Suit n° HCB/3S/05-06, Union Bank of Cameroon Plc c/ Protion Livestock and ATONGFAC Elias.

– INDIVISIBILITY OF DEBTOR AND GUARANTOR – REGISTRATION OF COMPANY – LEGAL STATUS – JURISTIC PERSONALITY – CORPORATE STATUS – EXECUTORY FORMULA – UNFOUNDED DECLARATIONS – SALE OF MORTGAGED PROPERTY Here the court had to decide on the objection against the attachment for sale of the property of ATONGFAC Elias in satisfaction of the creditor. In order to reach its decision, the court had other fundamental issues to grapple with. It had to determine whether the purported debtor and the guarantor were the same or different persons. In order to do so, it had to rule on the legal status of PROLICOM, the purported debtor. The court also had to rule on the validity of the mortgage deed. Section 46 of the Uniform Act on General Commercial Law states that companies and other corporate bodies referred to in the Uniform Act on Commercial Companies and Ecomomic Interest Groups (UACCEIG) shall apply for registration in the Trade and Personal Property Credit Register (TPPCR), within a month of their creation, to the registry of the court within whose jurisdiction their registered office is located. By virtue of section 98 of UACCEIG, unless otherwise provided by the Uniform Act, all companies shall have a legal personality with effect from the date of registration in the TPPCR. An unregistered business as was the case of PROLICOM is not separate from the owner and so the debtor and the guarantor were the same person. On the validity of the mortgage deed, the bone of contention was whether the introduction of the third party – borrower/guarantor rendered the deed null. It is a well- known principle of law that there is no nullity without text or that nullity is not presumed. Though a mortgage deed is a dual contract between either the borrower and the lender or the borrower and the guarantor, the introduction of the third party did not offend any section of the law on mortgages, thus the mortgage deed was valid. As to the objection against the attachment of the property of ATONGFAC Elias, section 127 of the 1997 Uniform Act Organising Securities provides that a contractual mortgage may be granted only by a person who has duly registered rights over the real property and is entitled to dispose of it. An unregistered company lacks a legal personality and cannot own property. In case of any enforcement measure in view of settling a debt contracted for the purpose of the business, the property of its owner can be attached. Section 9 OHADA Treaty, Sections 44 and 46 UAGCL, Sections 98, 854 and 864 UACCEIG, Sections 1, 2 and 127 UAS 1997, Section 227 UAS 2010, Sections 170 and 272 UASRPME (High Court of Mezam (Bamenda), Union Bank of Cameroon Plc v. Protion Livestock and ATONGFAC Elias, suit no HCB/3S/05-06 of 12 June 2012) The judgement creditor filed specifications in the registry of this court on the 1st day of March 2006. The contingent hearing was initially scheduled for the 31st day of March 2006. The matter suffered several adjournments without the court taking control of the specifications as provided for by article 272 of the Uniform Act on the Simplified Procedure for Recovery and Measures of Execution. The matter lingered in this court for 6 years and on the 28th day of June 2012, this court took control of the specifications in consonance with the provisions of the article afore cited. The contingent hearing was duly rescheduled and the judgement creditor was ordered to serve the judgement debtor de novo and inform the latter of the new date including the reminder that any declaration and observations may be filed within the period provided for in article 170 subsections 3 of the Uniform Act of instance. Worth mention is the fact that the judgement debtor had initially filed observations and declarations within the prescribed delay in the year 2006. Pursuant to the ruling of this court on the 28th day of June 2012, he proceeded to avail himself of his right to file further observations de novo. The declarations and observations were to the following effect. That at law PROLICOM is a juristic person different from his client ATONFAC Elias. That the property sought to be sold belongs solely to his client afore mentioned as opposed to the company PROLICOM. Counsel strenuously sought to establish that the property of his client cannot be attached to defray the debts of the company. Learned counsel emphasized that his client did not sign the mortgage deed which is the subject of the auction sale in his personal capacity as a