Professor James O. Ogunlade V. Federal Mortgage Bank of Nigeria Limited & Ors. (2006)

LawGlobal-Hub Lead Judgment Report

JOHN AFOLABI FABIYI, J.C.A.

This is an appeal against the judgment of Kolade, J. delivered on 15th May, 1996 while sitting at the High Court of Justice, Ibadan, Oyo State of Nigeria.

The Appellant had axe to grind with the 1st Respondent over a mortgage loan procured by him. He was propelled to initiate his action at the trial court. In paragraph 54 of the statement of claim, he put up a host of nine (9) claims against the Respondents jointly and severally. The lone issue that was contested before the lower court relates to propriety or otherwise of variation in the rate of interest as charged by the 1st Respondent. The claim concerning same, as contained in paragraph 54(5) of the statement of claim, reads as follows:-

“Declaration that the 1st Defendant is not entitled to calculate interest at a rate over and above 9% agreed upon by the plaintiff and reflected in the Deed of Legal Mortgage.”

The appellant testified before the trial court that in 1980, he applied for a loan from the 1st Respondent to develop, his property along Osungbekun Avenue, Agodi GRA, Ibadan. The 1st Respondent granted him an initial loan of N65,000. The letter approving the loan is Exhibit B. As security, he deposited his Certificate of Occupancy over which a Mortgage Deed was executed. The same is Exhibit ’91C’91. He said according to Exhibits B & C, the rate of interest was 8 ‘bd%. He further testified that in 1981, he applied for an additional loan. He was further granted N15,000. The letter of offer is Exhibit D. A supplementary Deed of Legal Mortgage dated 1st June, 1982 was executed between him and the 1st Respondent. The same is Exhibit E. He said he later received some notices from the 1st Respondent in respect of variation of interest rates. The notices are Exhibits F’97F3.

Cross-examined, the appellant, as plaintiff at the trial court, agreed that the loan was repayable by monthly installments. He said at the time of the sale of his property, he was in serious arrears. He agreed that Exhibits F-F3 are notices for increase in rate of interest. Two letters written by him to the 1st Defendant/Respondent are Exhibits G & G1 respectively.

DW1, a mortgage manager with the 1st Defendant/Respondent identified Exhibits B & D – the offer forms in respect of the loans granted to the plaintiff. He tendered the acceptance forms signed by the plaintiff. They are Exhibits H & H1. He confirmed Exhibits C & E as the Deeds of Legal Mortgage on the loans advanced. He said Exhibits F-F3 are notices served on the plaintiff varying interest rates. Exhibits G & G1 are the letters written by the plaintiff to the 1st defendant bank in 1987 and 1988.

Learned counsel on both sides addressed the trial court on the claim touching solely on variation of interest rate. In his considered judgment, the learned trial Judge found that the 1st respondent had the power to dictate the rate of interest at different intervals as reserved in the acceptance of offer form and in paragraph 8 of the Principal Legal Mortgage – Exhibit C executed by the parties. He found that the right of the plaintiff as reserved in paragraph 8(e) of the said mortgage deed is to treat any such notice received as a call for the repayment of the principal sum then due with interest; the option to be notified to the 1st defendant bank within one month of the receipt of the notice. But since the plaintiff failed to exercise any of the options, he is deemed to abide by the rate of interest notified. He found that the 1st defendant bank was entitled to the amount as stated on its account due and payable.

The Appellant felt unhappy with the stance posed by the learned trial judge. He has appealed to this Court. The original notice of appeal which carries six grounds of appeal was filed on 10-7-96. On 26-3-03, the Court granted the appellant leave to substitute same with an amended Notice of Appeal which carries seven (7) grounds of appeal.

On 7-3-06, when the appeal fell due for hearing, learned counsel for the appellant adopted and relied on the appellant’s brief of argument and urged that the appeal be allowed. Three issues couched for the determination of the appeal read as follows:

“(1) Whether, having regard to the conditions set out in the deed of legal mortgage, it can be said that the defendant complied with those conditions in increasing the interest, and if not, what is the effect of such unlawful increment?

(2) Whether the learned trial judge was not in error in resorting to extrinsic evidence to interpret clear and unambiguous terms of the mortgage deed.

(3) Whether the trial court can rightly pronounce on a relief not claimed before it.”

Learned counsel for the respondents also relied on the brief of argument filed by him and urged that the appeal be dismissed. He adopted the issues formulated for determination by the Appellant.