Chapter One - Secured Credit Transactions



UNIVERSITY OF LAGOS

SCHOOL OF POSTGRADUATE STUDIES

FACULTY OF LAW

SECURED CREDIT TRANSACTIONS 1(PPL 813)

2010/2011

BEING A SEMINAR PRESENTATION IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF LL.M

TOPIC: NATURE, SCOPE AND ENFORCEMENT OF LIENS

PRESENTED BY GROUP 11

JIBUNO O. JOSEPH

EBERE, I.E. (109061107)

CHIMA O. N. (089061058)

ESOMONU JUDE N.

OGBONNA N. COLLINS (109061132)

OBI OLIVE (099061105)

SUPERVISING LECTURER:

DR. AMOKAYE

OUTLINE

Chapter One

Introduction

Nature of Liens

·Definition

·Features

·When it arises

·Differences with other securities

· Classification of lien

Chapter Two

Scope of Liens

· Conveyancing Lien: Vendor’s Lien - Purchaser’s Lien

· Lien on personal Chattels

·Common Law Lien: Agency lien - In keeper’s Lien - Bailment Lien for and without reward

· Statutory Lien: Lien under Sale of Goods Act, Nigerian Railway Corporation Act, Factors Act, Customs and Excise Management Act.

·Maritime Lien

·Lien on Company Shares

·Lien on Life Insurance Policy

 

Chapter Three

Enforcement of Liens

Chapter Four

Recommendation

Conclusion

CHAPTER ONE

1.1. INTRODUCTION

We have earlier gone through the preliminary issues of the concept of security and the classification of security. It then becomes pertinent to examine the various security interests applicable in security transactions.

A security interest is a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a debt[1]. We have four traditional security interests:

-Liens

-Pledges

-Mortgage

-Charge

The above four interests are inter-related and may crisscross with one another or crystallise into another.

A lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation[2].

To create a valid lien, it is essential:

1. That the party to whom or by whom it is acquired should have the absolute property or ownership of the thing or, at least, a right to vest it;

2. That the party claiming the lien should have an actual or constructive, possession, with the assent of the party against whom the claim is made;

3. That the lien should arise upon an agreement, express or implied and not be for a limited or specific purpose inconsistent with the express terms or the clear, intent of the contract; e.g., when goods are deposited to be delivered to a third person or to be transported to another place.

We shall examine the other forms of security interests subsequently.

1.2 NATURE OF LIENS

Here, we shall go in-depth into the liens proper and try to understand the interest.

Lien arises to fulfil the obligation which a party to a transaction has failed to fulfil upon the fulfilment of the other party’s obligation. For example, in a conveyance of land, there is an obligation on the part of vendor to convey a good title to the purchaser in return for an obligation on the part of the purchaser to pay the purchase price. Breach by any of the parties will give rise to an equitable lien, outside the express or implied contract of the parties to the transaction. Thus, in Barclays Bank Plc v. Estates & Commercial Ltd (1997) WLR @ pg 415 it was decided that a vendor of land who has conveyed the land to the purchaser has in equity, a lien upon the property for unpaid purchase money. Conversely, a lien will also arise in favour of a purchaser who has made a full or part payment of the purchase price by way of deposit but who has not obtained a conveyance of the property[3].

1.2.1 Definition

As with all concepts in the legal parlance, liens defy a single, universally acceptable definition. There is a myriad of definitions of lien. We shall examine some:

Professor I.O. Smith[4] defines lien as

“A right to retain property until indebtedness is discharged”

It has also been defined as the right to hold the property of another as security for the performance of an obligation[5].

We had earlier given a general definition of a lien. Suffice it to say that

’’A lien is a form of security interest granted over an item of property, either by operation of law or by agreement between parties, for the retention of the item by the creditor to secure the payment of a debt or performance of some other obligation by the debtor’’

It can safely be surmised from the foregoing that a lien arises when there is a debt (or loan) and property is held by the creditor to be returned to the debtor when the debt is repaid.

This will leads us to the features of a lien.

1.2.2 Features

The following are features of a lien:

-Debt (or loan) resulting from outstanding performance, It could be a vendor failing to convey title of a property paid for or a purchaser failing to pay for a property already conveyed.

-Property: This is the subject-matter of the lien.

1.2.3 When It Arises

Lindley LJ[6] described the unpaid vendor’s entitlement to a lien on land sold for the unpaid purchase price by the purchaser as “too well established to be disputed”. However, there is still some degree of dispute as to when the lien actually arises. There are two schools of thought.

The first and we may add less popular, school of thought is that the lien arises on exchange of contract. This doctrine received judicial backing in the ancient case of Wythes v. Lee 61 ER pg. 954 where Kindersley VC referred to the vendor’s lien as existing “at the moment of the contract”[7]. The position was well espoused by Millett LJ[8] as follows:

“As soon as a binding contract for sale of land is entered into

the vendor has a lien on the property for the purchase money

and a right to remain in possession of the property until

payment is made. The lien does not arise on completion but

on exchange of contracts…..”

Some legal scholars agree with this school of thought. Some of which include Prof. Snell[9] and Messrs. Keeton and Sheridan[10].

The second, and more popular, school of thought is that the lien arises when the time for completion has arisen. This was extended by Lindley LJ, in the case of Kettlewell v. Watson (1884) 26 Ch. D pg. 501 to cover situations where the purchaser is allowed into possession prior to completion without payment in full of the purchase price[11].

The consensus here is that once the vendor has parted with the possession of the property to the purchaser, without receiving money, he (the vendor) has no lien on the deeds for the unpaid money in common law except in equity where he has a lien on the conveyed land for the unpaid purchase money. This view is shared by some legal authors such as Sugden[12] and Barnsley[13].

Prof. I.O. Smith is also of this school of thought. According to the learned professor of law[14]:

“…there is no doubt that it arises when the purchase money

becomes due upon completion.”

It is our humble opinion that a lien arises upon completion and not after exchange of contract for the following reasons:

i) The debtor’s liability to pay in conveyance crystallises at completion

ii) Lien, being a relief/security in equity only comes into play when there is no other relief in common law. From execution to completion, the vendor has relief/or is protected by common law, but after completion, the relief under common law expires and equity comes in.

1.2.4 Differences with other securities

A lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation[15].

A pledge refers to the act of delivering goods, property etc or something delivered as security for the payment of a debt or fulfilment of a promise, and subject to forfeiture on failure pay or fulfil the promise[16].

A mortgage arises when the assets are conveyed to the secured party as security for the obligations, but subject to a right to have the assets reconveyed when the obligations are performed[17].

A charge means the appropriation of a property upon the assurance by the debtor to the creditor that the said property shall, upon default of the debtor to repay the debt, attach to the debt for the purpose of using the proceeds of the property to satisfy the debt’’

What all four interests have in common is that they all possess the incidence of security, viz:

-right of pursuit

-right of preference

-proprietary rights[18].

1.2.5 Classification of Lien

In common law countries, liens are generally classified into:

a) Particular and General: When a person claims a right to retain property, in respect of money or labour expended on such particular property, this is a particular lien while, a general lien is available as a security for all debts arising out of similar transactions between the parties. A common-law lien only gives a passive right to retain; there is no power of sale which arises at common law[19]

However, in United States, liens are further classified into consensual (voluntary) and non-consensual (involuntary) liens, perfected and unperfected lien, common law and equitable liens and statutory and contractual liens.

Consensual Liens are agreed to by the parties such conveyance while non-consensual liens are usually based on statute or operation of law, e.g. tax liens, solicitor’s lien, judgement lien and maritime lien.

Perfected Liens are those liens for which a creditor has established a priority right in the encumbered property with respect to third party creditors. Perfection is generally accomplished by taking steps required by law to give third party creditors notice of the lien. The fact that an item of property is in the hands of the creditor usually constitutes perfection. Where the property remains in the hands of the debtor, some further step must be taken, like recording a notice of the security interest with the appropriate office[20].

Perfecting a lien is an important part of the task of protecting the secured creditor's interest in the property. A perfected lien is valid against bona fide purchasers of property, and even against a trustee in bankruptcy; an unperfected lien may not be.

Common law liens have been explained above. Equitable liens are non-possessory security right conferred by operation of law, which is similar in effect to an equitable charge. It differs from a charge in that it is non-consensual. It is conferred only in very limited circumstances, the most common (and least ambiguous) of which is in relation to the sale of land; an unpaid vendor has an equitable lien over the land for the purchase price, notwithstanding that the purchaser has gone into occupation of the property. It is seen as a counterweight to the equitable rule which confers a beneficial interest in the land on the purchaser once contracts are exchanged for purchase. However, there is still hesitation amongst scholars to accept equitable liens[21].

Statutory Liens are provided for in statutes while Contractual Liens are agreed upon by the parties in the contract.