guarantor, thus he cannot be presumed to have guaranteed the repayment of the loan. He proceeded to state with precision that Mr. ATONFAC Elias rather signed the mortgage deed in his capacity as the managing Director of PROLICOM. Counsel referred his court to the content of paragraph 7, 11 and 12 wherein a new party was introduced, same party “Borrower/Guarantor”, whereas no such party has executed the deed and no such party exist in the law he contented. To conclude, he stated that the mortgage deed was a nullity. In reply to the submissions, the learned gentleman for the judgement creditor commenced by briefly stating the genesis of the transaction between the bank and Mr. ATONFAC. That the latter was the owner and the Director General of PROLICOM 2000. That an account was opened by the former in the name of the company. Worthy of mention is the fact that same account was operated solely by Mr. ATONFAC Elias. That a short-term loan facility was granted to the company in the sum of 20.000.000 FCFA. That the loan was personally guaranteed by Mr. ATONFAC, as Borrower/Guarantor. On point of law, counsel submitted that contrary to the submissions of counsel for the judgement debtor, which were to the effect that the company PROLICOM is a juristic person, PROLICOM has never been registered as ordained by the OHADA Uniform Act on General Commercial Law 1998 as amended in 2010. The learned gentleman strenuously sought to establish the fact that PROLICOM 2000 is the personal business of ATONFAC Elias Who is actually the sole owner and the alter ego of the company. It was also stated by the learned gentleman that at law parties are bound by the documents they voluntarily and duly execute. He urged this court to take cognizance of the fact that ATONFAC Elias voluntary executed the mortgage deed qua borrower/guarantor. He urged this court to further observe that the signature and name of the latter are clearly eligible in the mortgage deed. The gentleman concluded by urging this court to hold that ATONFAC Elias and PROMICOM are indivisible. Since the latter is bereft of juristic personality. Thus, the facts for this court’s adjudication, the salient issues herein are: - The applicable law - Is the mortgagor herein a debtor or a guarantor or both? - The juristic capacity of PROLICOM - What are the obligations of Mr. ATONFAC Elias the sole signature to the account in the name of PROLICOM

THE APPLICABLE LAW The law on mortgage deeds is embodied in the Uniform Act on Securities 1997 as amended in 2010. Unlike the amended Uniform Act which abrogates the provisions of the previous Act in toto, this amended Act only apply to securities which are contracted after the 17th of April 2011, see article 227 of UAS 2011. The date of its applicability as provided for by the provisions of article 9 of the Treaty. The mortgage deed in contention was drawn in the year 2001, thus by virtue of the provisions of the Act afore cited, the applicable law is the act of 1997. IS THE MORTGAGOR HEREIN A DEBTOR OR A GUARANTOR OR BOTH? The learned counsel for judgement debtor precisely Mr. ATONFAC Elias, submitted that the mortgage deed wrongfully introduced a 3rd party to the deed which is Borrower/Guarantor; he referred this court to paragraph 7 of the deed which is endorsed with the words “Borrower/Guarantor” afore mentioned. The mortgage deed in contention is signed thus; SIGNED, SEALED AND DELIVERED BY THE WITHIN NAMED BORROWER PROLICOM 2000. SIGNED ATONFAC E.’ The signature and words afore cited unequivocally imply that the borrower is PROLICOM 2000. It is also unequivocally evident that the representative of PROLICOM 2000, who signed the deed, is ATONFAC E. The parties to a document are evident in the signature at the end of the document or the names of the parties cited at the beginning of the document. The signatories to the document do not pose a problem since it is as stated above and there are only two parties. The face of the deed cited by the Notary Public is: Union Bank CAMEROON (UBC LTD.) (LENDER) AND PROLICOM 2000 (BORROWER) AND (MR. ATONFAC ELIAS) (GUARANTOR) This begs the question as to the requisite number of parties to a mortgage deed. A mortgage deed is a dual contract and not a tripartite contract. It can either be between the borrower and the lender or the borrower and the guarantor. This is the wrong party referred to by the learned counsel for the judgement debtors herein. A definition of the contract between a lender and a guarantor will lend some clarity to this issue. Article 1 UAS 1997: Securities shall be the