Suit n° HCB/08S/12

– VALIDITY OF MORTGAGE – ATTACHMENT – ADMINISTRATION OF ESTATE – LETTERS OF ADMINISTRATION – CO- OWNERSHIP – ALIENATION – TRUSTEES – POWERS OF ADMINISTRATOR – PERSONAL ESTATE – INDIVISIBILITY OF PROPERTY – CONDITIONS FOR MORTGAGE – SPECIFICATIONS – OBSERVATIONS AND DECLARATIONS – EVENTUAL HEARING – FAMILY PROPERTY – SECURITY – CAPACITY TO MORTGAGE – DISTRIBUTION OF PROPERTY – INTEREST OF BENEFICIARIES – PERSONAL REPRESENTATIVES – DISMISSAL OF APPLICATION – ORDER OF SALE The court had to rule on an application for diversion of attached property based on the nullity of its mortgage. To arrive at its decision, the court had to determine the validity of the mortgage deed by a single co-owner and the possibility of attachment of the mortgaged property. Section 121 of the 1997 Uniform Act Organising Securities provides that persons whose rights over property are subject to duly notified conditions, cancellation or rescission, may only grant a mortgage on the property subject to the same conditions, cancellation or rescission. However, mortgages granted by all the co-owners of joint property shall remain effective regardless of the outcome of any subsequent sale by auction or sharing of the property. Though the 1997 Uniform Act did not address the question of mortgage of indivisible property by one single co-owner, the position is that a single co-owner can mortgage joint property but the interest of all the beneficiaries must be taken into consideration thus, the mortgage is valid. Concerning the possibility of attachment of the mortgaged joint property, section 249 of the Uniform Act Organising Simplified Recovery Procedures and Measures of Execution stipulates that the indivisible part of real property may not be put up for sale before the sharing or liquidation that may be prompted by the creditors of a co-owner. Hence, the property can be attached but cannot be sold before distribution. The application for diversion was, therefore, dismissed. Sections 15, 117, 121 and 127 UAS 1997, Sections 194 and 227 UAS 2010, Sections 249, 308, 309, 310 and 311 UASRPME ( High Court of Mezam (Bamenda), suit no HCB/08S/12 of June 2012)

This is an application for diversion grounded upon the nullity of a mortgage deed between NTARIKON CREDIT UNION LTD and FONKEM TANKEM BORROWER and BONGFEN EMMANUEL FON FESTUS GUARANTOR. Both gentlemen of counsel for the applicants and the respondents herein extensively addressed the position of the applicable laws in their written submissions. Barrister NTEM Donatus for the parties seeking the nullity of the deed, the petitioners submitted thus; That the application for diversion herein is predicated upon articles 308, 309 and 310 of the OHADA Uniform Act on Simplified Procedure for Recovery and Measures of Execution hereinafter referred to as UASPRME. That the petitioners herein are challenging the attachment and subsequent sale of the immovable property covered by Land Certificate No 4443 Vol. 23 Folio 72. That same land certificate is in the name of NDOH Tankem John, who died intestate in the year 1992. That pursuant to the latter’s demise; letters of administration were issued to FONKEM George TANKEM as evidenced in annex A exhibited in the petition. That the grant of probate was pursuant to a customary court declaration of next of Kin wherein the grantee deposed to the fact that his late father was survived by 3 widows and 21 children. Counsel contented that the widows and children afore referred are the beneficiaries of the estate of the late NDOH Tankem John. That to this effect the grantee could not have mortgaged the property without the consent of all the beneficiaries of the estate. To buttress this point, the learned gentleman proceeded to expatiate on the role of an administrator thus; That an administrator of an estate is akin to a liquidator and the duties of the administrator are analogous to those of an executor of a will. That an administrator does not own the property which is the subject of the grant but only manages same for the benefit of the other beneficiaries. Counsel stated that the property cannot be