Afrotec Technical Services (Nig) Ltd. V. Mia & Sons Limited & Anor (2000)
LAWGLOBAL HUB Lead Judgment Report
In the Kaduna High Court, the plaintiff’s claims against the defendant read as follows:-
“(1) Perpetual injunction restraining the defendant, its servant, of agents of other officers acting on its behalf from disposing of by sale or otherwise the equipments.
(3) Specific Performance of Agreement of installation of equipments i.e.
(a) Parker 5245/4 Crushing plant combination.
(b) Foden Model Dump Truck
(c) BD 440 Generating Set.
(d) Spare parts for crushing plant.
at the Kaduna Quarry site of the plaintiff by the defendant or the alternative refund of all monies paid by the plaintiff to the Defendant on the said equipments.”
Pleadings were filed and exchanged between the parties and the case proceeded to trial. At the trial, the plaintiff called two witnesses while the defendant called only one witness. After hearing evidence from both sides and the addresses of their counsel, the trial court adjourned for judgment. In a considered judgment delivered on 21/7/89, the learned trial Judge Ibiyeye J. after reviewing all the evidence before him, came to the conclusion that the transaction between the parties was a conditional sale and that the plaintiff had acted in violation of the conditions of sale i.e instalmental payments. The learned trial Judge, therefore dismissed plaintiff’s claims in their entirety as lacking in merit.
On the 24th July, 1989, the defendant sold the plant or machinery to AFCON ENGINEERING LTD, the 3rd Party herein.
Dissatisfied with the decision of the learned trial Judge, the plaintiff appealed to the Court of Appeal, holden at Kaduna.
In a reserved judgment delivered on 10/4/91, the Court of Appeal unanimously allowed the appeal, set aside the judgment of the Kaduna High Court and then proceeded to make the following orders in favour of the plaintiff.
“1. A perpetual injunction restraining the defendant whether by themselves, their servants, agents, privies or other representatives from selling, leasing or otherwise creating any incumbrance on the equipment subject matter of this suit.
- That the said equipment be delivered to the plaintiff subject to the defendant paying the entire sum outstanding as balance of the total cost of the equipment, taking into account N381,160.00, the plaintiff had so far paid to the defendant.
- Order remitting the issue of general damages back to the High Court for Assessment.
- 3rd Party to release the equipment, if it had taken possession of the same, forthwith.
- N500.00 costs to the plaintiff.”
Aggrieved by the decision of the Court of Appeal, the defendant has now appealed to this court on seven grounds of appeal. It is not necessary to reproduce them. It suffices to say that pursuant to the Rules of Court, the parties filed and exchanged their briefs of argument which were adopted at the hearing.
The seven issues distilled from the grounds of appeal and submitted by the defendant for the determination of this court are as follows –
“(i) Whether the Court of Appeal was right in its view that Ownership in the equipment passed to the plaintiff on proper construction of Exhibit 1 merely because the defendant had delivered the equipments at the site of the plaintiff at Kontagora.
(ii) Whether the Court of Appeal was right in its view that acceptance of negotiable instruments as payment for the equipment had converted the conditional sale of these equipment into an absolute sale.
(iii) Was the Court of Appeal right in its view that the only remedy open to the defendant was an action for the recovery of the balance of the sum unpaid and not in its exercise of the right of lien or Repossession of the plant when the agreement between the parties provided for those remedies
(iv) Was the Court of Appeal right in holding that plaintiff has established a legal right in the equipment as to entitle it to the Equitable reliefs sought
(v) Was the Court of Appeal right in holding that the defendant has waived all the restrictive conditions in Exhibit 1 when the waiver of the same as a defence was not specifically pleaded nor were circumstances and facts amounting to waiver pleaded in answer to the plaintiff’s pleadings
(vi) Was the Court of Appeal right in making an order to enforce the second agreement when the respondent failed to fulfill its obligation under the first contract
(vii) Whether the Court of Appeal was right in making an order that the said equipment be delivered to the plaintiff subject to the plaintiff paying the entire sum outstanding as balance of total cost of the equipment taking into account N381,160.00, the plaintiff has so far paid to the defendant when such relief was not placed before the trial court.”
The plaintiff on its part, submitted six issues in its brief of argument as arising for determination thus:
“(a) Whether having regard to the pleadings and evidence led, the defendant established any legal right to the equipment in dispute.
(b) If so, whether such legal right could be defeated by the “right of lien” or “right to immediate possession” clauses, following the failure of the plaintiff to complete the payment for the equipment.
(c) Whether the said rights of lien and “immediate possession” have been waived by the conduct of the parties.