CHAPTER TWO

2.1 SCOPE OF LIENS

2.1.1 Conveyancing Lien

A lot of our discourse thus far has centred on conveyancing lien. We shall now closely consider conveyancing lien under various sun-topics:

2.1.2. Vendor’s Lien

It has been decided that a vendor has a right to retain the property until the full purchase money is paid[22].The lien still avails the vendor even where he (vendor) executes an absolute conveyance with or without receipt for the purchase money and parts with possession both of the property and of the title deeds to the purchaser. Even where there may be implied agreements between the parties. This was the decision of the court in Conveyancing Lien: Vendor’s Lien for unpaid purchase money - Purchaser’ Lien Barclays Bank v. Estates & Commercial Ltd[23].

The lien attaches on sale of the property and will extend to the purchase money[24] .It will also cover compensation over property that was compulsorily acquired unless such compensation has been made subject of a separate agreement[25].

However, it should be noted that the unpaid vendor’s lien is postponed to the interest of a bona fide purchaser (or equitable mortgagee) for value without notice of the lien. This was the court decision in Ayorinde v. Scott[26] where the defendant bought a property from a purchaser which had earlier been conveyed by the plaintiff. The defendant was not aware of outstanding purchase money on the property. The Court held that the defendant was a bona fide purchaser for value having no notice of the plaintiff’s interest. A similar decision was taken in the case of Rice v. Rice[27].

2.1.2.1 Perfection of Vendor’s Lien

Issues raised in the preceding paragraph made it necessary for the unpaid vendor to affect subsequent purchasers or mortgagees with notice of his security. Odesanya J[28] enumerated some steps that can be taken to this effect:

-Endorsement at the Lands Registry to show encumbrance existing on the land.

-Lodging a caveat with the Registrar of Titles (for properties under the registration of Titles Law).

-Registering the written agreement to pay the balance within 30 days.

-Keeping the title deed as collateral security for the unpaid balance.

2.1.2.2 Sub-vendor’s Lien

An unpaid vendor’s lien is available in favour of the original purchaser against a subsequent purchaser and the original purchaser will be able to enforce the lien against the subsequent purchaser if, having acquired legal title from the vendor, the original purchaser then completes a contract with the subsequent purchaser without receiving the full purchase price.

To ensure that the original purchaser has a lien against the successor in title of the subsequent purchaser, the original purchaser can go ahead to “perfect” the lien as explained in Ayorinde v. Scott[29]

2.1.2.3 Loss of Lien

The vendor may waive his lien on the unpaid purchase money by taking security such as mortgage for the purchase money. The waiver may be express or implied from the circumstances of the case.[30] However, mere personal obligation such as bond, bill of exchange or promissory note will not of itself be sufficient to discharge the lien[31]. The circumstances of each case is taken into consideration by the courts before the inference is made as to whether the lien was intended to be received or that credit was given exclusively to the person from whom the other security was taken[32].

2.1.2.4 Transfer of Lien (Subrogation)

Where the purchaser borrows money equalling the purchaser price or part, such person, i.e. the lender may be subrogated to the unpaid vendor’s lien. This was the court decision in the case of Boodle v. Hatfield & Co v. British Films Ltd[33] where the plaintiff paid part of the purchase price of land to the vendor by way of loan to the purchaser. When the cheque issued by the purchaser to the plaintiff was not honoured, the plaintiff brought an action arguing that they were entitled to be subrogated to the unpaid vendor’s lien. The court agreed with the plaintiff holding that the plaintiffs were subrogated to the unpaid vendor’s lien for the mount of the loan. However, in the case of Nottingham Permanent Benefit Building Society v. Thurstan[34], it was held that where transaction with the lender is unenforceable, the lender cannot rely on the lien[35].

2.1.3 Purchasers Lien.

We have established earlier that a purchaser has a lien in the property in possession of the vendor for any deposit or instalment of his purchase money which the purchaser has paid to the vendor. The principles governing purchaser lien was first established by the court in Burgess v. Wheate[36]

The purchaser’s lien does not arise from any express contract between the vendor and the purchaser[37].

2.1.3.1 Grounds for Purchaser’s Lien

a) There has to be a valid contract between the parties[38].

b) The contract need not be susceptible to specific performance[39].

c) Where the vendor’s title is defective[40]

d) May arise even where contract is conditional and condition has not yet taken place[41].

e) Where the vendor repudiates the contract[42].

f) Where the contract goes off for want of title and even where the purchaser rescinds the contract under an enabling condition in the contract[43].

The lien, however, does not avail the purchaser where the contract goes off due to the purchaser’s default[44].

2.1.3.2 Scope of Purchaser’s Lien

The lien attaches to the vendor’s interest in the land contracted to be sold and provided that the vendor’s failure to convey the land to the purchaser is not due to any default of the purchaser, the purchaser has a lien over the land to secure:

a) Return of any deposit paid to the vendor[45]

b) Return of any other part paid of the price to the vendor[46]

c) Reimbursement for costs of investigating title[47]

d) Reimbursement for cost of an unsuccessful action for specific performance where the vendor fails because he has not adduced good title[48]

e) Reimbursement for expenditure on improvements incurred under a contractual term[49]

2.2.1 Lien on Personal Chattels

We are not unaware of the fact that there are some colleagues who have dedicated considerable time and effort to write on this aspect of liens in another treatise. For this reason, we shall be very concise on our discussion here.

Lien over chattels exists in different forms arising from a variety of circumstances brought about either by the involvement of parties in a contract of sale or in a situation where a party privileged to have custody of chattels property of another, exercises a right of retention in order to make the other party discharge certain obligations owed to him.

2.2.1.1 Creation of Lien over Chattels

Lien over personal chattels may arise either by agreement between the parties or by operation of law.

2.2.1.2. Lien by Agreement

The parties may voluntarily incorporate provisions for right of lien into the contract of sale. A typical case of this is Afrotec technical Services (Nig) Ltd. v. MIA & Sons Ltd[50] where the court held that express terms in a contract of sale would prevail over and therefore, exclude the statutory implication of a lien to the extent of any inconsistency with the express terms.

2.2.1.3 Lien by Operation of Law

A lien arises by operation of law when it arises at common law or it is created by statute

2.2.1.3.1 Creation by Common law

Creation of lien by common law may arise in any of the following four ways:

a) Where the creditor intercepts chattels en route the debtor and either retains or sells them. See s. 39 and 41 of Sale of Goods Act 1893

b) Where the creditor in possession of the debtor’s property refuses to hand it over to the debtor until the debtor until he (debtor) pays back the debt. In Re Hawkes (1898) 2 Ch pg 1, a lien arising from documents which got into the solicitor’s possession consequent upon a transaction embarked upon as agent prior to the latter’s indebtedness to the solicitor who in turn retains it until the indebtedness was discharged was held to be valid.

c) Where the right to retention is coupled with the right to sell the chattels and the proceeds of sale applied towards the liquidation of the indebtedness. The popular example of this is the innkeeper’s lien for charges over the client’s luggage.

d) Where the creditor exercises the right to deduct the debt from the debtor’s money in the custody of the creditor. Solicitor’s lien over claims or damages recovered by him on behalf of his client is an example. See Cormack v. Beisly[51]

The right to lien may be exercised and enforced by the creditor against the debtor in the event of failure to the debtor to discharge the debt either separately or in conjunction with other remedies in law to which the creditor may be entitled.

Lien over chattels may also be special or general. Example of special is repairer’s lien on chattels for the cost of repairs which has not been paid while an example of special lien is factor’s lien on goods in his possession for commission and other entitlements arising from his employment.

2.2.1.3.2 Creation by Statute

Statutory liens are created, as the name implies, by construction of provisions of different statutes. They will be considered in detail subsequently.

2.3.1 Common Law Lien

2.3.1.1 Agency Lien

A lien may arise in favour of an agent appointed to act for the principal in the ordinary course of business. Generally, every agent has a general or particular possessory lien on the goods and chattels of his principal in respect of all lawful claims, provided that:

-the possession of the goods or chattels was lawfully obtained by him in the course of the agency, and in the same capacity as that in which he claims the lien;

-there is no agreement inconsistent with the right of lien; and

-the goods and chattels were not delivered to him with express directions, or for a special purpose, inconsistent with the right of lien. See Bowstead on Agency[52]

Agency liens are usually particular or special in nature except where there is a general lien by agreement with the principal.

Also, where there is a contract making provision for the lien, the courts will construe the provisions of such contract and give effect accordingly. In the case of Witt & Busch Ltd. v. Alraine (Nig.) Ltd[53] the plaintiffs brought an action against the defendant to recover the special and general damages for wrongful detention und unlawful conversion of their goods. The defendants counterclaimed for all monies due to them under the clearing agreement and then also instituted proceedings to recover the value of the dishonoured bill of exchange. It was held, construing the agency agreement that the defendants were entitled to exercise a general lien over the goods and documents and to refuse to release them until payment of the amounts was made. The plaintiff’s claim in conversion failed.

