Zakariyau Haruna V. Savannah Bank of Nigeria & Anor. (1994)

LawGlobal-Hub Lead Judgment Report

MUHAMMAD, J.C.A. 

By a Deed of Legal Mortgage executed on 16/5/83 which has been registered with the Plateau State Lands Registry, the appellant mortgaged his landed property No. 12B Gboko Road, Tudun Wada, Jos covered by Certificate of Occupancy No. BP 1422 to the 1st respondent in consideration for a loan of N35,000.00. By a letter of commitment signed by the appellant, it was agreed that the purpose of the loan was to enable the appellant complete the building on the said property and rent it out. The loan was to be repaid from the rent proceeds in 5 equal yearly instalments commencing from January 1984. The appellant defaulted in repaying the loan. The 1st respondent wrote three demand notices to the appellant. Still the appellant failed to repay the loan. The 1st respondent then exercised its power of sale by virtue of Clause 6 of the Deed of Legal Mortgage and sold the mortgaged property to the 2nd respondent for N80,000.00.

Aggrieved by the sale, the appellant instituted an action in the Plateau State High Court, holden at Jos claiming the following reliefs:-

“(a) A Declaration that the purported sale of 12 Gboko Road is illegal, null, void and of no effect whatsoever;

(b) The sum of N200,000.00 less the plaintiff’s indebtedness to the 1st Defendant being the true and open market value of the plaintiff’s property at 12 Gboko Road, Tudun Wada Jos undersold by the 1st Defendant in bad faith to the 2nd Defendant.”

Pleadings were ordered, filed and exchanged. The 2nd respondent counterclaimed as follows:-

“(i) Possession of the premises i.e. plot 12 Gboko Road Tudun Wada G.R.A. Jos.

(ii) Arrears of rent from 17th March 1987 to November 1987 8’bd months N11,687.50.

(iii) Mesne profit of N1,375.00 every month from December, 1987 until possession is given.”

At the trial, the appellant gave evidence. He also called another witness, a quantity surveyor, who testified to the value of the property at the time it was sold. The respondents called one witness each. The learned trial Judge, Momoh J, in a well considered judgment dealt with all the issues raised in the case. On the issue that the 1st respondent sold the property before the right of sale accrued, the learned Judge found:-

“Paragraph 6 of the mortgage empowered the Bank to call in the loan and exercise its power of sale anytime after the execution of the mortgage provided that the payment of the monies secured had been demanded and the plaintiff has made default for one month in paying the same after the demand. The condition requiring notice to pay the mortgage money having been satisfied by the Bank and the plaintiff having defaulted to pay as covenanted, the power of sale arose and became exercisable under the mortgage irrespective of whether or not the five years period allowed in the earlier loan conditions Exhibit V had lapsed, if mortgage money is payable by instalments as in this case the power to sell arises as soon as any instalment is in arrears. That right becomes exercisable when payment has been demanded and there is default as aforesaid. The submission that the power of sale had not arisen is accordingly overruled. ”

On the issue that there was no breach of the condition of repayment of the loan from rentals in that the building has not been completed not to talk of renting it out, the trial Judge said:-

I am unable to agree with the suggestion that the building was not completed or that it was not in tenantable condition to be let out. The plaintiff himself confirmed in his letter to the Bank of 22/1/84 Exhibit D that he had completed the building from private sources and had moved in with members of his family. This was after the Bank had written to complain that instead of renting out the property to payoff the loan as agreed, he occupied it and paid nothing to the Bank. I am satisfied that it was the plaintiff and not the Bank that breached the condition of the loan agreement requiring him to let the property to satisfy the loan. Upon the breach by plaintiff of the agreement to rent the property and liquidate the loan from rental the power of sale became exercisable and the plaintiff cannot challenge the Bank for exercising right of sale on that ground. ”

The third reason for challenging the sale was that the sale was made in bad faith, at a grossly low price and in collusion with the 2nd respondent. The trial Judge considered all these issues and came to the conclusion that:-