(d) Whether the plaintiff has by pleadings and evidence, established the defence of waiver.
(e) Should the Court of Appeal have granted the relief that the equipment be delivered to the plaintiff subject to the defendant being paid the entire sum
(f) Was the Court of Appeal right in holding that the plaintiff had established a legal right to the equipment”
I have examined the two sets of issues and found them to be basically the same even though the questions raised by the plaintiff appear to be short and succinct. I will therefore adopt the set of issues identified by the defendant for my consideration of the appeal.
The facts of this case, which are not in dispute for the purposes of this appeal are as set out in paragraphs 1,2, 3, 4, 5, 6, 7 and 8 of the plaintiff’s amended statement of claim as follows:
“(1) The plaintiff is a Limited Liability Company with its registered office in Kaduna engaged in civil construction and other related works.
(2) The defendant is a Limited Liability Company engaged in the business of plant sales with its head office at Lagos and branches in major towns in Nigeria.
(3) The plaintiff by virtue of its business, was a customer of the defendant.
(4) The plaintiff by its L.P.O. No. 0358 of 8th February, 1978 made ordered:
(a) Parker 5245 crushing plant combination
(b) Foden Dump Truck
(c) BD 440440 KVA generating set from the defendant. The plaintiff shall at the hearing of this suit use and rely, on its above stated L.P.O.
(5) The plaintiff states that the total value of its order mentioned in paragraph 4 above was as stated below:
(a) Parker 5245/4 Crushing Plant combination N476,600.00
(b) Foden Model Dump Truck N84,000.00
(c) BD 440 Generating set N66,000.00
(d) Spare parts for crushing plant N38,000.00
(e) Transportation of Equipment to Kontagora N28,000.00
(f) Commissioning Fee N10,000.00
The plaintiff further states that the equipment ordered above mentioned in paragraph (4) above was to be delivered at the plaintiff’s construction site at Kontagora by the defendant.
The plaintiff, in view of paragraph (4) above, undertook by its letter of 28th March, 1978 to pay the defendant (the sum of N702,900.00 for the supply of the equipments ordered and above mentioned in paragraph (5) of the statement of claim, subject to terms and conditions stated in the said plaintiff’s letter of 28th March, 1978. The Plaintiff shall at the hearing of this suit use and rely on its said letter of 28th March, 1978 to the Defendant.
(8) The plaintiff states that it made a down payment of N281,160 i.e 40% of the total sum for the equipment mentioned in paragraph (5) above wherein the defendant proceeded and installed the equipment at the plaintiff’s site at Kontagora. The plaintiff shall at the hearing of this suit, use and rely on the defendant’s letter of 29th April, 1978 acknowledging receipt of the payment aforementioned by the plaintiff”.
These paragraphs of the amended statement of claim were admitted in Paragraphs 2 and 6 of the amended statement of defence which are set out as follows:-
“(2) The defendant admits paragraphs 1, 2, 3,4, 5, 6 and 7 of the statement of claim.
(6) The defendant admits paragraph 8 of the statement of claim but avers that other condition of sales contained in the sales agreement were not fulfilled by the plaintiff.”
One other fact which is not in dispute in this case is that at a stage, the defendant agreed to move the equipment from Kontagora to Kaduna at plaintiff’s request for a fee of N30,000.00 which was paid. The defendant now took advantage of this to effect a seizure of the equipments on the ground that the plaintiff had failed to pay tip the remaining instalments for the equipments as provided in the sales agreement between the parties.
The plaintiff in paragraph 7 of its amended statement of claim above had pleaded its own letter to the defendant dated 28th March, 1978 and that it would use and rely on it: The defendant agreed with it. That was the Sales Agreement between the parties. It was tendered and admitted as Exhibit 1 at the trial. Exhibit 1 is a two (2) paged document. I will set it out in full thus:
“28 March 1978
Afrotec Technical Services Nig. Ltd.,
P. M. B. 1061,
SUPPLY OF ITEMS OF PLANT AND EQUIPMENT
We hereby unconditionally and irrevocably undertake to pay Afrotec Technical Services Nigeria Limited (hereinafter referred to as Afrotec the total sum of N702,900.00 (Seven hundred and two thousand, nine hundred Naira) in consideration of their supplying us with the under-mentioned equipment on the following terms and conditions.
1 No. Parker Mobile Crushing Plant Model
1 No. Foden Quarry dump Truck Model FC27
Fast moving recommended spare parts to value
BD 440 440KV A Generating Set
The agreed prices are as detailed above and are understood to be on the basis of delivery Ex Afrotec’s yard at Isolo Industrial Estate.