Types of Agency Lien

We have the Factor’s lien and Auctioneer’s Lien.

2.3.1.2 Factor’s Lien

In the case of Baring v. Gorrie[54], a Factor was defined as a person to whom goods are assigned for sale by a merchant who entrusts him with the actual possession of the goods or the documents of title thereto and gives him authority to sell in his own name.[55]

Important Points

-Every factor has a general lien over the goods in his possession as Factor for any balance owed to him as Factor[56]

- For a right of lien to arise, the Factor’s possession of the goods must have arisen out his ordinary course of business as a Factor[57]

- The lien does not avail an agent or servant who is not a Factor over goods in his possession. This is because an agent holds possession in favour the principal, unlike a factor who acts for himself[58]

-The lien does not avail the Factor if he loses possession of the goods[59]

-The Factor has only a right of retention until he is paid, where he has a lien over goods bought for his Principal, he has no right to as against his Principal to enforce the lien by sale. However s.2 of the Factor’s Act, 1889 provides that if the sale took place in the ordinary course of business, the purchaser will get a good title.

- A Factor who has a lien over the goods given to him by his principal for sale can in general, sell them pursuant to his authority and reimburse himself out of the proceeds before remitting the balance to his principal[60]

-However, he cannot exercise a right of lien where the principal had revoked his authority to sell for such sale would be wrongful against the Principal[61]

S.7 of the Factors Act 1889 provides that a consignee without notice that the person in possession of the goods does not own them has the same lien on the goods as if the person in possession is the owner of the goods.

2.3.1.3 Auctioneer’s Lien

-An auctioneer has a lien over the proceeds of sale to the extent of his charges in conducting the sale[62]

-The auctioneer has a lien against the highest bidder over the goods for the purchase price so that if the purchaser fails to take delivery, he can sue for the price enough to pay off his commission and other expenses incurred in the transaction[63]

-The auctioneer, being a factor has a lien over the goods sent to him for sale in respect of the general balance arising out of advances made to the Principal against future proceeds of sale[64]

-However, the case of Brown v. Smith[65] decided that for the preceding lien to arise, the right against goods or proceeds of sale must have arisen mainly in connection with the auction otherwise the auctioneer’s right will be merely an equitable set-off.

2.4.1.1 Innkeeper’s Lien

-The general rule is that an Innkeeper has a lien over personal chattels brought into a hotel by a guest for the amount of the bill. This does not however extend to a charge for damage caused by the guest[66]

-The lien may be a general lien to the extent that each item of the guest’s belonging is a security for the whole bill[67].

-The lien may also be special to the extent it is limited to charges for lodging and storage of goods mainly to the exclusion of debts arising from loans made to the guest or disbursements made on his behalf[68].

-The lien will subsist notwithstanding that the bill has exceeded what was agreed on by the parties[69].

-The lien is restricted to the guest’s belongings deposited with the innkeeper; it does not cover his person or the clothes he is wearing[70]

-The lien will cover property brought by the guest irrespective of the fact that the property may not belong to him[71]. The owner of such property may settle the bills and recover his property. He may, however, sue the guest to recover the money paid.[72]

-The above lien will not avail the innkeeper when the property comes after the arrival of the guest and the innkeeper is aware that it does not belong to a third party

-Like the Factor, the innkeeper loses the lien when he parts with possession of the property of the guest[73].

-A lien does not arise where the guest gives an alternative security for payment of the bill and there is no intention to rely on that other security to the exclusion of the lien. This was exemplified in the case of Angus v. Mc Lachlan[74] where an equitable mortgage of a share in a ship taken by the innkeeper was held not to destroy his lien because there was nothing in the mortgage or the circumstances of its creation that was inconsistent with the continuance of the lien.

-The innkeeper only has a right of retention. He has no right to sell the property[75]. However, s. 6 of the Innkeeper’s Law[76] provides for sale of the guest property. The section, though, is subject to the proviso that the debt for the payment of which a sale is made shall not be any other or greater debt than the debt for which the goods or chattels could have been retained by the innkeeper under his lien.

-s.6(2)[77] of the same Law provides that the power of sale is not exercisable until after six weeks of the property being in custody of the innkeeper without having been paid

-s.6 (3)[78] provides that the proceeds of sale shall be applied to the payment of any such debt together with the cost and expenses of such sale and the surplus, if any, shall on demand, be paid to the person leaving any such goods and chattels.

-s.6(4)[79] provides that the innkeeper shall advertise the auction sale in one newspaper at least one month before any such sale and the advertisement shall contain notice of such intended sale and give a short description of the goods and chattels intended to be sold together with the name of the person who deposited or left same if known.

2.5.1.1 Lien Arising from Bailment for Reward

Prof I.O. Smith[80] defines a bailment as:

“A delivery of personal chattels on trust on the understanding that

the trust shall be duly executed and the chattels redelivered in

either the their original or altered form as soon the time for use

for, or condition on which they are bailed, shall have elapsed

or been performed.”

If the subject matter of a bail arrangement is kept for a fee or charge, it follows therefore that a lien may arise in favour of a bailee with respect to certain costs or expenses incurred in discharging the obligation undertaken by him in respect of the goods. Such lien may arise in any of the following four ways:

a) Storage of goods

b) Improving goods

c) Packaging goods

d) Carriage of goods

2.5.1.2 Lien for Storage of Goods

-A warehouse, luggage office-even banks- have a special lien on property deposited for safe keeping until the deposit charges are paid[81]

-The right of the custodian is mainly that of retention and he cannot sell the property. Where he sells without the consent (express or implied) of the bailor, he becomes liable in conversion[82]

-Consent is so vital that where it is obtained from the depositor and the custodian sells the property, the lien will prevail over the real owner of the property[83]

2.5.1.3 Lien for Improving Goods

-A craftsman who has done some improvement on goods delivered to him for improvement, repairs or change of form has a lien on such goods for the cost of improvement, repairs or change of form[84].

-The rule is not a straight jacket one. It is not enough merely to show that there is work expended on the property. The question is:

Did the lienee act upon the request (express or implied) of the lienor, and upon an undertaking (express or implied), on the part of the lienor to reimburse the lienee? This was well depicted in the case of Midaf Industrial Holdings v. Western Nigeria Development Corporation[85] the plaintiffs brought an action against the defendants for breach of contract and for trespass, the defendant claimed special and general damages for breach of the agreement and particularised the special damages to include duty paid by the defendants which ought to have been paid by the plaintiff. The court held, inter alia, that the duty paid by the defendants was a voluntary payment which was neither recoverable nor constituted a lien in favour of the defendants.

-Possession of the property must never be lost to claim a right of lien. Right of lien will not avail a custodian where the goods are removed and returned at will by the owner. In Hatton v. Car Maintenance co. Ltd[86], it was held that a garage where a car is parked to have no lien where the owner is entitled to drive the car out at will[87].

The Lien exist over goods the subject matter of the contract only. Thus, the court will not grant a lien over property that is outside the contract between the two parties. In Brown v. Sommerville[88] for a contract of printing book, only the finished printing can be retained to secure payment of the printing bill and not the customer’s plates or films.

Lien over goods improved by the bailee is special in nature and does not cover charges for work done on the goods retained only. It will not cover debts for previous improvements done on other goods unless there is a special agreement or trade custom[89].

-Where the original bailee of the goods for repairs sub-contract the work to another bailee for the same purpose (i.e. repairs) without knowledge or authority of the owner of the goods, no line arises in favour of the sub-contractor in the absence of a trade custom.[90]

-Where the goods repaired are subject of a hire purchase agreement, the following shall apply[91]:

a) Where there is an express obligation on the part of the hirer to carry out repairs on the hired goods and he is not expressly prohibited from creating a repairer’s lien, the lien binds the owner[92]

b) Even where the hirer is prohibited in (a) above, if the bailee is not aware of such prohibition, a lien arises in favour of the bailee against the owner for cost of repairs provided that there is an obligation on the part of the hirer to keep the goods in repair[93]

c) Where there is no obligation in (a) and (b) above, the hirer none the less has implied authority to create a repairer’s lien if it is reasonable to do so and it is not prohibited by the hire purchase agreement. Such lien will bind the owner who shall be responsible for cost of repairs[94].

2.5.1.4 Lien for Packaging of Goods

-This covers goods delivered to the bailee for packaging and/or labelling

-The bailee has a general lien on the goods for the cost of packaging and may refuse to deliver them to the customer until he is paid what is due to him generally for packaging those goods or other goods of the same customer[95]

2.5.1.5 Lien for Carriage of Goods

-Under a contract of carriage of goods, the carrier has a special lien on each item of the goods and may retain the goods until he is paid for the services.

-The bailor need not be the owner as the lien attaches to the goods as against the actual owner. The owner will be required to pay before collection.