means offered a creditor by the law of contracting state or agreement between the parties to guarantee the execution of obligations, whatever their legal nature may be. Article 2 UAS 1997: ‘A collateral security shall consist in the undertaking by one person to be answerable for the obligation of the principal debtor in case of the latter’s default or at the first call of the beneficiary of the guarantee’. A mortgage deed between a borrower or guarantor or and a lender is a contractual mortgage deed which is defined in article 127 of the act of 1997 thus; ‘A contractual mortgage may be granted only by a person who has duly registered rights over the real property and is entitled to dispose of it’. From the afore definitions, it is obvious that a contract is between the lender and the person who offered the security or rather who owns the property tendered as security. Where the security is the borrower’s, it is a contract between the lender on one hand and the borrower or borrowers on the other hand. In like manner, there may be several guarantors who offer different properties to secure a loan; in this case, the contract is between the guarantor or guarantors and the lender. In all cases, a mortgage deed is a dual contract to wit; the lender and the owner or owners of the property tendered to serve as the security. Having ascertained that a mortgage deed is a dual contract, the next issue for determination is the effect of the mention of three parties in the deed by the notary public. Counsel for the judgement debtor submits that the wrongful introduction of the 3rd party vitiates the mortgage deed. The gentleman for the judgement creditor submitted that in law parties are bound by deeds that they voluntarily execute. He proceeded to state that a document under seal is imputed upon the parties where the contracting parties have duly executed the document. I reiterate the fact that the deed is signed by ATONGFAC as the borrower. The validity of this deed depends on the party who is the real borrower, if there are more than two parties involved in the transaction; it would be apposite for this court to ascertain who the borrower really was. This aspect will be expounded upon in the course of this judgment. IS THE CONTENTIOUS DEED BETWEEN THE BORROWER AND THE LENDER OR BETWEEN THE LENDER AND THE GUARANTOR? Article 2 of the Uniform Act on securities 1997 defines a collateral security pertinent part thus; ‘‘A collateral security shall consist in the undertaking by one person to be answerable for the obligation of the principal debtor in case of the latter’s default or at the first call of the beneficiary of the guarantee’. The argument of counsel for the debtor is that the principal debtor is PROLICOM and that Mr. ATONGFAC who signed as the borrower cannot be responsible for the debts of PROLICOM. Counsel for the judgement creditor emphatically states that PROLICOM is not a juristic person because it is not registered. The fact of non-registration was never traversed by the counsel for the judgement creditor; in any case, no proof of registration exists in the file. The only inference is that the purported Company PROLICOM was not registered. A business can only be vested with juristic personality if same is recognized under the UACCEIG and registered with the Trade and Personal Property Credit Register in consonance with the provisions of article 44 and 46 of the UAGCL 2010. The status of a company is governed by the Uniform Act on General Commercial Law while the incorporation of same is provided for the Uniform Act on Commercial Companies and Economic Interest Groups. The latter Act treats various categories of companies recognized under the Act; a purview of same will lend clarity to the issue in rife contention. The different categories are thus; Partnership, limited partnership, limited liability companies and public limited companies. Article 46 of the OHADA Uniform Act on General Commercial Law obliges the registration of the companies afore mentioned within a month of its formation. This court reiterates the fact that the judgement debtors tendered no proof of having registered PROLICOM; thus it can only be assumed that same company was not registered. However, the Uniform Act on Commercial Companies and Economic Interest Groups lends credence to two categories of companies albeit the absence of registration in the TPPCR. The Act of instance in article 854 provides for a company known as joint venture which is described as an entity whose partners agree not to register in the Trade and Personal