attached for the debts of the administrator. The learned gentleman referred this court to the case of Stella NUNGA and 5 others Vs Clara KUMBONGSI and 4 others, CCLR part 5, pp.189-194, wherein Ekema J. in reversing the judgment of the trial court which attached the property of an estate for the debts of an administrator state thus; ‘Late NUNGA did not at his death, will the property in question to his wife Helen NUNGA. His property therefore became family property at his death; consequently, all the beneficiaries of the NUNGA estate had an interest in the estate. The gentleman further referred this court to the rule in the case of Agbloe Vs Sappor 1947, 12 WACA 107, which is to the effect that any valid alienation of family land must be unanimously agreed upon between the family head and the members of the family. Thus, the alienation of the property of instance by way of a mortgage deed was not only bad but also incurably bad. The gentleman concluded by submitting that the tender of the property in issue as security for a loan by the administrator of the estate was expressly for his personal gains as opposed to being in the interest of the estate. In astute reply, Barrister NDAMA MBAH for the respondents stated thus; That the position of the law is provided for by section 37 of the Administration of Estates Act 1925. That a conveyance of any interest in real or personal property of the estate made to a purchaser by a person to who probate or letters of administration have been granted is valid notwithstanding any subsequent revocation or variation of the grant. He contented that the section afore mention is of wide application since same is read to include ‘a mortgage, charge by way of legal mortgage, lease assert, vesting declaration, vesting instrument, disclaimer, release and every other’. Counsel further referred to the provision for the protection of a purchaser under section 37 of the Act afore mentioned which is predicated upon the fact that the purchaser must have acquired the interest in the property in good faith and for valuable consideration. The learned gentleman also referred to the protection of a purchaser accorded by section 204 of the Law of Property Act 1925 which is to the effect that an order of the court under any statutory or other jurisdiction shall not, as against a purchaser, be invalidated on the ground of want of jurisdiction, or of want of any concurrency, consent, notice or service, whether the purchaser has notice of such want or not. A grant of probate or letters of administration, he contented, is of course an order of the court and therefore conclusive. The learned counsel in citing section 39 of the administration of Estates Act 1925 held that personal representatives are vested with the right to sell or mortgage the real and personal property of the deceased. That this section empowers the personal representative with all the powers conferred on trustees for sale of land. Counsel strenuously sought to establish that the latter have all the powers to raise money by a legal mortgage of a tenant for life under the Settled Land Act 1925. The very learned gentleman pertinently submitted that these powers are not only exercisable for the purpose of administration but also during the subsistence of any life interest or until the period of distribution arrives. To conclude, counsel for the respondent emphatically stated that the purchaser of a legal estate in land must be protected save where it can be established that the latter is aware of the fact that all the debts of the estate and the legacies of the deceased had been discharged. That section 36 subsection 8 of the act of Instance does not require the prior investigation of the purchaser in relation to the subsistence of a life interest or the non-arrival of the period of distribution. He urged this court to hold that the mortgagor herein was vested with the capacity to mortgage the property of the estate. Thus the submissions of the learned gentlemen of counsel for the petitioner and the respondent for this court’s adjudication. This court equally examines each issue seriatim.

