Nigerian Advertising Services Limited & Anor V. United Bank for Africa Plc & Anor (1999)

LawGlobal-Hub Lead Judgment Report

ADEREMI, J.C.A

In the court below the plaintiffs, (hereinafter referred to as the Appellants) took out a writ of summons against the first defendant (hereinafter called the 1st Respondent) and claimed against it the following reliefs:

1. a declaration that the purported sale of the plaintiffs’ property known and described as 52, Norman William Street, S. W. Ikoyi, Lagos is null and void and of no effect whatsoever.
2. a declaration that the purported sale of the plaintiffs’ said property by the defendant is not in accordance with the provisions of the law.
3. an order setting aside the purported sale of the said property by the defendant on the ground that the sale was fraudulent and/or made in bad faith.
4. a declaration that an offer of N1.3 Million had been made to the plaintiffs for their property by another person and this was communicated to the defendant and its solicitor Mr. Obembe before their purported sale of the same property for a lesser amount of N1.2 Million.
5. a declaration that the purported sale is also null and void because it was contrary to the terms of the Mortgage Agreement between the plaintiffs and the defendant.
6. a declaration that the defendants’ action of selling the plaintiffs’ property to unknown person in public, the plaintiffs who are very well known have thereby been subjected to embarrassment, ridicule and contempt and the plaintiffs claim N5 Million damages for libel/slander published to the buyer of the property and others and the purported sale be set aside.
7. an injunction restraining the defendant, its servants or agents from interfering with the said property until the determination of this suit.

Pleading were ordered, filed and exchanged between the parties. Suffice it to say that the 1st Respondent had counter-claimed for possession and mesne profits.

Briefly, the facts of this case as could be gleaned from the pleadings are that on or about 28/8/72 the property styled as No.52, Norman Williams Street, S.W. Ikoyi was employed by its owner Chief Anyibuofu Megafu, the 2nd plaintiff/appellant, to secure facility granted by the 1st defendant/respondent (United Bank for Africa PLC) to the 1st appellant (Nigerian Advertising Services Limited). When the 1st appellant failed to repay the loan despite repeated demands, the first defendant/respondent sold the mortgaged property in what it termed, the exercise of its power as a mortgagee. Aggrieved by the sale, the plaintiffs/appellants took out a writ of summons claiming the reliefs set out supra. As I have said above, the 1st defendant/respondent also counter-claimed seeking reliefs stated above. Both sides led evidence in proof of the averments in their respective pleadings. After taking the addresses of counsel on both sides, the lower court, in a reserved judgment, on 16th December, 1992, dismissed the appellants’ claims in their entirety and granted the 1st Respondent’s counter-claim for possession but refused that for mesne profit. In concluding its judgment, the lower court said and I quote:

“The plaintiff’s claims failed in their entirety and are hereby dismissed. Judgment is hereby entered for the defendant against the 2nd plaintiff as follows:

The 2nd plaintiff Chief Anyibuofu Megafu shall give up possession of the property situate at No.52, Norman Williams Street, S/W Ikoyi, Lagos on or before the 31st day of December, 1992.”

Dissatisfied with the said judgment the appellants filed a notice of appeal which contains three original grounds of appeal. Distilled from the said grounds of appeal and set out in their brief of argument are three issues for determination and they are in the following terms:

1. whether the learned trial judge was right in holding that upon the preponderance of evidence, the mortgaged property was sold on 28th April, 1989.
2. whether any purported sale of the mortgaged property after the presentation by the mortgagor of a bank draft for the full redemption of the mortgage was not malafide, fraudulent and invalid and
3. whether the learned trial judge was right in holding that the respondent had no duty to extend the time within which the appellants could re-deem the mortgage.

It is necessary to say that while this appeal was still pending before this court, Mrs. Bridget Okwesa who held herself out as the party Interested sought and obtained the order of this court on 18th October, 1993 to be joined as the 2nd Respondent. Her interest lies in the fact that she claimed to have bought the mortgaged property.

The appellants filed a joint brief of argument while each of the 1st and 2nd respondents filed separate reply brief. Discerned from the 1st respondent’s briefs are 6 issues which are set out hereunder:

1. whether on the plaintiffs/appellants writ of summons, pleadings and evidence it is open to them to dispute or deny the fact of the sale of the mortgaged property having taken place on 28th April, 1989 or at all events, before 11th May, 1989 (the date the bank draft for N1.3 Million was presented to the defendant/respondent).
2. whether the holding by the learned trial judge that the sale took place on 28th April, 1989 is at variance with defendant/respondent’s pleading and evidence.
3. whether in all the circumstances, taken into account particularly the combined import of the writ of summons, the pleadings and evidence, the learned trial judge erred in holding that, on the balance of probability, the sale of the mortgaged property took place on 28th April, 1989.
4. whether the Bank draft for N1.3 Million was not the proceed of the sale of the mortgaged property by the 2nd plaintiff/appellant to a person whose offer to buy the said property the 2nd plaintiff/appellant communicated to the defendant/respondent on 21st April, 1989.
5. whether it is open to the plaintiffs/appellants to raise on appeal the question of a sale of the mortgaged property having taken place after 11th April, 1989 and the validity of such sale when the issue was not raised, at all in the plaintiffs/appellants’ pleadings and evidence given at the trial and when the question was not addressed by counsel on both side nor a determination made on it by the learned trial judge. (The question of fraud raised in the Appellants’ brief being dependent on issue 5 stands or falls with it).
6. whether the defendant/respondent is under a legal duty to accede to the plaintiffs/appellants’ request for further four weeks extension of time to repay the debt after the “final” notice by the defendant/respondent dated 3rd April, 1989.

