The case cited above, highlights the mandatory requirement and importance of the spousal consent on a mortgage of a matrimonial home. The case further enlightens on the rights of a bona fide purchaser of a mortgage that has been declared invalid for want of spousal consent and the rights of the party prejudiced by the validation of the sale of the mortgage property.
Material Facts
The 1st and 2nd respondent Mrs. Shakila Parves and Mutabasam Parves Shabbirdin got married in 2002 and went to dwell in a house in Mwanza city (mortgaged house) which by then, it was registered in the name of the second respondent.
In 2013 the 1st respondent realized that without her knowledge and consent, her husband, the 2nd respondent had applied for and obtained a loan from Twiga Bancorp limited, now known as Tanzania Commercial Bank PLC (1st appellant) and their matrimonial property had been mortgaged for that purpose.
Upon default by Mutabsam Parves, the Tanzania Commercial Bank instructed Tambaza auction mart (the second appellant to sell the mortgaged property by public auction and the mortgaged property was sold to Thomas Barnabas Mmbando (the third appellant).
Believing that the second mortgage and the sale of the mortgaged property were nullity the first respondent instituted a suit in the High Court of Tanzania, that is land case no. 46 of 2015 against the 2nd respondent jointly and together with the appellants. The judgment was in favor of the 1st respondent hence the appellants appealed to court of appeal challenging the decision delivered by High Court of Tanzania at Mwanza.
Issues Raised by the Court
In determining the appeal, the Court of appeal raised three issues for determination.
- Whether there were two different and independent financial arrangements or loans and mortgages over the mortgaged house.
- Whether the consent by Rukia Parves obtained in 2004 covered the financial arrangements or loan and the mortgage executed in 2013 which was secured by the same house.
- Whether the third appellant was not protected by the law for being a bona fide purchaser for value without notice.
Issues One
This was answered in affirmative. The court declared that, the first loan advanced in 2004 to sahbbirdin company limited and the second loan advanced in 2013 to Mutabasam Parves Shabbirdin were two different and independent financial arrangements and loans over the same mortgaged property.
Issues Two
The second wife, Rukia consented on the first mortgage which the same was not in dispute. The mortgaged house is a matrimonial house to which both the first respondent and Rukia had interest and the same was not in dispute.
The court was of the view that, there is no way the consent by Rukia Parves for the first mortgage could have extended to cover the second mortgage issued in 2013. Therefore, the second mortgage required a new spousal consent and since the second wife had two wives who both had interest in the mortgaged house their respective consent ought to have been obtained.
The mortgagor has the obligation to disclose their marital status to the mortgagee. The obligation of the spousal consent is not cast upon the mortgagee alone but also upon the mortgagor who has a reciprocal duty to disclose that he has the consent of his spouse or spouses as the case may be.
Lack of spousal consent for the mortgaged property is in contravention of the mandatory requirement under section 114 of the Land Act as well as Section 59(1) of the Law of Marriage Act. Therefore, a mortgage of matrimonial home without spousal consent is invalid.
Issues Three
Rights of a bona fide purchaser for value without notice and their being no evidence of fraud or misrepresentation, are legally protected under section 135(1)(2) and (3) of the Land Act. The bona fide purchaser whose title to the mortgaged house is protected under the law, the invalidation of the mortgage for want of spousal consent could not have necessarily rendered the sale of the mortgaged property invalid.
The question here arises as to what is the remedy of the 1st respondent
The 1st respondent who undoubtedly is prejudiced by the validation of the sale of the mortgaged property has a remedy under section 134(4) of the Land Act. The section provides that the person prejudiced by an unauthorized, improper or irregular exercise of the power of sale shall have a remedy in damages against the person exercising the power.
The first respondent may institute a fresh suit for claiming damages against the first appellant Tanzania Commercial Bank Plc and the second respondent Mutabasam, and in that suit the first respondent will be able to prove the damages she has suffered and where the court will properly assess the quantum of damages then the 1st respondent will be entitled to.
Our Opinion on the Case at Hand
Is a spousal consent mandatory?
Yes, spousal consent is a mandatory requirement, Lack of spousal consent for the mortgaged property is in contravention of the mandatory requirement under section 114 of the Land Act as well as Section 59(1) of the Law of Marriage Act. Therefore, a mortgage of matrimonial home without spousal consent is invalid.
The mortgagor has a duty to the mortgagee to disclose their marital status, The obligation of the spousal consent is not cast upon the mortgagee alone but also upon the mortgagor who has a reciprocal duty to disclose that he has the consent of his spouse or spouses as the case may be.
How about where there is more than one spouse?
Basically, in case the mortgagor has more than one spouse, then the one of spouses may consent or all of the spouses may consent to the mortgage, the land Act under section 114 (1) (a) and (b) provides a room for either of the spouse to consent to the mortgage or all of the spouses. And in this specific case the first mortgage was consented to by the second wife alone hence it was recognized by the court as valid.
Can one spouse consent on behalf of another spouse?
Yes, one spouse can consent on behalf of the others, the Land Act does not limit on a number of spouses to consent on the mortgage, taking example in this case the first mortgage was consented by the second wife alone.
Is there any protection for a bona fide purchaser for a mortgage that has been declared invalid?
Yes, rights of a bona fide purchaser for value without notice and there being no evidence of fraud or misrepresentation are legally protected under section 135 of the Land Act. The bona fide purchaser whose title to the mortgaged house is protected under the law, the invalidation of the mortgage for want of spousal consent cannot necessarily render the sale of the mortgaged property invalid.
What are the remedies for the party prejudiced by the validation of the sale of the mortgaged property?
The available remedy is damages. The party who undoubtedly is prejudiced by the validation of the sale of the mortgaged property has a remedy under section 134(4) of the Land Act. The section provides that the person prejudiced by an unauthorized, improper or irregular exercise of the power of sale shall have a remedy in damages against the person exercising the power.
The said party may institute a fresh suit for claiming damages against the person or persons exercising the power, and in that suit the party will be able to prove the damages she/he has suffered and where the court will properly assess the quantum of damages then that party will be entitled to the same.
Concluding remarks
Essentially, the ruling of this case gives a cue on the significant role of a spousal consent in the whole process of security perfection and mortgage of a matrimonial home. Banks and financial institutions are reminded that, before finalizing the loan issuance, to take reasonable steps to ascertain whether the mortgage has spousal consent as required by the law.
On the other hand, clients are obliged to be aware that the obligation of spousal consent is not cast upon the banks of financial institutions only, but on the borrower/mortgagor as well, who has a duty to disclose that he/she has the consent of their spouse or spouses.
A spousal consent is in the form of an affidavit, sworn by the spouse and must be sworn before a commissioner for oaths legally accepted to practice in Tanzania, if the spouse swears this affidavit outside Tanzania, ensure that it is notarized by the notary in the country where that spouse swear and signs from.