The corpus of mortgage law in Sierra Leone, as the provided text correctly identifies, is a fascinating hybrid of English common law, doctrines of equity, and received English statutes. This dual-track system, creating both formal legal mortgages and flexible equitable mortgages, is a direct consequence of Sierra Leone’s common law inheritance.
Understanding the creation, nature, and distinctions between these two forms of security is fundamental for any practitioner, financial institution, or scholar. This analysis expands on the foundational principles, integrating key authorities and jurisprudential concepts.
1. The Equitable Mortgage: Security in Conscience
An equitable mortgage is a charge on property that does not meet the formal requirements of a legal mortgage (i.e., creation by deed) but is recognized by equity as a valid security. The Court of Equity, looking to the intent rather than the form, will enforce the agreement. The provided text alludes to three primary creation methods, which we will analyze.
a) The Walsh v Lonsdale Principle: The Agreement to Mortgage
The first method is based on the maxim that “equity looks on that as done which ought to be done.” The locus classicus for this principle is Walsh v Lonsdale (1882) 21 Ch D 9. While that case concerned an agreement for a lease, the principle is applied broadly. Where there is a written, specifically enforceable agreement to create a legal mortgage, equity will treat that agreement as an immediate equitable mortgage. The lender (mortgagee) has the right to go to court and demand the execution of a formal legal mortgage by deed, but in equity, the security is considered already in place.
b) Deposit of Title Deeds: The Mortgage of Part Performance
This is perhaps the most common and historically significant method. The mere act of a borrower depositing their title deeds with a lender as security for a loan is sufficient, in equity, to create a mortgage. This doctrine is rooted in the equitable principle of part performance; the act of handing over the deeds is an unequivocal act that can only be explained by reference to an agreement for security.
The provided text correctly identifies the key Sierra Leonean authority on this point: Barclays Bank D.C.O. v Khahil (1972-73) ALR SL 14. This case affirmed that this English equitable doctrine is firmly entrenched in the law of Sierra Leone, providing a swift and efficacious method for creating security, particularly for banking institutions.
c) Mortgage of an Equitable Interest
The third method is logical: if a mortgagor’s interest in the property is itself only equitable, they can only create an equitable mortgage over it. The most common example is the interest of a beneficiary under a trust of land. The beneficiary (equitable owner) can mortgage their interest, but the security created is necessarily equitable, as the legal title is held by the trustee.
2. The Legal Mortgage: Security in Form
The legal mortgage is a more formal and robust security, created in compliance with statute. Its creation and nature are dictated by the Imperial Statutes (Law of Property) Adoption Ordinance, Cap 18, which adapted and applied English property statutes to Sierra Leone.
Crucially, the primary statute received was the Conveyancing Act, 1881. This is a critical point of distinction. Sierra Leone’s mortgage law is based on the pre-1925 English legal framework. It did not adopt the radical reforms of England’s 1925 Law of Property Act, which abolished the older methods of mortgage creation.
Therefore, in Sierra Leone, a legal mortgage is created as follows:
a) Freehold Mortgages
The method described in the text—the “conveyance of the mortgagor’s interest”—is the old common law method, which remains the law in Sierra Leone. The mortgagor technically conveys their entire legal fee simple (freehold estate) to the mortgagee. This conveyance is subject to a “proviso for redemption,” a contractual clause stating that upon repayment of the principal and interest by a specified date, the mortgagee will re-convey the fee simple back to the mortgagor.
b) Leasehold Mortgages
As the text notes, two methods exist:
Assignment of the unexpired term: The mortgagor assigns their entire remaining lease to the mortgagee. This method is rarely used because it creates “privity of estate” between the mortgagee (lender) and the head-landlord. This makes the mortgagee liable for all the covenants in the original lease (e.g., payment of rent, repair), an unattractive prospect for a lender.
Creation of a Sub-lease (Sub-demise): This is the universally preferred method. The mortgagor creates a new lease (a sub-lease) in favour of the mortgagee for a term slightly shorter than their own lease (e.g., “for the whole term less one day”). This creates the necessary security without establishing privity of estate, thereby insulating the mortgagee from liability under the head-lease.
3. The Unspoken Pillar: The Equity of Redemption
The provided text, being a brief note, omits the most important jurisprudential concept in all of mortgage law: the equity of redemption.
At common law, the “proviso for redemption” was interpreted strictly. If the mortgagor failed to repay the loan on the exact day specified, their right to redeem was extinguished, and the mortgagee’s ownership of the property became absolute.
The Court of Equity found this unconscionable. It intervened by creating the equity of redemption the right of the mortgagor to redeem the property at any time after the contractual date, provided they pay the principal, accrued interest, and any costs.
This right is so fundamental that two maxims emerged:
“Once a mortgage, always a mortgage.” This means a transaction intended as a security cannot be disguised as a sale.
A “clog” or “fetter” on the equity of redemption is void. Equity will not permit a mortgagee to include a term in the mortgage deed that prevents the mortgagor from getting their property back in its original state after repayment. A locus classicus for this is Samuel v Jarrah Timber and Wood Paving Corp Ltd [1904] AC 323, where the House of Lords struck down an option (granted at the time of the loan) for the mortgagee to purchase the mortgaged property, as it was a “clog” on the mortgagor’s right to redeem.
Conclusion
The law of mortgages in Sierra Leone presents a complex but coherent tapestry woven from common law, equity, and received statutes. It operates on a dual system, permitting the formal, statute-based legal mortgage (under the 1881 Act) and the flexible, conduct-based equitable mortgage (affirmed in Barclays v Khahil). Underpinning this entire framework is the borrower’s sacrosanct equity of redemption, a powerful reminder that the ultimate purpose of the transaction is security, not forfeiture.