The items of plant detailed above are to be delivered to site at an additional agreed price of N28,000.00 (Twenty-eight thousand Naira).
Afrotec to attend to commissioning and to provide skilled engineer to supervise installation at an additional cost of N10,000.00 (Ten thousand Naira) being five weeks at the rate of N2,000.00 per week.
TERMS OF PAYMENT
We confirm that the total contract price of N702,900.00 is to be paid to Afrotec on the following terms.
40% cash deposit of N281,160.00 (Two hundred and eighty-one thousand, one hundred and sixty Naira) payable in advance of delivery.
Balance of 60% payable by six equal instalments of N70,290.00 (Seventy thousand, two hundred and ninety Naira) each secured by post-dated cheques payable on the 27th April, 27th May, 27th
June, 27th July, 27th August and 27th September respectively.
The interest charged on the instalmental payments is to be for Afrotec’s account.
We unconditionally and irrevocably agree that Afrotec shall have a lien on all the machinery until such time as Afrotec receive payment of the full contract amount of N702,900.00.
We also confirm that should we fail to pay, any of the instalments detailed above within one month of the due date, Afrotec shall take immediate possession of those properties in specie that remain unpaid for within the subject of this transaction without hinderance and without recourse.
For: MIA & SONS LIMITED.
ALHAJI M. I. ATTA R.H.MAGGS
MANAGING DIRECTOR. FINANCIAL CONTROLLER”
As could be seen therefore from the pleadings and the evidence led at the trial, the only serious issue before the learned trial Judge and therefore the Court of Appeal was as to whether or not the defendant had the right to seize the equipment in question. And in determining that issue, it appears to me that the lower courts were called upon to resolve a very narrow issue as to whether the transaction between the parties amounted to an absolute/outright sale or a conditional sale as contended by the plaintiff and the defendant respectively. I will proceed to consider the issues.
Issues (i), (ii), (iii) and (iv)
These issues call conveniently be treated together as they all relate to the proper interpretation of Exhibit 1 above, and what remedies or rights are available to the parties as a result of such an interpretation. It was argued that since it is common ground between the parties (that the Sale Agreement dated 28th March, 1978 (Exhibit 1) was the basis upon which the sale was conducted, the Court of Appeal ought to have held the parties bound by its provisions; and that it should have interpreted the agreement to identify the intention of the parties as to whether or not the property in the goods passed to the plaintiff on the installation of the plant in Kontagora by the defendant. That the Court of Appeal was in serious error when it held that under section 18(1) of the Sale of Goods Act 1893 which is a received English statute of general application in force in England, the 1st January 1900 (see section 28 of the High Court Law Cap. 49 Laws of Northern Nigeria 1963, Vol. 2, hereinafter simply referred to as the Act) mere installation of the plant in Kontagora passed the title in the plant to the plaintiff without regard to the express intention of the parties in Exhibit 1. That section 18 of the Act deals with unconditional sale of goods unlike in the present case where the sale is conditional. Reference was made to section 19 of the Act and to the following authorities:-
Buraimo v. Adeniyi (1990) 2 NWLR (Pt.133) 406
Oduye v. Nigerian Airways (1987) 2 NWLR cPt.55) 126
Niger Benue Transport Co. Ltd. v. Narumal & Sons Ltd. (1986) 4 NWLR (Pt.33) 117
Bookshop House Ltd. v. Stanley Consultants Ltd. (1986) 3 NWLR (Pt.26) 87.
Ogbunyiya v. Okudo (1979) 6-9 SC. 32
We were also referred to specified conditions in Exhibit 1 headed “Terms of Payment” and “Interest” respectively, which the plaintiff had failed to fulfil and which did not pass ownership to it thus, leaving the defendant with the right to repossess the plants.
The plaintiff on the other had contended that having regard to the pleadings and evidence, it established a legal right to the equipments especially when the defendant had parted with possession before receiving full payment for them. That there is no provision in the Act which makes a seller who has parted with possession to retain title unless there is specific provision or clause in the sale agreement to that effect. We were referred to section 17 of the Act and to the cases of:
Aluminium Industries Vassen BV v. Romalpa Aluminium Ltd. (1976) 2 All E. R. 552.
Hendy Lennox (Industrial Engines) Ltd. v. Grahamme Puttick Ltd. (1984) 2 ALL E. R. 152.
Yakassai v. Incar Motors (Nig.) Ltd. (1975) 1 All N.L.R. 287.
It was also contended that by parting with possession, the right of lien and immediate possession were lost and that title passed to the plaintiff when the contract herein was made.
