mortgage may be created when the need for writing is
excused by the operation of the rules of equity including the rules relating to fraud, duress, hardship, unconscionability,
part performance. Equitable mortgage can also be created where the interest in the immovable property is equitable. An
instance is a trust.
● Pledge- A pledge is a customary law transaction where the pledgor (borrower) surrenders possession of his property to
the pledgee (creditor) “to hold and use until the debt due is paid, an article borrowed is returned or replaced, or obligation
is discharged.55 Section 3(1) (c). Typically customary law does not know of writing. There should be the presence of
witnesses. ‘A mortgage is not enforceable unless it is excused from the necessity of a writing by an enactment, in the case of
a customary law transaction.’ There have been some intervention in the law in relation to mortgages. The Mortgages
(Amendment Decree), 1979 AFRCD 37. It is an act made up of two sections. Section 1 indicates that upon the coming into
force of the amendment law, September 1979, the pledgor retains ownership or possession of the property unlike what
existed under customary law( possession is given the pledgee). This is thus in consonance with section 1(2) of NRCD 96.
Under section 2, upon the commencement, where a farm land had been used as a security for a loan, it is converted into a
mortgage transaction. This is retrospective.

End of Pledges in Ghana ‘-Professor E.V.O. Dankwah.

When possession passed to the pledgee under the old law only one creditor could advance loan(s) in respect of one property. But
since under s. 1(1) of N.R.C.D. 96 a pledge is now only a charge on immovable property (farmland) more than one charge can be
created with different creditors in respect of the same property. A farmer with a valuable farmland as security may, therefore, be
able to raise more credit than previously out of that single property. A.F.R.C.D. 37 has also settled the question whether a pledgee
has an implied power to sell pledged property. Pledged farmland now can be sold only after a court has so ordered; and the parties
cannot agree to a contrary provision. ..

By virtue of Section 1 of A.F.R.C.D. 37 past pledges of agricultural farmland cease to be pledges. …Since, by virtue of section 1 of
A.F.R.C.D. 37, future loan transactions in respect of which any farmland is given as security shall be governed by N.R.C.D. 96 the
implication is that there can no longer be a pledge of agricultural farmland in Ghana.

A.F.R.C.D. 37, future loan transactions in respect of which any farmland is given as security shall be governed by N.R.C.D. 96 the
implication is that there can no longer be a pledge of agricultural farmland in Ghana. AFRCD 37 is a revolutionary piece of
legislation not only because it has converted pledges into mortgages but also because the conversion has been made retrospective.
As a result pledges of “farmlands” which were made under the old law are governed by N.R.C.D. 96, with the qualification, “as far as
may be necessary”. The following are , arguably, some of the consequences which flow form the conversion of pledges into
mortgages:

55 See EVO Dankwa The End of Pledges in Ghana

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(i) Pledges in possession of farmlands must give up their possession because their possession is not based upon failure of
performance of an act or acts secured by the pledges as required under the N.R.C.D. 96; (ii) A provision in a pledge which conferred
on the pledgee the power of sale will be of no effect not; (iii) The right of the pledgor to redeem the land will be lost if the pledgee
continues to remain in possession for 12 years.

AFRCD 37 applies to “farmland’ (section 1) and “agricultural farmland” (section 2); presumably the two terms mean the same
thing. Although the two terms are not defined or interpreted under A.F.R.C.D. 37, it is suggested that all lands on which there are
farms or on which farms can be made are farmlands. Broadly speaking, fishermen are engaged in farming, and fisheries have
always been under agriculture, at least in Ghana. Creeks should, therefore, be considered as part of “agricultural farmland”. This is
more so since the same principles (of pledges) applied to both land strictu sensu and creeks; and the mischief sought to be cured by
A.F.R.C.D. 37 obtains in pledges of both kinds of property. Nevertheless, the limitation of the application of A.F.R.C.D. 37 to
“farmland” makes it possible to apply both the new and old laws to the same transaction because pledged property may consist of a
farm and a building as was the case in LANGMAH V. NGWAH. However, it is probable that some houses/buildings may be so
inextricably linked with farmlands (as in the use of farmhouses or houses close to farmlands) that the former may be considered as
part of the latter in which case only N.R.C.D. 9 will be applicable.”

