Best (Nigeria) Limited V. Blackwood Hodge (Nigeria) Limited & Ors. (1998)

LawGlobal-Hub Lead Judgment Report

PATS-ACHOLONU, J.C.A.

The appellant went to court based on a contention that the 1st respondent backed out and unilaterally breached the contract for assignment of the residue of years in a property variously described as No. 11 and 15 Burma Road, Apapa. The appellant who was the plaintiff stated that it had agreed with the 1st defendant (now 1st respondent) to sell to it the property herein before described, for the sum of N3 million with an agreement to pay the withholding tax. It further stated that a receipt ‘No. 5980 was issued on 13/6/86. The payment was made on 4/6/86. On the full payment of this money, the 1st respondent, it was alleged, promised to do all that is necessary to obtain the governor’s consent for the actualization of the contract agreement. However, surprisingly on 16/7/96. Messrs Osagie Okekc and Otegbola, the 2nd defendant, wrote and informed the appellant that the firm (apparently agent of the 1st respondent) had previously agreed to assign the property to someone else who turned out to be the 3rd respondent. However, it transpired that the 3rd respondent paid the balance of the money after be paid the deposit of N1 million in 1985. When the appellant warned the 1st respondent about the consequences of its act in dribbling it and not abiding by terms of the agreement and got no favourable reaction indicating that it was not ready to budge from its standpoint, which was that it stood by a sale to the 3rd respondent, it was forced to issue a writ of summons after the 1st defendant returned its money with interest.

The 1st defendant in its pleadings while agreeing that it was negotiating with the appellant for the purchase of its property and admitting having received money from it said that the cornerstone of the sale, that is to say, that it was a condition precedent that any purchaser of the property should pay the withholding tax of N450,000.00. On the payment and receipt of the money of the appellant and inspite of the appellant having promised to pay the withholding tax after which the letters of consent would be lodged with the governor, no such payment was made. The appellant was silent in this important ground when contacted, it alleged. The 1st respondent alleged that the appellant was very much aware that there was a prior intending purchaser who bad made an advance payment as far back as 14/6/85 and that negotiation had only been entered between it and the appellant because the 3rd respondent could not perform the conditions of sale. Therefore it did not hold itself bound to the appellant when nothing was done about the withholding tax particularly as it brought up the subject mailer several times to it. The 1st agreement to sell the property, it pointed out, was made as far back 1985 when its agent the 2nd respondent made a move to sell the property, and it was bound by the acts of his agents. The 3rd respondent averred that he bought the property through the agents of the 1st respondent for the sum of N3.5 million. He now enjoys the occupation of the property by virtue of a valid contract and he counter-claimed for a declaration that he is entitled to be registered as the proprietor of the property, and for perpetual injunction.

After hearing evidence of the parties and their witnesses, the court below held inter alia as follows

“In contracts for the sale of an interest in land, it is the almost invariable practice for the parties to strike a bargain but to make it clear that they do not intend to enter into a binding contract until a formal agreement has been drawn up by their solicitors. Such an intention is commonly indicated by the parties expressly making their agreement ‘subject to contract’. Where an agreement is made in the above mentioned circumstances, even a signed written offer, prima facie, cannot be accepted so as to conclude a binding contract, the reason being that the offeror clearly does not intend to be bound at this stage. I must however make reference to three exceptional cases. First, where both parties employ the same solicitor it may be that no exchange of contracts is possible, in which case the contract may come into existence when signed – Smith v. Mansi (1962) 3 All E.R.857. Secondly, where the document amounts to a deed, it takes effect on ‘delivery’ and not on exchange – Vincent v. Premo Enterprises (Voucher Sales) Lid. (1969) 2 Q.B. 609: D’Silva v. Lister House Development Ltd (1971) Ch. 17; (1970) 1 All E. R. 858. Thirdly, it is quite competent for the parties to remove the ‘subject to contract’ or other suspensive condition, with the result that there is from that moment a binding provisional agreement – Griffiths v. Young (1970) Ch. 675; (1970) 3 All E.R. 601; or for them to agree on a new ‘open contract’ – Law v. Jones (1973) 2 All E.R. 437.”

He then gave judgment to the respondent. Being dissatisfied with the judgment of Segun, J., the plaintiff filed 7 grounds of appeal from which the counsel for the appellant framed 8 issues (this is a case in which more issues were formulated from fewer number of grounds of appeal.I shall set down the issues put as questions in controversy to be determined by the court:

i. Was there a valid contract as between the plaintiff (the appellant herein), and the 1st defendant (the 1st respondent herein), for the assignment to the plaintiff by the 1st defendant of the lease of the property at No. 15 Burma Road, Apapa, in the Lagos State of Nigeria, enforceable in equity by an order for specific performance?

ii. Was there such a contract subsisting between the 1st defendant and the 3rd defendant acting through the 2nd defendant on the 3rd of June, 1986, when negotiations between the plaintiff and the 1st defendant had been finalized or at all?

iii. Was the learned trial Judge not in error in refusing to make the order for specific performance in favour of the plaintiff in the light of the evidence before him?

iv. In the circumstances of this case, would not the end of justice have been met by the application of the doctrine of substantial justice?

v. Was the 2nd defendant agent for:

(a) the 1st defendant

(b) the 3rd defendant; or

(c) the agent for both the 1st and 3rd defendants?