As I have indicated above, the very narrow and decisive issue to be decided in this appeal is whether the sale or transaction between the parties amounted to an outright sale or a conditional sale.
I have reproduced above, the Sale Agreement (Exhibit 1), say straight away that I am in no doubt whatsoever that the facts of this case show clearly that the equipment or machinery were sold to the defendant conditionally. The conditions being that “the defendant shall have a lien on all the machinery until a time that the defendant received payment of the full contract amount of N702,900.00” and that “the defendant shall take immediate possession of the machinery within one month should the plaintiff fail to pay any of the instalmental payment detailed in Exhibit 1”. In other words, I am of the view that the property in the equipment or machinery had never passed to the plaintiff when the defendant effected the seizure which is the subject matter of this action. The parties are clearly bound by the provisions in the Sale Agreement (Exhibit 1) without any subtraction or addition.
The Court has no power to rewrite the agreement. I have carefully perused the agreement herein and have found nothing illegal in any of its provisions. Exhibit 1 is in fact fortified by the provisions of sections 38, 39 and 40 of the Act. They read in part:
“RIGHTS OF UNPAID SELLER AGAINST THE GOODS
Unpaid Seller defined:
Section 38(1) The seller of goods is deemed to be an “unpaid seller” within the meaning of this Act –
(a) When the whole of the price has not been paid or tendered;
(b) When a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise.
UNPAID SELLER’S RIGHTS
Section 39 (1) Subject to the provisions of this Act and of any statute in that behalf, notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has by implication of law:
(a) A lien on the goods or right to retain them for the price while he is in possession of them;
(2) Where the property in goods has not passed to the buyer, the unpaid seller has in addition to his other remedies, a right of withholding delivery to and co-extensive with his rights of lien
UNPAID SELLER’S LIEN
Section 41 (1) Subject to the provisions of this Act, the unpaid seller of goods who is in possession of them is entitled to retain possession of them until payment or tender of the price in the following cases, namely:
(a) where the goods have been sold without any stipulation as to credit;
(b) where the goods have been sold on credit, but the term of credit has expired;
(c) where the buyer becomes insolvent.
(2) The seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee or custodier for the buyer.”
One of the facts not in dispute in this case is that the six post-dated cheques issued by the plaintiff to the defendant in accordance with Exhibit 1 each bounced one after the other. Twenty one other post dated cheques for smaller amounts as replacements also were returned unpaid. And all efforts to collect the balance of the sale price as agreed in (Exhibit 1 ) proved abortive. There is no doubt at all that the defendant is an unpaid seller under the Act. It was therefore acting within its rights when though acting as an agent of the plaintiff, it seized the machinery which had lawfully come into its possession at the relevant time. The short of it all is that the contract of sale between the parties being conditional, the defendant was entitled to exercise its right of lien both under the contract agreement (Exhibit 1) and under the Act, the plaintiff having woefully failed to satisfy the conditions of sale of paying the 60% balance of the sale price. The case of Yakassai v. Incar Motors (Nig.) Ltd. which was relied upon by the Court of Appeal and which was cited by learned counsel for the plaintiff will not apply here. In that case, the Supreme Court held that the sale therein was an outright or complete or absolute sale. In the instance case, the sale as I have found is conditional. So also in Kofi v. Mensah (1933) I WACA 76, the West African Court of Appeal also held that the sale therein, being in outright sale, the purchaser was riot bound by the agreement which allowed the seller to seize the lorry or property on failure of instalments. That I believe was as it should have been. The agreement to seize the property when the sale was absolute or outright, is contrary to the provisions of’ the Act discussed above. The property in the lorry vested immediately in the purchaser and the seller could no longer take possession of it on failure by the purchaser to pay the instalment. These two authorities do not therefore apply in this appeal where the sale as I have already concluded is a conditional Sale. The Court in the two cases above rightly held that in an outright sale, the seller’s remedy lies in an action to recover the balance of purchase price owed by the purchaser only. I therefore resolve issues 1,2,3 and 4 in favour of the defendant as follows:
(1) The Court of Appeal was wrong in its view (that ownership in the equipment passed to the plaintiff on proper construction of Exhibit 1.
(2) The Court of Appeal was wrong in its view that acceptance of negotiable instruments or cheques as payment for the equipment had converted the conditional sale into an absolute sale.
(3) The Court of Appeal was wrong in its view that the only remedy open to the defendant was an action for the necessary of the balance of the sum unpaid.
(4) The Court of Appeal was wrong in holding that the plaintiff had established a legal right in the equipment as to entitle it to equitable reliefs sought.