-It is immaterial that the goods are delivered to the carrier against the will of the owner since the carrier is obliged to carry all goods delivered to him for carriage[96]

-The lien is special in nature in that it is restricted to the freight unpaid on particular contract of carriage. It does not extend to the general balance of account due in respect of other goods. However a general lien may be created in respect of other goods under contract.

-it therefore follows from above that where separate goods are carried on a single trip for the same consignee and freight is paid on some only, the carrier cannot, in the absence of a general lien, retain all the goods as security for what remains although he may discontinue delivery and return the goods not paid for until the freight is paid[97].

-A carrier loses his right of lien when he agrees to give credit for the carriage[98].

-Also, the right of lien does not arise until the transit is complete

-Where the carrier is obliged to preserve the goods at the end of the transit, he may recover the charges incurred, but he has no right of lien for such charges in the absence of an agreement to the contrary[99]

The right of lien exist so long as the carrier retains the goods so that where the consignee carries away the goods against the will of the carrier, the lien is lost and can only be revived when the carrier regains possession of the goods[100].

2.5.2 Lien Arising from Bailment without Reward

-Bailment may be without reward either by agreement or by virtue of special circumstances (such as mistake, accident, necessity, involuntary deposit etc) under which the bailee of goods incurred expenses in relation thereto.

-The question then is: Is such a gratuitous bailee entitled to a right of lien on the goods in his possession? The question was answered in the case of Balonwu v. Odunuko[101] in an action brought by the Plaintiff for recovery of the subject matter (car) as the legal owner, the defendant contended, inter alia, that as a bailee, he had a lien on the car for the expenses he had incurred in connection with it, which the owner had acknowledged should be paid to him. It was held, inter alia, that the defendant had a lien on the car and a right to detain it until he was paid his expenses in full and that such a detention could not amount to wrongful detention.

-It follows from Balonwu’s case that, being a bailment without reward, the bailor must have acknowledged that such expenses would be settled by him or a person so authorised by him.

2.6.1. Statutory Lien

Refer to our introduction in page 13 of creation of lien on personal chattels. We have examined creation by common law; we shall now examine creation by statute.

2.6.2 Lien under the Sale of Goods Act 1893[102]

-The unpaid seller has a right of lien and retention over the goods either in his possession or in transit[103]

2.6.2.1 Unpaid seller’s lien of goods in his possession

-The nature of the lien under the act is possessory

-S. 41 creates a lien in favour of an unpaid seller of goods who is in possession of the goods. He (unpaid seller) can retain possession of the goods until payment is made or:

i) tender of the price where the goods have been sold without any stipulation as to credit,

ii) Where the goods have sold on credit but the terms of the credit has expired, or

iii) Where the buyer becomes insolvent

-S. 42 provides that where the unpaid seller has made part delivery of the goods, he may exercise a right of lien or retention on the remainder unless such part delivery has been made under circumstances as to show an agreement to waive lien or right of retention. However, where the contract is severable, the unpaid seller cannot exercise a lien over subsequent instalment after default if the buyer is prepared to pay for a subsequent instalment.

S.43 provides that the right of lien is lost by the unpaid seller of goods when he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the right of disposal of the goods, or when the buyer or his agent lawfully obtains possession of the goods, or by waiver thereof.

-The lien is not lost by the unpaid seller obtaining judgement or decree for the price of the goods[104].

-s.48 (3) gives the unpaid seller power of sale after exercising his right of lien.

-s.55 provides that the right of lien may not be lost where there is an express agreement by the parties to the contrary. It states that any right, duty or liability arising under a contract of sale by implication of law, may be negatived or varied inter-alia, by express agreement between the parties. This was the scenario in the case of Afrotec Technical Services (Nig.) Ltd. v. MIA & Sons Ltd[105]

-The above case also decided that the unpaid seller’s right to be paid the contract price is independent of the existence of a lien. The lien is an additional security given to the unpaid seller.

-s.62 provides that the unpaid seller can retain possession of the goods for the price even when the property has passed

2.6.2.2 Unpaid seller’s lien of stoppage of goods in transit

-s.44 gives the unpaid seller, in the event of the buyer becoming insolvent, the right to resume possession of goods in the course of transit to such buyer, and retain possession of them until payment of the price.

-By this, the unpaid seller will gain priority in regards to the goods over the general creditors of the insolvent buyer. An exercise of the right to stoppage in transit by the unpaid seller put the carrier in transit under an obligation to redeliver possession of the goods to the seller.

-An exercise of the right of stoppage in transit does not, by itself, terminate the contract of sale but merely prevents the buyer from obtaining possession while enabling the seller to exercise a power of sale contained in s.48

s.45(1) provides that the goods are deemed to be in the course of transit from the time they are delivered to a carrier by land or water or other bailee for the purpose of transmission to the buyer until the buyer or his agent in that behalf takes delivery of them from such carrier or bailee

-s. 45(2) provides that if the buyer or his agent obtains delivery of the goods before their arrival at the appointed destination, the transit is at end

-s. 45(3) provides that if after the arrival of the goods at the appointed destination, the carrier or bailee acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in possession of them as such, the transit is at end notwithstanding that a further destination for the goods may have been indicated by the buyer.

-s. 45(4) provides that where the goods are delivered to a ship chartered by the buyer and the carrier, or bailee continues in possession of them, the transit is not deemed to be at end, even if the seller has refused to receive them back

-s. 45(5) gives that where the goods are delivered to a ship chartered by the buyer, it is a question of fact whether they are in possession of the master as a carrier or as agent to the buyer.

s. 45(6)-The transit will end if the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent. Also, when the carrier has delivered part of the goods, the seller may stop the remainder in transit, unless the partial delivery was made under such circumstances as to show an agreement to give up possession of the whole of the goods.

S.46 provides for the method of stopping the goods in transit. The unpaid seller may stop by taking actual possession of them or by giving notice of stoppage to the carrier, or bailee in whose possession the goods are.

-the notice is to be given with reasonable diligence and on receiving the notice of stoppage, the carrier or bailee must re-deliver the goods to the seller or according to the directions of the seller at the seller’s expense[106].

s.47 provides that the unpaid seller’s lien and his right of stoppage in transit is not lost by any sell, or other disposition of the goods without the seller assenting thereto except where the documents of title have been given to the buyer and have been transferred on sale to a person taking the documents in good faith and for valuable consideration

-we have earlier mentioned that s. 48 empowers the seller to resell the goods. However, he(seller) is meant to give notice of such sale to the buyer and if the buyer does not indicate interest within a reasonable time to pay, the unpaid seller mat resell the goods and recover from the original buyer damages for any loss occasioned by his breach of contract[107].

-s. 48(4) provides that where the seller expressly reserves the right of resale in case the buyer defaults and upon the default resells the goods, the original contract of sale is rescinded but without prejudice to any claim the seller may have for damages

2.6.3 Lien under the Nigerian Railway Corporation Act 2004

S.61(1) provides that the Nigerian Railway Corporation(NRC) may detain goods delivered by a person or for such person to the corporation when the person fails to pay on demand any rate, charge or debt due. This is a special lien.

-However, a general lien may be created over any other goods of the debtor then being in or thereafter coming into the possession of the corporation, if the particular goods delivered by the debtor have been removed from the railway.

-s. 61(2) gives the NRC the power to sell the goods by public auction after calling for tenders for the purchase thereof. Where the goods are perishable, the corporation may sell at any time it deems okay. Where the goods are not perishable, the corporation may sell after lapse of two months notice.

-Even where the goods remain after sale, the NRC may give the buyer fifteen days notice after which it can sell and satisfy the debt owed and expenses incurred while refunding the balance to the owner of the goods[108].

2.6.4 Lien under the Customs and Excise Management Act 2004

-The Board of the Customs may detain any ship, aircraft or vehicle (ands the goods therein) that remain on the port after twenty-one days upon arrival or filing mandatory report[109].

-The owner is to reimburse the Board expenses of watching/guarding and removing the ship[110].

2.7.1 Maritime Lien

Prof Smith[111] defined maritime lien as:

“A privileged claim upon a vessel resulting from its general

Operation and arising either from the services rendered to

It by persons such as seamen, salvors and repairers of the

Ship; or injuries caused by it in the course of its operations”

-It was described as a non-possessory lien creating a right in rem in favour of the lienee and enforceable against the ship directly as opposed to the owner of it[112].

-S. 5(3) of the Admiralty Jurisdiction Act 1991 defines a maritime lien as a lien for salvage, or damage done by a ship or wages of the master or member of the crew of a ship, or master’s disbursements.

-The lien is secret in nature in that it does not have to be registered and their existence does not depend upon possession.

-The lien is indelible in the sense that it clings to the ship even in the hands of a bona fide purchaser for value without notice of the lien.

-They are by nature inchoate and devoid of any legal consequences until enforced by a proceeding in rem. The normal principles of priorities amoung secured creditors do not necessarily apply to maritime liens which may sometimes rank in inverse order of creation.