Property Credit Register and not to give it a corporate personality. Such a company is not subject to publicity and its existence may be proved by any means. Article 864 of the UACC describes the ‘société de fait as a de facto’ company where two or more natural persons or corporate bodies act as partners without having formed between themselves one of the companies recognized by the Uniform Act. The judgement debtor cannot assert to belong to any of the afore mentioned unregistered companies since it is evident that Mr. ATONGFAC was the only member of PROLICOM and the alter ego of same as submitted by the learned gentleman of counsel for the judgement creditor. Worthy of mention is the fact that the liability of the shareholders of all the companies afore mentioned are only limited in the case of a private limited company, and a public limited company. The recognition of De facto companies is essentially predicated upon the relationship vis-à-vis the members of these types of companies with third parties which has categorically been that the partners contract in their personal capacity. Unregistered companies are bereft of a juristic personality, they can neither be sued nor sue. It can be observed from the analysis afore expounded that PROLICOM has no legal status limiting the liability of the account holder. The afore analysis further buttresses the fact that the signatory to the deed was one and the same person, since a company is only represented by his manager where same is vested with juristic personality. Barrister NDAMA MBAH Edward of counsel for the judgment creditor cited the case of GILFORD MOTOR CO Vs. HORNE (1993) wherein the dictum was to the effect that if a company is formed to be used for the purposes of fraud or as a device to evade a contractual or other legal obligation, the court would not allow the corporate form. This citation is in fact superfluous since PROLICOM has no corporate status known to the applicable company law. Thus, in answer to the question as to who the actual borrower is, this court emphatically states that it is Mr. ATONGFAC, the signatory to the account. That is in fact why he signed as borrower because he was actually the borrower. This answers the question of the parties to the deed, it is as executed, the lender and the borrower. The borrower PROLOCOM is not registered even if same was registered as one of the forms of companies recognized by the UACCEIG, the liability of the managers are only limited where the company is registered as limited. This is not the case herein. PROLICOM has no juristic capacity and thus is represented by the manager ATONGFAC Elias. The latter cannot guarantee a loan to himself. IS THE INTRODUCTION OF A 3RD PARTY TO THE DEED ON THE COVER OF THE DEED FATAL TO THE VALIDITY OF THE MORTGAGE DEED? It is stated that codified law must be strictly applied; it is very unfortunate that a notary public would draw a deed in this manner, it is more unfortunate that where the notary is using a standard form which bears ‘BORROWER/GUARANTOR, he fails to delete the non applicable word when drafting the deed. However, nullity cannot be ordered without referring to the section of the law which is vitiated thus the old adage, ‘there is no nullity without a text’. Thus, the question is ‘what section of the applicable law on mortgages has been breached by the deed in contention?’ The very learned counsel for the judgment debtor who was seeking to annual the deed cited no provision of the law on securities that was breached. It is because none was breached. The mortgage deed herein is duly endorsed with the executory formula; same is duly inscribed at the land registry. The property secured does belong to the party who mortgaged it. In the light of the afore analysis, the declaration and the observations of the judgment debtor are untenable.

ORDERS 1. THE DECLARATIONS OF THE JUDGMENT DEBTOR ARE HEREIN UNFOUNDED. 2. THE SCHEDULED DATE OF SALE WAS SOME THREE YEARS AGO, THIS COURT, HAVING TAKEN CONTROL OF THE SPECIFICATIONS IS IN ORDER TO RESCHEDULE A NEW SALE, SAME SALE IS HEREIN RESCHEDULED FOR THE 17TH DAY OF JULY 2012. 3. THE JUDGMENT CREDITORS WILL REPEAT THE FORMALITIES OF PUBLICATION OF THE SALE. 4. COST IS AWARDED AGAINST THE JUDGMENT DEBTOR IN THE SUM OF FIVE HUNDRED THOUSAND FRANCS CFA.

Ohadata J-13-215 SECURITY – MORTGAGE DEED – PARTIES TO A MORTGAGE – MORTGAGOR – DUAL CONTRACT – NULLITY OF MORTGAGE – MEASURES OF EXECUTION – ATTACHMENT OF PROPERTY – SPECIFICATIONS – CONTINGENT HEARING – DECLARATIONS AND OBSERVATIONS – GUARANTOR –PERSONAL GUARANTEE