Issues V and VI
These relate to the findings by the Court of Appeal that defendant had waived all the restrictive conditions in Exhibit 1 and whether or not there was a second contract between the parties. The defendant said the plaintiff neither pleaded waiver nor facts amounting to such waiver. The plaintiff contended otherwise. It referred to paragraphs 9 and 23 of the statement of claim and to Exhibit 11 a letter dated 3rd July, 1981 written by the defendant to the plaintiff.
I have carefully examined the entire pleadings in this case. There is nowhere in the pleadings where waiver is expressly pleaded. But did the act of the respondents in installing the equipment after dishonour of plaintiff’s cheques (both original and replacements) and a demand for a fresh letter of lien in its letter of 3/7/81 constitute waiver My answer is in the negative. I also say that there was no second or new contract between the parties herein and none was produced.
Now, let us see what the Act has to say about loss or termination of lien –
“TERMINATION OF LIEN
Section 43(1) – The unpaid seller of goods loses his right of retention thereon:
(c) By waiver thereof
The Act thus recognised that the unpaid seller’s lien may be waived.
But it must be stressed that by proceeding to install the machines in Kontagora after the initial dishonour of the six post-dated cheques, the defendant was merely fulfilling the terms of agreement (Exhibit 1) which included installation at Kontagora. Failure to install would have amounted to a breach of the contract. Secondly the proposal to issue ten new post-dated cheques in replacement of the original six which were also dishonoured, was conveyed to the defendant vide plaintiff’s letter MIA/ A/27 dated 25th May 1981 (See defendant’s letter Exhibit 11 dated 3rd July,1981) wherein the defendant made its own suggestion including the request for a fresh letter of lien. It is noteworthy that the proposals in the letter under reference came only after the defendant had repossessed the equipment/machinery which even had taken place before 28th March, 1980 (See paragraph 21 of the amended statement of claim). The defendant has not been shown to have waived its lien by dealing with the machines in any manner inconsistent with the lien or by making any new arrangement with the plaintiff which is inconsistent with the continuance of its lien. A lien may be lost if the seller refuses to deliver the goods on some ground other than the buyer’s failure to pay or tender the price, or on some ground other than his right of lien. That is not the case here (see Hungmann v. Brieseman(1892) 67L.T. 642; Weeks v. Goode (1859) 6 C.C. (N.S.) 367. Exhibit 1 being the agreement pleaded and relied upon by the parties, all subsequent acts of the parties in fulfilment of the agreement must be treated as such but not as giving rise to new contracts each and every time a proposal is made on how to effect a performance by a defaulting party. There was absolutely no need for the defendant to have asked the plaintiff for a fresh lien when Exhibit 1 had provided for same. The request was superflous. The fact was that the ten new cheques still bounced, one after the other and so the defendant remained an unpaid seller. I therefore resolve issues (V) and (VI) in favour of the defendant and hold that the Court of Appeal erred when it held that the defendant had waived its right of lien as contained in Exhibit 1 which is the only agreement or contract pleaded and relied upon by the parties. I also hold that the plaintiff did not establish any legal right in the equipment as to entitle them to any of the reliefs claimed.
This issue is directed against the following order made by the Court of Appeal-
“That the said equipment be delivered to the plaintiff subject to the plaintiff paying the entire sum outstanding as balance of the total cost of the equipments, taking into account N381,160.00 the plaintiff had so far paid to the 1st respondent (defendant)”
There is no dispute about the fact that this is certainly not one of the reliefs sought by the plaintiff against the defendant in the trial court. The defendant also made no counter-claim in its statement of defence before the High’ Court against the plaintiff. The order made by the Court of Appeal is therefore clearly gratuitous. It is not the function of a Court of Law to make a gratuitous award. Such an award will be incompetent (see for example Ekpeyong v. Nyong (1975) 2 SC.71, Obioma v. Olomu (1978) 3 S.C.1). The issue therefore succeeds.
Having come to the conclusion as I have done above that the plaintiff did not establish any legal right in the property or machinery subject-matter of the contract, it automatically failed to qualify for any of the relief’s sought by, it against the defendant. The property or title in the goods conditionally sold to the plaintiff remained perpetually in the defendant as an unpaid seller and as contained in the Sale Agreement (Exhibit 1).
It is noteworthy to observe here now that the Act, hitherto a received English statute of general application in Kaduna State, has since been Nigerianised vide the Sale of Goods Edict No. 15 of 1990. This is as it should be. All such laws should be Nigerianised as soon as possible to enable us know what laws actually govern us without having to travel all the way to England for the purpose!