The protection of the mortgagor’s equity of redemption

The mortgagor’s equity of redemption is the right that the mortgagor has to reclaim, recover and redeem his property on the
performance of the acts secured by the mortgage. The equity of redemption is a collection of rights which may be summed up in the
maxim ‘once a mortgage, always a mortgage’- KHOURY V MITCHUAL. Note that the mortgagor’s equity of redemption is a
propriety interest in land, and hence can be transferred to another person.

Rights

1. There should be no clogs or fetters on the mortgagor’s equity of redemption: The principle is that a mortgagee
must not attempt to exclude the right to redeem. Therefore, equity will not permit an option to purchase the
mortgaged property contained in the mortgaged deed even if the option constitutes a perfect bargain- SAMUEL V.
JARRAH TIMBERS AND WOOD PAVING CORPORATION LTD. In relation to the mortgagee purchasing the mortgaged
property, Lord Macnaghten expressed the view that the rule should be different from people dealing at arm’s length.
He puts it thus “…I should not be sorry if your Lordships could see your way to modify it so as to prevent its being used
as a means of evading a fair bargain come to between persons dealing at arms’ length and negotiating on equal
terms”. However, an option to purchase the mortgaged property may be valid if granted after the mortgage. In making
the assessment, the court looks at the nature of the bargain to determine whether the option to purchase is
independent of the mortgage transaction.

REEVES V. LISLE.
The appellants mortgaged a steamship for a loan from the respondents. It was agreed that before the expiration of the
two years from the date of the mortgage, if the respondents should elect within those two years to enter into

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partnership with the appellant in his business, they should be at liberty to do so on the terms that the respondents
should relieve the appellant from payment of the loan for the purposes of the partnership. The money was lent but not
repaid as the two years elapsed. By a deed of assignment, the appellants assigned to the respondents property as
security for part of the debt with a proviso of redemption and covenanted to pay the remainder by a stated date.
Another agreement was signed between the parties after the term of the two years expired, whereby the appellant was
not in a position to comply with the respondent’s application for repayment. The applicants further requested for an
extension of time for a further five years, which they agreed to do upon certain terms, including that if at any time
within eth period of the five years, the respondents should elect to enter into a partnership with the appellant in his
business, they should be at liberty to do so, upon the terms the respondents should relieve the appellant from the
payment of the debt owned and should transfer the ship free form the mortgage for the purpose of the partnership.
Within the five years, the respondents gave the appellant notice that they elected to enter into partnership with him.
The appellant –defendants having regard to comply, the respondents –plaintiffs brought an action against for specific
performance or alternatively for a breach of the agreement.

Held- That a mortgagor and a mortgagee may, by a separate and independent transaction subsequent to the
mortgage, make a valid agreement which gives the mortgagee the option of purchasing the mortgaged property , and
thus, may have the effect of depriving the mortgagor of his right to redeem. The appellant is thus bound by the
agreement.

Generally, as mentioned earlier, equity does not allow redemption before the legal date of redemption. But any
covenant made by the mortgagor not to redeem the mortgage before a certain date may be held void if it is oppressive
and unconscionable. KNIGHTSBRIDGE ESTATE V. BYRNE There should be no unreasonable postponement of the
mortgagor’s right to redeem his property: The general principle is that the right to redeem may be postponed unless
redemption in those circumstances becomes illusory or oppressive- FAIRCLOUGH V. SWAN BREWERY LTD. However, a
postponement may be held valid and enforceable where the parties are commercial and of equal bargaining power.
That is both parties under expert advice and dealing at arm’s length. KNIGHTSBRIDGE ESTATE V. BYRNE

2. Redemption must be free from collateral advantage or conditions- A collateral advantage is an agreement in
the mortgage which does not relate to the mortgage but confers some advantage on the mortgagee. The principle is
that a mortgage may lawfully contain terms which give a mortgagee some advantage in addition to his security. Such
a condition or advantage is enforceable if the condition is neither unconscionable nor in restraint of trade and
designed to cease with redemption. BIGGS V. HODDINOTT, NOAKES V. RICE. A collateral advantage may however be
enforced after redemption if it is independent of the mortgage-

KRELINGER V. NEW PATAGONIA MEAT AND COLD STORAGE COMPANY LIMITED.