-A lien may arise, on a ship to recover damages in collision with another ship[113].

-A lien may also arise against specific cargo on board a vessel in respect of a claim for salvage.

-The lien does not avail an independent claim on freight. It has to attach to a lien on the ship.

-A claim for salvage or towage of an aircraft when waterborne is a right of lien over the aircraft and may give rise to an action in re, against it[114]

2.7.2 Extinction of Maritime Lien

The maritime lien may be discharged through any of the following means:

-Statute of Limitation of Action

-Latches and acquiescence

-Satisfaction of claim

-Waiver of claim by lienee

-Bail or guarantee by ship owner

-Sale to person enjoying immunity of suit

-Sale by court

-Destruction of the res

2.8 Lien on Company Shares

-A company has a lien on any unpaid shares of the company including dividends accruing thereto.

-The lien arises by operation of the law and attaches to the proprietary interest in the shares.

-The Companies and Allied Matters Act (CAMA) creates a statutory lien with respect to unpaid shares.

-s 139(1) provides that the company shall have a first and paramount lien on every non fully paid up share for all moneys called or payable at a fixed time in respect of that share, and on non fully paid up shares standing registered in the name of a person for all moneys payable by him or his estate to the company. However, the directors may at any time declare any share to be wholly or in part exempted from this provision.

s.139 (2) provides that a company’s lien on a share shall extend to all dividends payable on it.

-A shareholder may compel the company to assign its lien a person who is willing to pay off the amount of the lien[115].

2.8 Lien on Life Insurance Policy

Lien on life insurance may arise under common law or equity. However, the lien does not exist longer than the policy so that when the policy drops, the lien drops with it[116].

2.8.1 Common Law Lien (Possessory Lien)

- It arises by operation of law in circumstances where the owner of a policy is indebted to another who is in possession of the policy. The person having custody of the policy has the right to retain it until the debt owed by the policy owner is paid. Two good examples are the broker’s lien and solicitor’s lien

2.8.1.1 Broker’s Lien

-The broker is entitled to a lien to retain the policy in his possession until he is paid his commission and premium outstanding[117].

-The right only subsist in so far as he retains possession of the policy so that where he loses possession; the lien is lost although he may be entitled to an equitable lien in respect of the premium paid by him.

-The broker’s lien is for the unpaid balance of his commission or premium; it will not cover moneys due to the broker in respect of other services unless he was employed as a general agent[118]

-Unless it is proven that it was deposited as security for advances, a mere deposit of a policy with an agent will not give rise to a lien[119]

2.8.1.2 Solicitor’s Lien

-A solicitor has a general lien upon his client’s papers including his insurance policies in his possession for costs[120]

-The cost not only includes costs arising from his services in connection with the policy but also covers all cost arising from the general professional services rendered by the solicitor for which fees are outstanding[121]

It is only by order of court that the solicitor can part with the policy and such order will be given only where the document is necessary to secure the property which it creates, and suitable security can be given.

2.8.2 Equitable Lien

-An equitable lien may be created under the following circumstances:

a) Lien by contract

b) Trustee’s Lien

c) Mortgagee’s Lien

2.8.2.1 Lien by Contract

-As a general rule, lien does not arise where a stranger to an insurance policy pays the premium[122].

-However, a contract by a stranger to a policy with the beneficial owner to pay the premium creates a lien in favour of such stranger for the repayment[123]

-A covenant by a surety to pay premiums on certain policies upon default by the mortgagor to pay the premiums creates a lien upon payment by the surety so that the mortgagee takes the proceeds of the policies subject to repayment of the premiums to the surety[124].

-Where a person not responsible for payment of the premium pays them with the knowledge and acquiescence of the person responsible for paying same, a contract giving rise to the lien may be inferred from conduct[125]. Also, where a person responsible for the payment of premiums requests another to pay them, that other person acquires a lien on the policy[126].

-Where a person interested in the policy but not responsible for the payment of premium requests a stranger to pay them on the default of the person liable, the stranger has no lien on the policy[127].

- A mortgagor who pays premiums to keep up a mortgage policy after his bankruptcy is not entitled, in the absence of a special agreement, to a lien on the policy for the amount so paid[128].

2.8.2.2 Trustee’s Lien

-A trustee is entitled to a lien on moneys payable under a policy which forms part of the trust property for any premiums paid out of his own pocket.

-The policy on which the premiums are paid must form part of the trust fund to give rise to a lien[129].

-Where there is availability of trut funds at the disposal of the trustee and he goes ahead to pay premiums out of his own pocket, no lien will arise in his favour[130].

-Also, if the trustee would, by the payment of premiums, have acquired a lien upon moneys paid under a policy, request another person to pay such premiums, that other person is in equity subrogated to the rights of the trustees including the equitable lien[131].

2.8.2.3 Mortgagee’s Lien

Through the mortgage deed, a mortgagee can have a lien on the mortgage policy money for premiums paid by him on the policy upon default by the mortgagor where such sums were included in the debt secured[132].

-Liens may arise in favour of a part owner only where there is a request to pay the premiums by another part owner[133].

CHAPTER THREE

3.1 Enforcement of Liens

We shall consider enforcement of the different types of liens:

3.2 Enforcement of Conveyancing Liens

We have vendor’s liens and purchaser’s liens.

3.2.1 Enforcement of Unpaid Vendor’s Lien

-Proceedings for enforcing unpaid vendor’s lien is commence by writ at the High Court claiming a declaration that the vendor is entitled to a lien[134]. Upon such declaration being made, the vendor is entitled to all such remedies for enforcing payment of the purchase money and interest as he would have been entitled under mortgage or charge.[135]

-It follows from above that the vendor can therefore, sell the property or appoint a receiver.

-We had earlier enumerated steps to be taken by unpaid vendor to “perfect” his lien[136].When such steps have been taken, the unpaid vendor’s lien may be enforced against the purchaser’s successor in title unless he (purchaser) obtained a legal estate for value without notice of the lien or unless he has a better equity than the vendor[137]

-The unpaid vendor’s lien is enforceable against the purchaser and is representative upon his death, but also against all persons taking as volunteers under him, as well as his trustees in bankruptcy[138]

-We had earlier examined the enforcement of sub-vendor’s lien in page 10.

3.2.2 Enforcement of Purchaser’s Lien

-The purchaser can bring an action by sale of the property pursuant to a court order by bringing an action for a declaration that he is entitled to the lien[139].

-The purchaser may also sue in the same action for specific performance or may sue for a lien and sale of the property[140].

-The lien, though equitable in nature, is capable of binding the vendor’s successors in title[141].

-The lien should be duly protected in order to be enforceable against the vendor’s successors in title[142]

3.2.3 Enforcement of Sub-purchaser’s Lien

-A sub-purchaser has a lien on the purchaser’s equitable interest in the land before the purchaser’s contract with the vendor is completed.

-Where the contract is not completed due to the vendor’s default and the vendor repays the deposit to the purchaser, the sub-purchaser is entitled to repayment of the price paid to the purchaser as well as other costs and expenses incurred[143].

-Where the non-completion is due to the default of the purchaser and the vendor forfeits the purchaser’s deposit, the sub-purchaser will only be entitled to a personal claim against the purchaser to recover the deposit[144]

-After completion of the contract the sub-purchaser has a lien against the legal estate vested in the purchaser.

3.2.4 Enforcement of Maritime Lien

-As earlier discussed, maritime lien is for an action in rem. Procedure for such action is regulated by the Admiralty Jurisdiction Procedure Rules 1993 which introduced distinct rules of procedure from existing Federal High Court (Civil Procedure) Rules for matters within the admiralty jurisdiction of the court.

-An action in rem must be commenced by writ of summons and statement of claim.

-The court process shall be served on the relevant “res” within the jurisdiction of the court for the action to be maintainable. If follows, therefore that where the “res” leaves the jurisdiction of the court, is sold or destroyed, the right to proceed in rem is lost.

-Enforcement does not allow for substituted service as it is not provided for in the Rules of Procedure.

-The removal or destruction of the “res” can be avoided by plaintiff through obtaining an order of the court via a motion ex parte supported by an affidavit containing sufficient facts and evidence establishing a “strong prima facie case”. However, what will amount to a “strong prima facie case” is a matter of fact to be decided by the court. Courts have been advised to take a strict view of the requirement of establishing a “strong prima facie case” since the courts do not demand actual security being provided by the plaintiff as pre-condition for arrest[145]. The courts are also to bear in mind the commercial implications of a vessel or other property stopped as a result of an order of arrest.

-The ship may be released upon lodgement of appropriate and satisfactory security by the owner but in that case, the owner is said to have submitted himself personally to the jurisdiction of the admiralty court and becomes amenable to the court’s jurisdiction in personam.