On the whole,this appeal therefore succeeds and it is allowed. The judgment of the Court of Appeal including its orders, are hereby set aside. The judgment of the learned trial judge delivered on 21st July,1989 dismissing plaintiffs claims is restored. The defendant is awarded costs of this appeal which is fixed at N10,000,00 against the plaintiff.
WALI, J.S.C.: I have read before now the lead judgment of my learned brother Kutigi, JSC and I agree with his reasoning that the appeal has merit and ought to succeed.
The vexed question that arises for determination in this appeal and upon which the resolution of other issues raised depends, is Issue 1 in the appellant’s brief of argument. It reads as follows:
“1. Whether the Court of Appeal was right in its view that ownership in the equipment passed to the respondent on proper construction of Exhibit 1, merely because the Appellant had delivered the equipment at the site of the respondent at Kontagora.”
Learned counsel for the respondent criticised the manner the issues in the appellants’ brief were framed. He in particular referred to the grounds 1 and 3 and contended that they could not be attached to any issue in the appellant’s brief. It was also his complaint that ground 2 was split into 2 by framing 2 issues out of it to wit issues (i) & (iv) and submitted that a ground of appeal ought to relate, to only one issue for determination. Learned counsel further complained that Issues (iii) and (vi) were not based on or related to any ground of appeal.
I have examined the issues framed by the appellant as related to the grounds of appeal and have arrived at the conclusion that the only issue that could not be hinged to any ground of appeal is issue (vi), and for that reason it is hereby struck out. On the question relating to formulating two issues from a single ground viz issues (i) and (iv) arising from ground 2, it is not against the procedure relating to briefs of argument that one or more issues are formulated out of a ground of appeal, but I agree that it is inelegant to do so and it may at times be incomprehensible and confusing. The purpose of filing a brief is to state with accuracy, brevity and precision whatever is essential to clear and adequate understanding of the questions which are required to be considered by the Court. Ground 1 is in my view covered by Issue (i) ground 3 by issue (ii) and ground 4 by issue (iii) of the appellant’s brief.
From the pleadings and evidence lead in this case, both oral and documentary, the parties entered into agreement for the sale of specific goods and the conditions attached to such contract. These are contained in Exhibit 1 dated 28th March, 1978. It is a short document and for the purpose of clarity and convenience, Exhibit 1 is reproduced hereunder
“Afrotec Technical Services Nig. Ltd.
SUPPLY OF ITEMS OF PLANT AND EQUIPMENT
We hereby unconditionally and irrevocably undertake to pay Afrotec Technical Services Nigeria Limited (hereinafter referred to as Afrotec) the total sum of N702,900.00 (seven hundred and two thousand, nine hundred Naira) in consideration of their supplying us with the under-mentioned equipment on. The following terms and conditions –
N Ex – Isolo
1 No. Parker Mobile Crushing Plant Model 5245/4/7606 476,000
1 No. Foden Quarry. Dump Truck Model FC27 84,000.00
Fast moving recommended spare parts to value – 38,900.00
BD 440 KVA Generating Set 66,000.00
The agreed prices are as detailed above and are understood to be on the basis of delivery Ex. Afrotec’s yard at Isolo Industrial Estate.
The items of plant detailed above are to be delivered to site at an additional agreed price of N28,000.00 (twenty-eight thousand, Naira).
Afrotec to attend to commissioning and to provide skilled engineer to supervise an additional cost of N10,000.00(Ten thousand Naira). being five weeks at the rate of N2,000.00 per week.
Terms of payment
We confirm that the total contract price of N9702,900.00 is to be paid to Afrotec on the following terms. 40% cash deposit of N281,160.00 (Two hundred and eighty-one thousand, one hundred and sixty Naira) payable in advance of delivery.
Balance or 60% payable by. six equal instalments or N70,290.00 (Seventy thousand, two hundred and ninety Naira) each secured by post-dated cheques payable on the 27th April, 27th May, 27th June, 27th July, 27th August and 27th September respectively.
‘The interest charge on the instamental payments is to be for Afrotec’s account. We unconditionally arid irrevocably agree that Afrotec shall have a lien on all the machinery. until such time as Afrotec receive payment of the full contract amount of N702,900.00 We also confirm that should we fail to pay any of the instalments detailed above within one month of the due date, Afrotec shall take immediate possession of those properties in specie that remains unpaid for within the subject of this transaction without hindrance and without recourse.