The meat company were mortgagors, while the mortgagees were a firm of wool brokers. The mortgage contained a
provision that for the next five years the company should not sell any sheepskins to any other person without first

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offering them to the wool brokers at the best price obtainable elsewhere. The wool brokers accepted a slightly reduced
rate of interest in return for this guarantee. The mortgagor repaid the debt after only two years and in accordance
with the agreement, the lenders claimed to exercise their option of pre-emption notwithstanding the payment of the
loan. Held- That the ‘sheepskins clause’ remained valid for the full five years, even though the mortgagors had
redeemed the mortgage. The sheepskins agreement was not a collateral advantage of the mortgage, but was an
‘independent’ collateral contract entered into as a condition of obtaining the loan.
It should however be noted that, if there is inequality of bargaining power between the mortgagee and the mortgagor,
the collateral advantage may be held to be a cog on the equity of redemption.

3. Terms of the Mortgage must not be oppressive nor unconscionable: Equity viewed borrowers including
mortgagees as necessitous men- VERNON V. BETHEL “necessitous men are not truly speaking freemen but to
answer a present exigency will submit to any terms that the craft may impose upon them” . In proper cases the court
has the power to reduce interest rates. Section 1 of Loans Recovery Ordinance, 1918 (CAP 175) gives the court
the power to reopen a transaction where the transaction is harsh, unconscionable or is otherwise a transaction in
respect of which a court of equity will give relief- CITYLAND & PROPERTY (HOLDINGS) V DEBRAH .; PHILOMENA
MENSAH V. AHIENFIE CLOTH SELLERS ASSOCIATION
The plaintiff association was formed with the object of applying for loans for its members as it was difficult for the
members to get the loans themselves. It succeeded in obtaining a loan of GH¢100000 from GCB on an interest rate of
29%. The defendant, a member of the association applied to the association and was granted a loan of GH¢30000 from
the association but at an interest rate of 52%. The defendant defaulted in paying the loan and the plaintiff sued. The
defendant argued that the interest rate was harsh and unconscionable and was unlawful. Held- the court held that,
the plaintiff association can be regarded as a money lending business and fell within the description of a lender. The
court further held that the interest of 52% was harsh as it exceeded the normal interest rate then in force of 30% and
as such, the court revised it and splashed a 19% interest rate.
4. Where it is provided for in a mortgage deed or agreement, the mortgagee may alter interest rates provided that he
does so in good faith and for valid commercial reasons and not for dishonest or improper purposes.

PARAGON FINANCE PLC V. NASH

The claimant mortgage company claimed possession as mortgagee from the defendants in two actions on the ground
that the defendants were in arears with their mortgage interest repayments. Both mortgage agreements contained
variable interest clauses. The defendants admitted the arrears of interest, but asserted that, by reason of the rates of
interest that they were required to pay, the mortgage agreement were extortionate. The defendants did not complain
that the agreements were extortionate credit bargains at outset, but rather that the agreements had become
extortionate at a later date when, by reason of the claimant’s failure to adjust the charging rates in line with Bank of
England or prevailing market rates, the interest payable so far exceeded those rates as to be exorbitant. Held- the
power given to the claimant by the mortgage agreements to set interest rates from time to time was not completely

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unfettered. A construction to the contrary would mean that the claimant would be completely free, in theory at least,
to specify interest rates at the most exorbitant level.

The equity of redemption can be lost by the effect of a judicial sale, or if one has been in possession for 12 years or
more of the mortgagor’s property-Section 12(2)(4) of NRCD 54.