-Where the ship owner is sued along with the “res” or enters an appearance, the action continues against him as an action in rem and in personam. Therefore, any judgement obtained by the plaintiff is enforceable against the “res” as well as the defendant through a writ of fieri facias[146].

-However, a judgement in rem is not enforceable against the ship owner who has not appeared to defend the claim and does not attach to any other vessel[147].

-A judgement in an action in rem is not a bar to a subsequent action in personam against the ship owner in respect of the same vessel[148] and vice versa[149].

-An action in rem cannot be sustained to enforce a foreign judgement in personam[150]

-Where judgement is obtained by the defendant in personam, he cannot subsequently exercise his right to arrest the ship[151].

-The court may order for the sale of the ship to satisfy the maritime lien. The effect of such sale is that it extinguishes the lien and transfers it to the proceeds of sale. The lienee is to satisfy his claim out of the proceeds and return any balance to the ship owner.

3.2.5 Enforcement of Lien on Company Shares

-s.139 of the Companies & Allied Matters Act (CAMA) empowers the company to sell any shares of which the company has a lien in such manner as the directors may think fit. However, fourteen days notice must have been given and elapsed before such sale can be effected[152].

-s.139 (4) provides that for the purpose of giving effect to any such sale, that the directors may authorise some person to transfer the shares sold to the purchaser of the shares, and the purchaser shall be registered as the holder of the shares comprised in the transfer.

-The proceeds of the sale shall be applied by the company in payment of the amount on which the lien exist as is due while nay residue is paid to the person entitled to the shares at that date.

-s.139 (5) provides that the purchaser shall not be bound to see to the application of the purchase money and his title to the shares shall not be affected by any irregularity or invalidity in the proceedings with reference to the sale.

-The person against whom the lien is enforceable is the registered holder of the shares even if the person is only a trustee[153] except where it is proved that the company had notice of the trust before transferring the debt[154]

CHAPTER FOUR

4.1 Recommendations

From the treatise during which we exposed some lacuna, we have taken liberty to advance some suggestions that can address the ills facing the implementation of liens as a means of security in Nigeria.

1) It would seem that lien gives no right to take possession of the goods, therefore to foreclose and sell the goods where the lienor defaults except:

i) Where there is an order of court;

ii) Where there is an agreement between the parties incorporating such power of sale or foreclosure.

It is our opinion that the legislature has a huge role to play here by enacting legislations giving the lienee the right to sell or foreclose where there is default by the lienor. This will make the security more potent than it is presently. Example is the Innkeeper’s Act of 1878, which is a Received English Law; the innkeeper is empowered to sell the goods of a lodger after expiration of a six-week period. Also, we can see the giant strides, the Lagos State House of Assembly made in the new Mortgage and Property Law[155], recently passed. In that Law, equitable mortgage has been given the status of a legal mortgage, also charges have also been given the status of a mortgage. This goes to show that it is possible for liens to be given some features of mortgage as well to enable it become more “secure” in the hands of creditors.

2) There is no legal requirement to register a maritime lien to constitute notice to third parties so that neither a potential purchaser nor lender to the business is afforded an opportunity of determining the extent of exposure to the business risks. However, there are international conventions[156] that can ensure uniform recognition and enforcement of maritime claims in order to avoid conflict situations and prevent forum shopping. Nigeria has failed to ratify these conventions, thereby exposing lienees to loss of lien where the res disappears from the jurisdiction of the court or is destroyed. We should ratify these conventions in order to afford us the benefits they provide.

3) The risks that insurance policies could be vitiated and avoided is the greatest danger facing a mortgagee of a life insurance policy, thereby making the policy less efficacious. A policy may be vitiated where:

i) The accuracy, which is presumed, of the assured’s statement in the proposal form turns out to be false or wrong.

ii) There is proven lack of insurable interest in the policy by the mortgagor.

iii) The death of the insured resulted from circumstances outside the cover provided by the policy.

It is our humble suggestion that before accepting the insurance policy as a security from the insured/lienor, the lienee should liaise with the insurers and the insured with a view to registering his presence and the nature of interest he will acquire if the lien goes through.

4.2 Conclusion

The preceding section of this treatise should by no means be construed to mean that the enforcement of liens is defective. Our commendations go to legal authors and scholars, legislators, judiciary and the like whose efforts have made lien what it is today-a security. However, if the recommendations put forward are implemented it will go a long way in boosting the “security” of liens as a means of security interest.

INITIAL BIBLOGRAPHY

Legislations

1) Sale of Goods Act 1893

2) The Factors Act 1889

3) The Innkeeper’s Law (Applicable in the states formerly under the west and mid-west)

4) Nigerian Railway Corporation Act 2004

5) Customs and Excise Management Act 2004

6) The Admiralty Jurisdiction Act 1991

7) The Companies and Allied Matters Act (CAMA) 1990

8) International Convention for the Unification of certain Rules relating to maritime Liens and Mortgages, 1926, 1967 and 1993

9) The Lagos State Mortgage and Property Law, 2011

Books

1) Black’s Law Dictionary (8th edition, 2004)

2) Nigerian Law of Secured Credit, Ecowatch Publishers Ltd, 2001 at pg 37

3) The Osborn’s Law Dictionary (9th edition) 2001

4) Snell’s Equity, 30th ed. (2000) Sweet & Maxwell p.529

5) Keeton and Sheridan, Equity, 3rd ed. (1987) Kremer Law Publishers

6) “Conveyancing Liens” (1997) 61 Conv. (Sweet & Maxwell)

7) R. Goode, Commercial Law (Harmondsworth, Penguin Books/Allen Lane, 1982)

8) Bowstead on Agency12th Ed. @ pg 155 Art 172

9) 5 Halbury’s Law of England, 4th ed. Para 447

10) Barnsley “Conveyancing Liens” (1997) 61 Conv. (Sweet & Maxwell) pg 336

Articles

1)

2)

3)

4) Security: Some Mysteries, Myths & Monstrosities by David Allan, Monash University Law Review (Vol 15,Nos 3 and 4 ’89 )

5) Phillips J, "Equitable Liens—A search for a unifying principle" in Palmer & McKendrick, Interests in Goods (2nd Ed.)

6) Williams on Vendor & Purchaser, 4th ed. (1936) vol 2

7) Vendors and Purchasers of Estates 14th ed. 1862

8) Bowstead on Agency12th Ed. @ pg 155 Art 172

9) Fry on Specific performance 6th ed. (1921) pg 677.

10) L.C. Ilogu: “Essentials of Admiralty Practice and Procedure in Nigeria”. Papers on Maritime Seminar for judges 6th-8th December 1995(1996) Godak Communications Ltd. pg 67

11) The John and Mary (1859) SWA p 471; Joannis Vatis (no. 2) (1992) pg 213 at pg 221-22

Cases

1) Whytes v. Lee 61 E.R pg 954

2) Kettlewell v. Wilson (1884) 26 Ch. D pg 501

3) Re Birmingham (1959) Ch. 523

4) Barclays Bank Plc v. Estates and Commercial Ltd (1997) 1 WLR pg 415

5) Ecclesiastical Commissioners v. Pinney (1899) 2 Ch. P 729

6) Davies v. Little John (1923) 34 CLR pg 174

7) Santley v Wilde [1899] 2 Ch 474

8) Carter v Wake (1877) 4 Ch D 605

9) Thames Iron Works v Patent Derrick (1860) 1 J&H 93

10) Re Hamilton Snowball’s conveyance (1959) Ch. Pg 308

11) Davies v. Thomas (1900) 2 Ch pg 462

12) Walker v. Ware Hadham and Buntingford Rly (1865) LR 1 Eq pg 195

13) Ayorinde v. Scott CCHCJ/272 Unreported.

14) Rice v. Rice 61 ER pg 646

15) Winter v. Lord Anson 38 E.R. pg 658

16) Hughs v. Kearny (1803) 1 Sch & lef pg 132: (1802-6) 2 Ch.