For: MIA & SONS LIMITED
ALHAJI M. I. ATTA R.H.MAGGS
Managing Director Financial Controller. ”
Following this agreement, the appellant delivered the plant and accompanying equipment at the agreed site in Kontagora Town, Niger State and installed them. Before the delivery and installation of the plant and equipment, the respondent paid 40% of the contract price to wit N281,166.00 and the balance of N428,860.00 to be paid by six equal instalments of N70,290.00 each secured by post-dated cheque payable on 27th April, 27th May, 27th June, 27th July, 27th August and 27th September, 1978 respectively.
The following stipulations were specifically provided in Exhibit I :
“1. The interest charged on the instalmental payments is to be for Afrotec’s account.
- We unconditionally and irrevocably agree that Afrotec shall have a lien on all the machinery until such time as Afrotec receive payment of the full contract amount of N702,900.00.
- We also confirm that should we fail to pay any of the instalments detailed above within one month of the due date, Afrotec shall take immediate possession of those properties in specie that remains unpaid for within the subject of this transaction without hindrance and without recourse. (italics provided for emphasis)
The object of sale of goods is generally to transfer its ownership to the purchaser from the seller. See sections 16-19 of the Sale of Goods Act, 1893. But where a contrary intention is shown, the property in the goods only passes to the buyer at such time as the parties to the contract intend to. And for the purpose of ascertaining the intention of the parties, regard must be had to the terms of the contract the conduct of the parties and the circumstances of the case. In R. v. Ward Ltd. v. Bignall (1967) 2All ER 449 at453; (1967) QB 534CA,Diplock L.J. stated:
” in modem times, very little is needed to give rise to the inference that property in specific goods is to pass only on delivery or payment.”
Having regard to the contents of Exhibit 1 and the conduct of the parties in this case, can it be concluded that the ownership of the specific goods sold and delivered passed to the respondent
The respondent agreed in Exhibit 1 unconditionally and irrevocably that Afrotec shall have a lien on all the machinery sold and delivered under that contract, until such time as Afrotec receives payment of the full contract amount of N702,900.00. It was agreed by the parties in Exhibit 1 that should the respondent fail to pay any of the instalments detailed in Exhibit 1 within one month of due date, the appellant, Afrotec shall take immediate possession of those properties in specie that remain unpaid without hindrance and without recourse. This shows that the passing of the property to the respondent is conditional to the payment in full of the contract price as agreed in Exhibit 1.
Perusing through the documents tendered and admitted in the course of trial, there was an attempt by the parties to re-schedule the payment of the outstanding debts which was never concluded after default by the respondent. The respondent made a proposal to the appellant in that regard which the latter replied by a counterproposal. A counter-offer by the offeree operates as a rejection of the original offer thus, terminating it. So, it is futile for the respondent to claim that Exhibit 1 had been replaced or altered by another agreement which he called novation. The conditions in Exhibit 1 were still binding and enforceable at the time of litigation.
There was no waiver by the appellant of his right of lien over the equipment sold and delivered to the respondent’s site in Kontagora. The delay by the appellant in exercising the rights given him in Exhibit 1 was only to give the parties more time and opportunity to reach amicable settlement which the respondent failed to avail himself by resorting to unfulfilled promises and hollow under-taking before he resorted to litigation.
With consent and tacit approval of the respondent, the appellant regained possession of the equipment that is, when he was to remove them from Kontagora to Kaduna for servicing and relocation to another site in Kaduna. It was then he decided to hold on to them in exercise of his lien for the unpaid debt. The appellant was more or less at that time like the respondent’s agent. See section 41(2) of the Sale of Goods Acts. 1893 and Grice v. Richardson (1877) 3 App. Cas. 319.
Section 41(1) of the Sale of Goods Act, 1893 provides as follows:
“Subject to the provisions of this Act, the unpaid seller of goods who is in possession of them is entitled to retain possession of them until payment or tender of the price in the following cases, namely,
[a] When the goods have been sold without any stipulation as to credit;
[b] Where the goods have been sold on credit, but the term of credit has expired;
[c] Where the buyer becomes insolvent.”
Paragraphs (b) and (c) could apply in the present case, because-
“(i) the appellant was an unpaid seller;
(ii) the stipulated period of credit had expired;
[iii] the buyer (who is the respondent) had become insolvent; and
(iv) the seller was in possession of the goods or part of them.”
Section 62(3) of the Sales of Goods Act, 1893 also defined insolvency as following:
“A person is deemed to be insolvent within the meaning of this Act who his either ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an act of bankruptcy or not”
See the Feliciana (1915) 59 CJ 456; R v. Saddlers Co. (1863) 10 H.L. 404, 425; Parker v. Gossage (1835)2CM & R617, 620 and Biddle Combe v. Bond [1835) 4A & E 332, 337. The respondent was unable to pay his debts when they became due and was therefore Insolvent.