THE CAPACITY OF THE PETITIONER The learned counsel for the petitioner raised several very pertinent issues in relation to the propriety of the mortgage deed in appreciation of the limitations of an administrator’s powers to alienate estate property. However, the application herein is predicated upon the interest of the beneficiaries. The exhibition of the customary court judgment is untenable to establish the capacity of the beneficiaries. As submitted by the learned counsel for the respondent, the beneficiaries of an estate are governed by statutory law and predicated upon the provision of the Intestacy Act 1971. This act establishes the rightful beneficiaries of the estate where the deceased died intestate; which are the wife and the children of the deceased and other members of the extended family or even unrelated dependents where they satisfy the provisions embodied in the Financial Provision Act of 1975. In fact, a next of kin judgment emanating from a customary court cannot bind a court of law. If this court should lend credence to the next of kin judgment exhibited by the learned gentleman for the petitioners, it would be disastrous to his case since same judgment is to the effect that the next of kin ‘inherits’ all the property of the estate thus he would have been unequivocally vested with the capacity to alienate same. However, the next of kin judgment is a usage which was accepted by the courts for purposes of ascertaining the administrator of an estate as opposed to the application of the provisions embodied in the Non Contentious Probate Rules 1987. Thus, the petitioners herein should not be prejudiced by same. In any case, this court takes cognizance of the fact that the next of kin judgment is an indication of the fact that the mortgagor is not the lone beneficiary of the estate. WHAT IS THE POSITION OF THE LAW IN RELATION TO THE POWERS OF AN ADMINISTRATOR OF AN ESTATE TO ALIENATE ESTATE PROPERTY? In the present circumstances, a mortgage may lead to the alienation of the property, thus the validity of the mortgage of instance is predicated upon the authority vested in the administrator of an estate in relation to the alienation of estate property. Both learned counsel stated the position of the law in relation to the role and powers of an administrator with precision. For the respondent Barrister NTEM Donatus substantiated his position by referring this court to plethora of related case law. Barrister NDAMA MBAH Edward with admirable lucidity cited the relevant provisions of the Administration of Estate Act. This court is ad idem with both learned gentlemen in as far as the laws and precedence referred to in their submissions. However, counsel for the respondent failed to convince this court that the law on succession vest the administrator of an estate with an unfettered right to dispose or engage estate property. The administrator of an estate is vested with the powers to get in the real and personal estate of a deceased and administer it according to the law. This includes the payment of the debt of the estate and the distribution of same. An administrator of an estate may sell or mortgage estate property during the 12 months of administration for the purposes of paying the debts of the estate. An administrator of an estate is expected to complete this process within the first 12 months of the grant. It was stated in the case of RE TANKARD 1942, CH DIV P 69 that the personal representative must carry out their statutory duty ‘to collect and get in the real and personal estate of the deceased with reasonable diligence. Due diligence was construed in the aphorism of the case of GRAYBURN Vs CLARKSON (1868) 605 thus; Personal representatives have a duty to realize any investments within a reasonable time, which prima facie means within a year fro, the date of death. Where same is not possible within the period afore mentioned, article 44 of the Administration of Estates Act stipulates that this period may be extended. In the present case, the administrator has had over ten years to execute the process of administration and distribution. Thus, he cannot avail himself of section 44 afore mentioned. The learned gentleman for the respondent sought to establish the fact that a third party who acquires an interest in the estate in bonis is protected by the provisions of section 37 and 38 subsection 6 of the Administration of Estate Act. The afore cited provisions of the law are in contemplation of the powers vested in an administrator to dispose of estate property for the purpose of administration. Where the residue of the estate vests the beneficiaries with a life interest in the property, the administrator holds same on trust for all the beneficiaries. This position was emphatically elucidated in the case of Commission of Stamp Duties Queens Land Vs Livingston 1965, A.C 694, wherein it is stated by the learned judges that the fiduciary duties of a personal representative are sometimes called trust. The afore mentioned principle was equally reiterated and expatiated by the Court of Appeal in the case of HAVEL Vs FOSTER 1954, 2QB p 36, wherein the significance of the title of the administration of Estate Act 1925 was highlighted. The learned judges alluded to the caption in part 111 ‘Administration of Estates’ wherein section 33 refers to the fact that the estate of a deceased