Rights of the mortgagee in the event of the mortgagor’s default

1. Right to sue on a personal covenant-Section 6 of NRCD 96 ‘ A mortgagor is personally liable as well as liable on
the mortgage security unless a contrary intention appears. The effect of section 6 is to let the mortgagee effect
judgment or proceed against any other property of the mortgagor’s to recover. The mortgagor may therefore be sued
on his personal covenant to recover
2. Sale of the mortgaged property- This can be done judicially or statutorily (private sale).

● Judicial Sale- Upon default by a mortgagor to perform, the mortgagee may bring an application under section
18 of the Mortgages Decree for an order for the judicial sale of the property. The judicial sale must be by
public auction unless the mortgagor or all subsequent encumbrances agree to a private treaty and the
terms of the private treaty are approved by a court. Under the Act, a mortgagee who requests for a judicial
sale as well as all encumbrances may purchase the property at the judicial sale. The only caveat is that the terms
of the purchase must be approved by the court.- section 18(6) The effect of the judicial sale is that the purchaser
takes the property free form all subsequent mortgagees on the proceeds. All expenses incidental to the judicial sale
are first paid for with the proceeds of the sale. This is followed by all sums secured by the mortgage. Next are any
subsequent mortgages in the order of priority. Any remaining balance will be given to the mortgagor or any of his
assigns, or successors in title.
● Statutory Sale- Here the significance difference is that there is no need for an order of the court to sell the
property but the law given you the power to sell must be faithfully complied with. Section 33 of the Borrowers
and Lenders Act states that where a borrower fails to pay an amount secured by a charge under this Act, the
lender may sue the borrower on any covenant to perform under the credit agreement, or realise the security in the
property charged on notice to the person in possession of the property. Also section 12 of act 770. Section 20 of
the Home Mortgage Finance Act states a mortgagee may exercise a right of sale without recourse to court. The
sale maybe by public auction or private contract. Under the home mortgage finance Act 770, the auctioneer’s fee
shall not exceed 3% of gross amount realized from the sale. Again under Act 770 also, a mortgagor or a person
who has an interest in the mortgaged property may purchase the property at the sale. Where there is default, the
law says that the mortgagee must be given 14 days’ notice and when this fails too you must give him notice and it
is after this that you may proceed to sell. The sale may be by private treaty or public auction. Where it is a private
treaty, it should not be sold less than 85% of the value. Section 1 of the Home Mortgage Act indicates that it will