By virtue of the provision of section 39 of the Act the powers granted to the unpaid seller under Part (iv) thereof, can be exercised by him “notwithstanding that the property in the goods may have passed to the buyer”. See also section 41 of the Act that also provides that the seller – “may exercise his right of lien not withstanding that, he is in possession of the goods as agent or bailee for the buyer”. See Grice v. Richardson [1873 3 App. Cas 319.
It is implicit in section 28 of the Act that delivery of the goods is conditional on payment and where payment is not forthcoming or if the buyer becomes insolvent, the seller is entitled to retain the goods even during the currency of a period of credit. See Bloxam v. Sanders (1825) 4 B & C 941 at 949.
Subsequent to the judgment of the trial court in which the respondent as plaintiff lost to the appellant as defendant resulting in the dismissal of the action filed. The respondent brought an application for injunction to stay the implementation of the judgment pending appeal.
Parties filed affidavits and counter-affidavits and made oral submissions when the application was heard. In a considered ruling, the learned trial Judge refused the application and concluded:
“In sum, the applicant has failed to establish that the res it seeks to preserve is still in existence or in the possession of the respondent. This court shall not therefore exercise its discretionary power in vain.”
The learned trial Judge found that before filing the litigation by the respondent, due warning by the appellant to the respondent that in exercise of their right of lien on the equipment in their possession they intend to dispose of same by sale to satisfy the debt or part thereof and as a result of which the said equipment were thereafter sold and delivered to Messrs Afcon Engineering Co. Ltd. Section 48(2) & (3), confers on the unpaid seller the right to sell goods in his possession in exercise of his lien over the same in order to satisfy his debt or part thereof. It provides thus:
“48 Where an unpaid seller who has exercised his right of lien or retention or stoppage in transit sells the good, the buyer acquires a good title thereto as against original buyer.
(3) Where the unpaid seller gives notice to the buyer of his intention to re-sell and the buyer does not within a reasonable time pay, or tender the price. The unpaid seller may re-sell the goods and recover from the original buyer damages for any loss occasioned by his breach of contract.
An unpaid seller can exercise the statutory right of resale of the Goods in his possession whether or not properly, the goods has passed to the buyer or not and the new buyer acquires good title in such goods. See R. v. Ward v. Bignall (1967) Q.B. 543; (1967) (1967) 2 All 449.”
Under section 48 of the Sales of Goods Act, the unpaid seller retains the right to sell the identified property, where the buyer has become insolvent. The right of sale can be exercised by the seller under this section where he has been in continuous possession of the goods or where he has regained possession by exercising his right of lien or stoppage of the goods in transit. This right is available to him whether or not the property in the goods has passed to the original buyer who has become insolvent by his failure to pay or tender the purchase price as agreed in the contract, within a reasonable time. The intention to sell the goods must be notified to the insolvent buyer. What is a reasonable time in this con is a question of fact. See Darnhouwer & Co. Ltd. v. Christian (1917) KB 37. In that case, it was agreed by the parties that payment was to be made within 90 days of the arrival of the goods. Over 90 days of the arrival of the goods, the purchaser did not pay for the goods or take delivery of the same. The seller gave three days notice to the expiry of which he sold the goods. It was held that the three days notice is reasonable having regard to all the surrounding circumstances of the case. The re-sale of the goods rescinded the original contract and the property in the goods I reverted in the unpaid seller which had previously passed to the original buyer. This act of resale rescinded the original contract, thus reverting the property in the goods to the seller who passed good title in them to the new buyer.
The Court of Appeal was therefore wrong in its conclusion that:
“I have considered all the relevant issues above and it is my judgment that this appeal must succeed and it is allowed. I hereby set aside the judgment of Ibiyeye, J. delivered on 21(7)89.
I also agree that the third party, Afcon Engineering Company, Ltd. did not obtain any title in the equipment in dispute which the 1st respondent allegedly sold to it. The 1st respondent had no proprietory rights over the equipment when it sold and delivered it to the 2nd respondent. After parting with the property in the goods, the Company had no right to pass over to the 2nd respondent. It is also quite plain that the 2nd respondent bought the equipment with the knowledge of this suit and that in itself, will disqualify it from obtaining any property in the equipment. The 2nd respondent is hereby ordered to release the equipment, if it had taken possession of the same, forthwith.”
It is for these and other reasons ably stated in the judgment of my learned brother Kutigi, JSC which have already expressed my agreement with, that I also hereby allow this appeal set aside the judgment and orders of the Court of Appeal and restore the judgment of the trial Court. I award N10,000.00 costs to the appellant against the respondent.