is vested in the personal representative upon trust. Thus, the administrator of the estate holds the property for all the beneficiaries and must manage same in their common interest. The administrator would have been competent to mortgage the property after the period provided for the distribution of the estate, where he can establish that the mortgage was for purposes of satisfying the needs of some beneficiaries of the estate or for purposes of defraying some expenses of the estate. There are the only circumstances wherein an administrator of an estate may alienate the property of an estate. In the present case, as rightly stated by counsel for the petitioners seeking diversion herein, ‘the irony is that the administrator mortgaged the property for his personal interest’. The mortgage is for the purpose of a loan granted to a third party. Whatever his interest in alienating or tendering the estate property to secure a loan to a third party, same interest is for his personal benefit as opposed to the estate. WHAT ARE THE CONDITIONS UNDER WHICH INDIVISIBLE PROPERTY CAN BE MORTGAGED UNDER THE UAS 1997? This aspect is worthy of epilogue since the mortgage and total alienation by way of sale of indivisible property in this jurisdiction is recurrent. A situation which culminates in causing irreparable loss to the bona fide third party interest acquired in the process. Article 121 UAS 1997 stipulates thus; ‘Persons whose rights over property are subject to duly notified conditions, cancellation or rescission may only grant a mortgage on the property subject to the same conditions, cancellation or rescission. However, mortgages granted by all the co-owners of joint property shall remain effective regardless of the outcome of any subsequent sale by auction or sharing of the property’. A construction of the afore cited provision leads to the conclusion that where the rights over the property controlled by an administrator are subject to certain conditions, any contract aimed at mortgaging the estate property shall be subject to the conditions of the interests of the beneficiaries as afore expounded upon. The 1997 law on securities did not actually address the issue of the validity of the mortgage deed in these circumstances thus the compelling amendments in the 2010 law. Article 194 UAS 2010 which replaces article 121 afore cited expounded upon the validity of a mortgage over indivisible property thus clarifying the position of the law. The position of the law is succinctly stated by YVETTE KALIEU ELONGO in Droit et Pratique des sûretés réelles OHADA thus; “A mortgage may equally be contracted in relation to indivisible property; “indivisibility of property implies that the property belongs to several individuals with the “right of each individual being limited to their respective shares. The fact of indivisibility “does not preclude the mortgage of the property where the requisite conditions are duly “fulfilled. These conditions are: “1) Where the mortgage is contracted with the consent of all the co-owners, it shall be valid “till extinct irrespective of any subsequent distribution. “2) Where the mortgage is contracted by a single co-owner, same shall be valid but may only “be foreclosed after the property has been distributed and the mortgage property is allocated “to the mortgagor. To this one may add that ‘the mortgage property in whole or in part’. “3) Where the mortgage is contracted by one of the co-owners in respect to his share of “property, the creditor shall wait for the distribution. “Noteworthy is the fact that the author afore mentioned expatiates upon the provision “of article 194 UAS 2010. By virtue of article 227 of same Act, article 194 is inapplicable “herein. However, while article 121 UAS 1997 referred to the fact that a mortgage deed in “relation to property must comply with the conditions to which the holder of the property is “subjected; it failed to expound on the mortgage deed in respect of indivisible property “pending its foreclosure. “The amendment of article 121 UAS 1997 was essentially triggered by the fact that “article 249 UASPRME confirmed the validity of mortgage deed in relation to indivisible “property pending its sale after distribution.” WHAT IS THE POSITION OF THE MORTGAGOR? Barrister NADAMA MBAH of counsel for the judgment creditors very strenuously sought to convince the court that the cited provisions of the Administration of Estate Act is the applicable law. Irrespective of the reasoning of this court as to the construction of the position of the purchaser in bonis, which depends upon the time of the alienation without or within the period of administration up to the time limits scheduled for distribution, this court emphasizes herein the principle of specialia generalibus derogant, which is so the effect that where there is conflict between a general and a specific provision of the law, the latter must prevail over the former. In the present case, the UAS 1997 is the specific law which is applicable to the formation of mortgage and the UASPRME the applicable specific law on the foreclosure of same; the applicable law on succession is the general law in this case. Thus, the provisions of the Uniform Act afore mentioned shall prevail. In principle, there is really no conflict between the provisions of both laws as to the extent of the administrator’s