17) Boodle v. Hatfield & Co v. British Films Ltd (1986) PCC pg 176

18) Nottingham Permanent Benefit Building Society v. Thurstan (1903) AC pg 6

19) Burgess v. Wheate(1759) 1WB pg 123

20) Whitbread & Co. Ltd v. Watt(1902) 1 Ch pg 835

21) Ewing v. Osbaldiston 40 ER pg 561

22) See Chattey v. Farnidal Holdings (1997) 1 EGLR pg 153

23) Westmacott v. Robins 45 ER pg 1234

24) Chattey v. Farnidal Holdings (1997) 1 EGLR pg 153

25) Lee-Parker v. Izzt(1971) 1 WLR pg 1688

26) Whitbread & Co. Ltd v. Watt (1901) 1 Ch. Pg 911

27) Dinn v. Grant 64 ER pg. 1194

28) Rose v. Watson (1864) 10 HIC pg 67

29) Kitton v. Hewett (1904) WN pg 21

30) Turner v. Marriott (1867) LR 3 Eq pg 744

31) Middleton v. Magnay 71 ER pg 452

32) Afrotec technical Services (Nig) Ltd. v. MIA & Sons Ltd (2000) 15 NWLR (pt 692) pg 730

33) Re Hawkes (1898) 2 Ch pg 1

34) Cormack v. Beisly 44 ER 1229

35) Witt & Busch Ltd v. Alraine (Nigeria) Ltd (1968) NCLR pg 301

36) Baring v. Gorrie 106 ER Pg 317

37) Esso West Africa Inc. v. Alli (1968) NCLR pg 119

38) Kruger v. Wilcox 27 ER pg 168

39) Burns v. Bruce

40) Dixon v. Stanfield (1850) 10 CB 398

41) Gardiner v. Alexander Milner & Co. (1858) 208 pg 565

42) Smart v. Sanders (1848) 5 CB pg 865

43) Webb v. Smith (1885) 30 Ch D pg 192

44) Chelmsford Auctions Ltd v. Poole (1973) QB pg 542

45) Neillay’s Trustee v. Hutchison (1881) 8 R pg 489

46) Brown v. Smith (1893) 13 LT pg 158

47) Ferguson v. Perterkin (1953) SLT pg 91

48) Mulliner v. Florence (1878) 3 QBD pg 484

49) Chesham Automobile Supply (Ltd) v. Beresford Hotel (Birchington) (ltd) (1913) 29 TLR pg 584

50) M’kichen v. Muir (1849) Shaw J. pg 223

51) Sunbolf v. Alford 150 ER 1135

52) Robins v. Gray (1895) 2 QB pg 501

53) Broadwood v. Granada (1854) 10 Ex p. 417

54) Jones v. Thurloe 88 ER 126

55) Angus v. Mc Lachlan (1883) 23 Ch. D pg 330

56) Themes Iron Works Co v. Patent Derrick C. (1860) 1J& H 93

57) Laurie v. Denny’s Trustee (1853) 15 D p 404

58) Sacks v. Miklos (1948) 1 All ER pg 67

59) C.A. Munro v. Wilmot (1949) 1 KB pg 295

60) Singer Manufacturing Co v. London and South Western Railway Co. (1894) 1 QB pg 833

61) Chase v. Westmore 105 ER 1016

62) Bevan v. Waters (1828) 3 C & P pg 520 (1840-41) 1 Ch pg 41

63) Midaf Industrial Holdings v. Western Nigeria Development Corporation (1971) NCLR pg 236

64) Hatton v. Car Maintenance co. Ltd (1915) 1 Ch. Pg 621

65) Forth v. Simpson (1849) 13 QB pg 680

66) Brown v. Sommerville (1844) 6 D.p. 1267

67) Green v. Farmer 98 ER 154

68) Pennington v. Reliance Motor works Ltd. (1923) 1KB p. 127

69) Green v. All Motors Ltd. 91917) 1KB pg 625

70) Albermarie Supply Co. Ltd. v. Hind & Co. (1928) 1 KB pg 307

71) Tappenden v. Artux (1964) 2 QB pg 185

72) Ex Parte Deeze (1748) 1 Atk 228, (1736-55) 3 Ch p. 26

73) Re Witt (1876) 2 Ch D pg 489

74) Ratt v. Mitchell (1815) 4 Camp pg. 146

75) Great Northern Railway Co. v. Swaffield (1874) LR 9 Exch pg 132

76) Balonwu v. Odunuko (1971) 2 NCLR pg 338

77) Yakassi v. Incar Motors (Nig.) Ltd (1975) All NLR pg 287

78) The Bold Buccleugh (1881) 7 Moo PC pg 267: (1836-62) 15 PC 12-5

79) The Langford (1888) 4 P.D. pg 34

80) Everiit v. Automatic Weighing machine Co (1892) 3 Ch pg 503

81) Busteed v. West of England Fire and Life (1956) 5 Ir. Ch. R. pr 533

82) Fisher v. Smith (1878) AC pg1

83) Muir v. Fleming (1822) 1 Dow & Ry NP pg 29

84) Richard v.Planet (1841) 10 LJ CH pg 375

85) Worral v. Johnson (1820) Jac & Walk pg 214

86) Re Leslie, Leslie v. French (1883) 23 Ch. D pg 552

87) Burridge v. Row (1842) 1 Y & CCC pg 183

88) Aylwin v. Witty (1861) 30 LJ Ch pg 860

89) West v. Reid (1843) 2 Hare pg 249

90) Falcke v. Scottish Imperial Insurance (1886) 34 Ch.D pg 234

91) Strutt v. Tippett (1889) 62 LT pg 475

92) Saunders v. Dunman (1878) 7 Ch D pg 825

93) Re Earl of Win Chelsea’s Policy Trusts (1889) 39 Ch D pg 168

94) Clark v. Holland (1854) 19 Beave pg 262

95) Todd v. Moorhouse (1874) LR 19 Eq. p 69

96) Re Mckerrell (1912) 2 Ch pg 648

97) Re Stucley (1906) 1 Ch pg 67

98) Exparte Hanson 33 E.R. pg 131

99) The Gemma (1899) pg 285

100) M.V. Zack Metal C. v. International Navigation Corp. (1975) A.M.C. pg 720

101) Nelson v. Crouch (1863) LJCP pg 46

102) The “City of Mecca” (1879) 5 PD pg 28

103) Anchor Ltd v. The Owners of the Ship line, vol 1 NSC 42 (SC)

104) New London & Brazilian Bank v. Brocklebank (1882) 21 Ch pg 302.

105) Bradford Co. Ltd. v. Briggs & Co. Ltd (1886) 12 AC pg 29

-----------------------

[1] See Black’s Law Dictionary (8th edition,2004)

[2] See

[3] See Whytes v. Lee 61 E.R pg 954

[4] In his book, Nigerian Law of Secured Credit, Ecowatch Publishers Ltd, 2001 at pg 37

[5] See The Osborn’s Law Dictionary (9th edition) 2001

[6] See Kettlewell v. Wilson (1884) 26 Ch. D pg 501 @ pg 507

[7] This view was later adopted in the case of Re Birmingham(1959)Ch. 523.

[8] See Barclays Bank Plc v. Estates and Commercial Ltd (1997) 1 WLR pg 415 @ 419.

[9] See Snell’s Equity, 30th ed. (2000) Sweet & Maxwell p.529 para 28

[10] See Keeton and Sheridan, Equity, 3rd ed. (1987) Kremer Law Publishers.

[11] Later adopted in Ecclesiastical Commissioners v. Pinney (1899) 2 Ch. P 729 @ 735 and Davies v. Little John (1923) 34 CLR pg 174 @181.

[12] See Vendors and Purchasers of Estates 14th ed. 1862 Chap 19 pp. 670-671

[13] See “Conveyancing Liens” (1997) 61 Conv. (Sweet & Maxwell) p. 336 at p. 340

[14] Ibid

[15] See

[16] See

[17] See . See also Santley v Wilde [1899] 2 Ch 474; Carter v Wake (1877) 4 Ch D 605

[18] See Security: Some Mysteries, Myths & Monstrosities by David Allan, Monash University Law Review (Vol 15,Nos 3 and 4 ’89 ) at Pg 346. See further R. Goode, Commercial Law (Harmondsworth, Penguin Books/Allen Lane,1982) at p.733

[19] Thames Iron Works v Patent Derrick (1860) 1 J&H 93

[20] Land Registry or Corporate Affairs Commission.

[21] See Phillips J, "Equitable Liens—A search for a unifying principle" in Palmer & McKendrick, Interests in Goods (2nd Ed.)

[22] See Re Hamilton Snowball’s conveyance (1959) Ch. Pg 308

[23] Supra @ pg 420

[24] See Davies v. Thomas (1900) 2 Ch pg 462

[25] See Walker v. Ware Hadham and Buntingford Rly (1865) LR 1 Eq pg 195

[26] CCHCJ/272 Unreported.

[27] 61 ER pg 646

[28] Ayorinde v. Scott(supra)

[29] Ibid. For a detailed explanation see Prof Smith, Nigerian Law Of Secured Credit(supra) @ pg 141

[30] See Williams on Vendor & Purchaser, 4th ed. (1936) vol 2 pg 984.

[31] See the cases of Winter v. Lord Anson 38 E.R. pg 658 and Hughs v. Kearny (1803) 1 Sch & lef pg 132: (1802-6) 2 Ch.