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apply where a financial institution provides funding for the acquisition, construction, extension, renovation, etc for
a residential purpose. However, where it is an obligation which does not deal with money lending for residential
purposes you go to NRCD 96. Where you comply with the details of the borrowers and lenders act (with the
collateral registration) you come under the Borrowers and lenders Act.
3. Appointment of a receiver- Section 16 of Mortgages act, NRCD 96; section 29 of the Borower’s and Lender’s
Act; section 14 of the Home Mortgage Act-Its indicated here that the appointed can be done without a court order.
The receiver is the agent of the mortgagee. The mortgagee may revoke the appointment of the receiver in writing-
section 14, Act 770. Under Section 16 of the mortgages act, a mortgagee may apply to court for the appointment of
a receiver where there is failure by the mortgagor to perform an act/obligation secured by the mortgage. The receiver
has power to collect income from the property, make repairs and to do all things necessary for the proper
management of the property. He must be able to account to the court whenever he is required to and also entitled to
take out of the income from the property as his remuneration. From the monies collected, he must pay all rents and
taxes and all sum due the mortgagee. A receiver is appointed by express orders of the court and any contrary
agreement authorizing a receiver out of court is void. –section 16(6). Under the Home Mortgage Finance Act, a
mortgagee is not obliged to take court proceedings to appoint a receiver. The receiver shall be the agent of the
mortgagee. Again, the law indicates that where the parties have agreed as to how much the receiver should receive,
the receiver should not be paid not more than five percent of the gross amount received. Where the parties are silent
however, the receiver shall be paid 2.5 per cent. Under section 29 of the Borrowers’ and Lenders Act, the mortgagee
may appoint a receiver or apply to the court for appointment.
4. Right of Possession- section 17 of NRCD 96. Under pre-73 law, the mortgagee had the legal title to the mortgaged
property and as such in principle could enter into the property at any time during the subsistence of the mortgage,
even if the mortgagor was punctually performing the acts secured by the mortgage unless he has contracted out of the
right expressly or impliedly. In FOURDMAIDS V. DUDLEY MARSHALL (PROPERTIES) LTD, Harmann J, held that the
mortgagee may go into possession before the ink is dry on the mortgage unless there is something in the contract,
express or implied, whereby he has contracted himself out of that right. The right to enter into possession can now be
exercised only if there is failure to perform an act secured by the mortgage-section 17(1). Where the default involves
the payment of principal interest, the mortgagee’s right of possession can only be exercised after the mortgagor has
been given notice in writing within 30 days or such longer period of notice. A mortgagee is entitled to possession if he
can do so peaceably, otherwise he must bring an action for possession. –section 17 (2) of Mortgages Act. This right is
normally not exercised because of strict expectations of the court. This is because, generally, the duties imposed on the
mortgagee are onerous since he must account to the mortgagor any profits or rents which he receives and on the
footing of willful default for all that he ought to have received. This is the doctrine of ‘strict accountability.’- section 17
(3-7) of Mortgages Act / section 34 Borrowers and Lenders Act; section 13 of the Home Mortgage Finance Act.
Under section 13 of Act 770, the mortgagee may take possession of the mortgaged property upon the mortgagor’s
default to perform and the mortgagee is not obliged to take court proceedings and may take possession peaceably.
Where a mortgagee is unable to enforce a right of possession in a peaceable manner, the mortgagee may use the

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services of the police to evict the mortgagor or other person in possession pursuant to a warrant issued by a court-
section 13(3)

Priority of mortgages
Priority of mortgages helps a court with the rules that determine the sequence in which competing claims are settled. Section 19 of
NRCD 96 governs questions of priority. Section 19(1) provides that priorities among encumbrances shall be in order of time, the
first encumbrance in time having priority. There are however several exceptions to this rule:
● It may be displaced by statute- For instance Act 122 requires that all transactions affecting land must be registered and
an instrument which is not registered is not enforceable. The ACT indicates that priority will be determined in accordance
with registration. Under section 3(4) of NRCD 96, every mortgage shall be registered in accordance with the Land’s
Registry Act, 1962 (ACT 122) Rule in DEARLE V. HALL
● It may be displaced by the express agreement among encumbrances (mortgagees) - The mortgagees can agree to
alter the general rule.
● It is also subject to the operation of the rules of equity including the rules concerning fraud, estoppel for gross negligence
or purchaser for value without notice of prior interest. Remember AMUZU V. OKLIKAH where Ampiah JSC stated that ‘It is
said that equity follows the law, but equity would not permit an Act to be used as an instrument of fraud! Any conduct that
borders on fraudulent behavior should be frowned upon; it must not be encouraged.”

Tacking and consolidation

Tacking- Tacking is a process by which a first lender on a mortgage could hold on to (tack) his first loan subsequent advances
made to the mortgagor so as to obtain priority over a mortgage intervening between the first and the subsequent advances made to
the mortgagor by the first mortgagee-section 19 (3) , NRCD 96. Tacking has been partially abolished under NRCD 96. Section
19(3) provides that no tacking shall be allowed in deciding priorities among mortgagees. However where a mortgage is expressed
to secure further advances tacking shall apply.

Consolidation- This refers to the practice where a mortgagor who has entered into more than one mortgage transaction with a
particular mortgagee is compelled as a pre-condition to redeeming a particular mortgage to also redeem any other mortgage
which he had made. Consolidation is totally prohibited in Ghana under section 19(4) of NRCD 96. Therefore a mortgagor is at
liberty to redeem any particular mortgage that he or she may choose without being required to redeem all other mortgages.

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