powers to alienate estate property save the requisite express consent of all the beneficiaries. A mandatory provision of article 249 UASPRME is as far as the foreclosure is concerned. The UAS 1997 recognizes the validity of a mortgage in relation to co-owned property subject to the interest of the other beneficiaries. Thus, the position of the applicable law is that the mortgage is a valid mortgage. The interest of the beneficiaries of indivisible property is acknowledged by the regional legislator in the UASPRME and referred to in article 249 UASPRME; same article is to the effect that the indivisible part of real property may not be put up for sale before the sharing or liquidation that may be prompted by the creditor of a co-owner. Thus, same may be attached but not sold. The position of the mortgagee who finds himself with indivisible property mortgaged by some one as opposed to all the beneficiaries was succinctly stated by the Court of Appeal Dakar in arrêt n° 28 of 18th January 2001 in the case of Me DOUDOU NDOYE ès nom et ès qualité de DOUDOU et MOUSTAPHA NDOYE c/ LELIA HILAL HAMED et ASSOCIES, ME ALY SARR. The facts of the case afore cited were that some beneficiaries of an estate engaged estate property as security in a mortgage deed in favour of their lawyers in order to underwrite their legal fees. In a bid to recover the debt upon default, the firm of lawyers proceeded to attach the property which was the object of the mortgage. The trial court ruled that the property could not be sold pending the liquidation and distribution of the property. In confirming the decision of trial court, the learned judges of the Court of Appeal stated that a mortgage contracted over indivisible property by all the interested parties can be foreclose and sold at any time, with the precision that a sole beneficiary may properly contract a mortgage in respect of estate property. The snag is that the mortgage deed can be foreclosed but the property cannot be sold before the distribution of the estate which may be ordered at the instance of the creditor. Article 117 of the UAS 1997 is to the effect that a mortgage shall be forcible or contractual real property security. It shall give its holder a right of pursuit and a preferential right. Reiterating the fact that a mortgage deed between the lender and the holder of the property as evident in article 127 UAS 1997, article 15 of same Act stipulates that the guarantor shall be liable in like manner as the principal debtor. The joint and several guarantors shall be bound to execute the principal obligation under the same conditions as joint and several debtors, subject to the special provision in this Uniform Act. In the present case, the administrator of the estate has a share of the mortgage property. The quantum depends on the extent of the estate of instance. The regional legislators cognizant of the dilemma of creditors in the process of recovery empowered the creditor to force the sale of indivisible property for the purposes of recovery from the share of the debtor. The CCJA in arrêt n°025/2008 of the 30th of April 2008 in the case of société Générale de Banque en Cote D’Ivoire dit SGBC c/ Dame KONAN Marie Aimée et sieur KONAN Camille, reiterated the fact that in the case of an impossibility to proceed against the debtor who is a holder of indivisible property, the creditor may force the liquidation and distribution of the property by applying to the court. The application of the petitioners was for diversion of the entire property upon the nullity of the deed. The application as stated by gentlemen for the petitioners was predicated upon article 308, 309 and 310 of the UASPRME. In the light of the afore analysis the mortgage deed is valid. Thus, all the property cannot be diverted, it would have been apposite to divert some part of the property if same constituted of several buildings which is not the case herein. The application for diversion cannot be granted since it is law that the judgment creditor may seize this court for a forced sale of the property in view of the liquidation and distribution of the estate for purposes of alienation of the share of the mortgagor. WHAT HAPPENS TO THE ATTACHMENT PROCEEDINGS? Article 249 of the Act of instance precludes the sale of indivisible property pending its liquidation. In the present case, the proper application would have been under article 311 of same Act which is a request for the nullity of some part of proceedings. In the present case, article 311 of the UASPRME vest the parties herein with the right to seize this court for the nullity of the proceeding even within 8 days of the scheduled date of sale since the latter are 3rd parties. It would thus be a futile exercise to proceed with the attachment proceedings. Thus this court makes the following orders; ORDERS 1) THE MORTGAGE DEED IS VALID THUS THE APPLICATION FOR DIVERSION IS HEREIN DISMISSED. 2) IN CONSONANCE WITH THE PROVISION OF ARTICLE 249 OF THE UASPRME, THIS COURT ANNULS PROCEEDINGS AS OF THE DATE OF THE FILING OF SPECIFICATIONS. SINCE NO OBSERVATIONS AND DECLARATIONS WERE FILED BY THE JUDGMENT CREDITOR, THE MORTGAGOR HEREIN, THE RULING PURUSNAT TO THE EVENTUAL HEARING WHICH WAS SUSPENDED AND WHICH IN FACT SHOULD NOT HAVE TAKEN PLACE IS ALSO VAST

Ohadata J-13-216 MEASURES OF EXECUTION – APPLICATION FOR DIVERSION – NULLITY OF MORTGAGE