[32] See Winter v. Lord Anson (supra)

[33] (1986) PCC pg. 176

[34] (1903) AC pg 6

[35] This position was later adopted in Orakpo v. Manson Investment Ltd (1971) Ch pg 81

[36] (1759) 1WB pg 123. See the dictum of Sir Thomas Grant

[37] See Whitbread & Co. Ltd v. Watt(1902) 1 Ch pg 835

[38] See Ewing v. Osbaldiston 40 ER pg 561

[39] See Chattey v. Farnidal Holdings (1997) 1 EGLR pg 153

[40] See Westmacott v. Robins 45 ER pg 1234

[41] See Chattey v. Farnidal Holdings (1997) 1 EGLR pg 153

[42] See Lee-Parker v. Izzt(1971) 1 WLR pg 1688

[43] See Whitbread & Co. Ltd v. Watt (1901) 1 Ch. Pg 911 @ pg 915

[44] See Dinn v. Grant 64 ER pg. 1194

[45] See Whitbread & Co Ltd v. Watt (supra)

[46] See Rose v. Watson (1864) 10 HIC pg 67

[47] See Kitton v. Hewett (1904) WN pg 21

[48] See Turner v. Marriott (1867) LR 3 Eq pg 744

[49] See Middleton v. Magnay 71 ER pg 452

[50] (2000) 15 NWLR (pt 692) pg 730

[51] 44 ER 1229

[52] 12th Ed. @ pg 155 Art 172Cited with approval in Witt & Busch Ltd v. Alraine (Nigeria) Ltd (1968) NCLR pg 301 @ 306-307

[53] ibid

[54] 106 ER pg 317.

[55] Also adopted in Esso West Africa Inc. v. Alli (1968) NCLR pg 119

[56] See Kruger v. Wilcox 27 ER pg 168

[57] See Burns v. Bruce

[58] See Dixon v. Stanfield (1850) 10 CB 398

[59] See Kruger v. Wilcox (supra)

[60] See Gardiner v. Alexander Milner & Co. (1858) 208 pg 565

[61] See Smart v. Sanders (1848) 5 CB pg 865

[62] See Webb v. Smith (1885) 30 Ch D pg 192

[63] See Chelmsford Auctions Ltd v. Poole (1973) QB pg 542

[64] See Neillay’s Trustee v. Hutchison (1881) 8 R pg 489

[65] (1893) 13 LT pg 158

[66] See Ferguson v. Perterkin (1953) SLT pg 91

[67] See Mulliner v. Florence (1878) 3 QBD pg 484

[68] See Chesham Automobile Supply (Ltd) v. Beresford Hotel (Birchington) (ltd) (1913) 29 TLR pg 584

[69] See M’kichen v. Muir(1849) Shaw J. pg 223

[70] See Sunbolf v. Alford 150 ER 1135

[71] See Robins v. Gray (1895) 2 QB pg 501

[72] See Broadwood v. Granada (1854) 10 Ex p. 417

[73] See Jones v. Thurloe 88 ER 126

[74] (1883) 23 Ch. D pg 330

[75] See Themes Iron Works Co v. Patent Derrick C. (1860) 1J& H 93

[76] Applicatble in the states formerly under the west and mid-west(excluding Lagos)

[77] ibid

[78] ibid

[79] ibid

[80] Law of Secured Credit (supra) @ pg 195

[81] See Laurie v. Denny’s Trustee (1853) 15 D p 404

[82] See Sacks v. Miklos (1948) 1 All ER pg 67 @ 68. See also C.A. Munro v. Wilmot (1949) 1 KB pg 295

[83] See Singer Manufacturing Co v. London and South Western Railway Co. (1894) 1 QB pg 833

[84] See the cases of Chase v. Westmore 105 ER 1016 and Bevan v. Waters (1828) 3 C & P pg 520 (1840-41) 1 Ch pg 41

[85] (1971) NCLR pg 236

[86] (1915) 1 Ch. Pg 621

[87] See also Forth v. Simpson (1849) 13 QB pg 680

[88] (1844) 6 D.p. 1267

[89] See Green v. Farmer 98 ER 154

[90] See Pennington v. Reliance Motor works Ltd. (1923) 1KB p. 127

[91] See Nigerian Law of Secured Credit op. cit. ,pg 198

[92] See Green v. All Motors Ltd. 91917) 1KB pg 625

[93] See Albermarie Supply Co. Ltd. v. Hind & Co. (1928) 1 KB pg 307

[94] See Tappenden v. Artux (1964) 2 QB pg 185

[95] See Ex Parte Deeze (1748) 1 Atk 228, (1736-55) 3 Ch p. 26 adopted in Re Witt (1876) 2 Ch D pg 489

[96] See 5 Halbury’s Law of England,4th ed. Para 447

[97] ibid

[98] See Ratt v. Mitchell (1815) 4 Camp pg. 146

[99] See Great Northern Railway Co. v. Swaffield (1874) LR 9 Exch pg 132

[100] 5 Halbury’s Law of England (supra)

[101] (1971) 2 NCLR pg 338

[102] Applicable in Lagos, Eastern and Northern Nigeria. The western states(including Edo & Delta) have their Sale of Goods Law which is in pari material.

[103] See s. 38 of the Act

[104] See s.43(2) ibid

[105] (2000) 15 NWLR (pt 692) pg 730. But see Yakassi v. Incar Motors (Nig.) Ltd(1975) All NLR pg 287

[106] See s.46(2) ibid

[107] See s.48(3)

[108] See s.61(4)

[109] See s.26

[110] See s. 35

[111] See The Law of Secured Credit (ibid) @ pg 244. He adopted the definition in The Bold Buccleugh (1881) 7 Moo PC pg 267: (1836-62) 15 PC 12-5

[112] See The Langford (1888) 4 P.D. pg 34

[113] See The Bold Buccleugh (supra) where a lien operated against a ship which had been sold to a bona fide purchaser for value

[114] See s.5(3) (5) of the Admiralty Jurisdiction Act

[115] See Everiit v. Automatic Weighing machine Co (1892) 3 Ch pg 503

[116] See Busteed v. West of England Fire and Life (1956) 5 Ir. Ch. R. pr 533

[117] See Fisher v. Smith (1878) AC pg1 @ 7-8

[118] See Muir v. Fleming (1822) 1 Dow & Ry NP pg 29

[119] ibid

[120] See Richard v.Planet (1841) 10 LJ CH pg 375

[121] See worral v. Johnson (1820) Jac & Walk pg 214

[122] See Re Leslie, Leslie v. French (1883) 23 Ch. D pg 552 @ 561

[123] See Burridge v. Row (1842) 1 Y & CCC pg 183

[124] See Aylwin v. Witty (1861) 30 LJ Ch pg 860

[125] See West v. Reid (1843) 2 Hare pg 249

[126] See Falcke v. Scottish Imperial Insurance (1886) 34 Ch.D pg 234

[127] See Strutt v. Tippett (1889) 62 LT pg 475

[128] See Saunders v. Dunman (1878) 7 Ch D pg 825

[129] See Re Earl of Win Chelsea’s Policy Trusts (1889) 39 Ch D pg 168

[130] See Clark v. Holland (1854) 19 Beave pg 262

[131] See Todd v. Moorhouse (1874) LR 19 Eq. p 69

[132] See Falcke v. Scottish Imperial Insurance(supra) @ pg 246

[133] See Re Mckerrell (1912) 2 Ch pg 648 @ 652

[134] See the various States High Court rules

[135] This was the decision in Re Stucley (1906) 1 Ch pg 67

[136] See Ayorinde v. Scott (supra)

[137] See Rice v. Rice (supra)

[138] See Exparte Hanson 33 E.R. pg 131

[139] See Barnsley “Conveyancing Liens” (1997) 61 Conv. (Sweet & Maxwell) pg 336 at pg 352

[140] See Fry on Specific performance 6th ed. (1921) pg 677.

[141] See Barnsley (ibid) at pg 355

[142] ibid

[143] ibid

[144] ibid

[145] See L.C. Ilogu: “Essentials of Admiralty Practice and Procedure in Nigeria”. Papers on Maritime Seminar for judges 6th-8th December 1995(1996) Godak Communications Ltd. pg 67

[146] See The Gemma (1899) pg 285 @ pg 291

[147] See M.V. Zack Metal C. v. International Navigation Corp. (1975) A.M.C. pg 720

[148] See Nelson v. Crouch (1863) LJCP pg 46

[149] In any other case, to meet any other outstanding damages. See The John and Mary (1859) SWA p 471; Joannis Vatis (no. 2) (1992) pg 213 at pg 221-222

[150] See The “City of Mecca” (1879) 5 PD pg 28

[151] See Anchor Ltd v. The Owners of the Ship line, vol 1 NSC 42 (SC)

[152] See s. 139(3)

[153] See New London & Brazilian Bank v. Brocklebank (1882) 21 Ch pg 302.

[154] See Bradford Co. Ltd. v. Briggs & Co. Ltd (1886) 12 AC pg 29

[155] We are aware that our colleagues are doing justice to this piece of legislative enactment by criticising it. For that purpose so much time will not be dwelt on the law.

[156] See the International Convention for the Unification of certain Rules relating to maritime Liens and Mortgages, 1926, 1967 and 1993. See also Nigerian Law of secured credit pg 255

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