PRINCE S. B. GODWN V. H. A. PARIS AND B. L. THOMAS

KINGDON, C.J., NIGERIA, GRAHAM PAUL, C.J., SIERRA LEONE AND MARTINDALE, J., GOLD COAST. The plaintiff who is a licensed money lender sued one H. R. Pratt as principal and G. N. Pratt as surety for the sum of £165 being principal due upon the defendants bond to the plaintiff dated 12th April, 1939. The principal debtor H. R. Pratt did not defend, judgment was entered against him and he is not concerned in this appeal.

The surety G. N. Pratt did defend and his statement of defence was as follows: “The defendant GEORGE NICOL PRATT says: - “ 1. That the bond referred to in the plaintiff’s statement of claim “was executed by him on the representation of the plaintiff and for “the belief of the defendant G. N. PRATT that the repayment of the “principal and interest was also being secured by a mortgage of “premises at Waterloo Street, Freetown, in the Colony of Sierra “Leone, the bond being collateral to the mortgage.

“2. A deed of mortgages of the said above-mentioned premises was “executed by LENA EUGENIA PRATT the wife of the said defendant of “the one part and the plaintiff of the other part as a security for the “amount loaned and the interest thereon.

“3. The said deed of mortgage was not acknowledged by the said “LENA EUGENIA PRATT, a married woman before a Judge of the Supreme “or Circuit Court or other duly authorised person and is invalid as “a security for the amount loaned and the interest thereon.

“4. That the transaction should be re-opened under sec. 3 (1) of “the Money-lenders Ordinance, 1924, Cap. 129-as being harsh and “unconscionable the rate of interest being excessive.”

The Court below took evidence on the issues between the plaintiff and the surety and gave judgment for the plaintiff against the surety with costs jointly and severally with the principal debtor. From that judgment the surety appealed to this Court and after the appeal came before this Court the appellant died and his executors have now been substituted for him in the appeal.

The case is really a very simple one but its simplicity was somewhat obscured by an apparent misconception on the part of plaintiff’s counsel in his argument on the evidence at the trial.

The facts of the case are that the plaintiff advanced £165 to the principal debtor under an arrangement to which the principal debtor, the wife of the principal debtor, and the surety were parties. That arrangement was that the money was to be advanced and in return therefore the lender was to receive (1) a personal bond by the principal debtor and the surety and (2) a Mortgage Deed by the wife of the principal debtor of certain real property. On 12th April 1939, both these documents were executed and delivered to the lender and on 13th April he paid over the amount of the advance to the principal debtor.

The Mortgage Deed being by a married woman, by the law in force in Sierra Leone, in order to be valid had to be acknowledged by the Mortgagor before a Judge. The lender was well aware of this requirement and had endorsed on the Mortgage the necessary form of acknowledgment before the Chief Justice. The Mortgagor, however, although she signed, sealed and delivered the Deed of Mortgage, subsequently refused to go before the Chief Justice to make the necessary acknowledgment. In spite of that

^{*Page 46} refusal which made the Mortgage Deed completely invalid, the lender, now the respondent, without the consent of the surety paid over the money to the principal debtor.

It is quite clear from the evidence of the respondent himself that the two documents, the personal bond and the Deed of Mortgage, though the parties were not identical, were regarded by all concerned as together constituting the arrangement between all the contracting parties. His evidence on the point is as follows: -

“Mortgage Deed bears same date as Bond. Same amount. Same “transaction. All parties understood this to be so”.

Nothing could be clearer than that, there was one transaction which all parties understood and agreed to. That transaction was that the loan should be made in exchange for the two documents duly completed by the relative parties. Under the arrangement understood by all parties, the valid execution of the Mortgage Deed was a condition precedent to the surety’s liability. The lender, however, elected to pay over the amount of the loan without having the Mortgage Deed duly and validly completed. To do that was to vary to an important and serious extent the terms of the agreement with the surety. The variation was obviously seriously detrimental to the interests of the surety who, by the consequent invalidity, was deprived of his well-established legal right of contribution from the, security subjects of the Mortgage Deed. Where as here, the lender took upon himself to pay over the loan without having the condition precedent implemented it is clear that the surety's liability never arose at all.

In arguing the case in the Court below counsel for the surety based his case on the principle that where by the negligence of the lender in failing to do something which it was in his power to do and which it was his duty to do a security becomes invalid or useless, any surety for the same debt is entitled to release from his liability to the amount of the consequent loss of his right of. contribution. The learned Judge rightly held that in this case that particular principle did not apply as the invalidity of the Mortgage Deed was not due to the lender’s neglect but to the refusal of the Mortgagor to acknowledge before the Chief Justice. But as has been pointed out the real case for the surety was based upon a more fundamental principle and upon that principle in our opinion, he must succeed.

Taking that view of the plaintiff's claim we find it unnecessary to deal with the question raised in the second ground of appeal, namely, as to the rate of interest charged on the loan except to say that we are not satisfied that the interest actually charged which works out roughly at 20 per cent was excessive.

The appeal is allowed; the judgment of the Court below including the order as to costs is set aside and it is ordered that if any sum has been paid by G. N. Pratt or the appellants to the respondent by way of costs it shall be refunded to the appellants; it is further ordered that there be substituted for the judgment of the Court below judgment for the defendants-appellants dismissing the claim against the surety with costs to the defendants-appellants; the defendants-appellants are awarded the costs of this appeal to be taxed.