The 2nd Respondent the party interested also raised three issues for determination in her brief and they are as follows:

1. whether the learned trial judge was not correct in inferring the existence of a lawful sale to the 2nd Respondent of the mortgaged property on 28th April, 1989 or in any event before 11th May, 1989.
2. whether the assignment by the 1st Respondent to the 2nd Respondent of the mortgaged property pursuant to the exercise of its power of sale under the mortgage is vitiated or otherwise affected by the alleged or any default on the part of the 1st Respondent in the exercise of its said power of sale.
3. whether the learned trial judge was not correct in inferring the existence of a lawful sale to the 2nd respondent of the mortgaged property on 28th April, 1989 or in any event before 11th May, 1989.

All the issues formulated in the different briefs are interwoven. They point to a common goal. They pose the fundamental question; whether the mortgagee’s power of sale ever arose and if it arose, whether it was exercised bona fide for the purpose of realizing the debt owned it by the mortgagor without it being in collusion with purchaser. The answers to the afore-mentioned questions constitute the bottom line of the resolution of this appeal.

When the appeal came before us on 14/4/99 Mr. Uwechia learned counsel for the appellants referred to and adopted the brief of argument of the appellants. By way of emphasis, he submitted that from the entire evidence adduced before the lower court there was no justification for the finding that the sale of the mortgaged property took place and while placing reliance on the decision in A.C.B. v. Nbisike (1995) 8 NWLR (Pt.416) 725, he urged that the appeal be allowed, the judgment of court below be set aside and judgment entered in favour of the plaintiffs per their writ of summons. Mrs. Chukura learned counsel for the 1st Respondent referred to and adopted the brief of her client and urged that the appeal be dismissed.

Mr. Ajumogobia, of counsel for the 2nd Respondent referred to and adopted the brief of his client urging that the appeal be dismissed. Although there is a Respondent’s Notice of Intention to contend that the decision of the court below be affirmed on grounds other than those relied upon by the court below. Mr. Ajumogobia did not allude to it. He would seem to have abandoned it.

As I have observed earlier all the issues raised for determination are interwoven. Issue 1, 2, and 3 raised by the 1st Respondent are saying the same thing in so many words: indeed they are similar to issue 1 set up by the appellants and issues 1 and 3 put forward in the 2nd Respondent’s briefs.

The main plank of the appellant argument in their brief is that there was no evidence that the mortgaged property was sold on 28th April, 1989 and therefore the court below was wrong to have so held. Indeed that fact was not pleaded by the 1st Respondent they contended. On the other hand, the briefs of arguments of the 1st and 2nd Respondents are replete with arguments that the property was sold on 28th April, 1989 in the lawful exercise of the power of sale that resided in the mortgage.

In the judgment of the lower court while reviewing the evidence led by the 2nd plaintiff/appellant (Chief Anyibuofu Megafa) the trial judge credited him as testifying thus:

“The 2nd plaintiff testified further that he gave them a cheque for N1.3 Million to redeem the mortgage. He testified further that on 3rd April, 1989, they wrote him a letter giving him final notice to redeem the property. He produced the letter dated 3rd April, 1989 admitted as Exhibit p2. He testified that when he received Ex.p2. He wrote them asking for four weeks extension to enable him redeem the property…He testified that on 11th May, 1989 he took the cheque for N1.3 Million to Mr. Obembe but he did not accept the cheque. He testified that Obembe told him that he had already accepted a cheque for N1.2 Million for the purported sale of his property, He testified that the purported sale of the property was on 28th April, 1989.”

The law is settled that evidence which is at variance with the pleadings goes to no issue and should not be received by the trial judge; it should be disregarded by the court. See Enang & Ors. v. Audu (1981) 11 – 12 S. C. 25. But in paragraph 9, 11 and 13 of the statement of claim, the appellants who were the plaintiffs in the court below aver thus:

Para 9

“The plaintiffs aver that bank draft No. 017466 dated 11/5/89 for N1.3 Million drawn on Nigeria Merchant Bank Limited Broad Street, Branch in favour of the defendant was presented to the defendant on 11/5/89 for the liquidation of the mortgage debt, but was rejected by the defendant on the ground of the property having been sold on 28th April, 1989, thereby denying the plaintiffs opportunity to redeem their property.”

Para 11

“The plaintiffs shall contend at the trial that the defendant was actually aware at all material time prior to the purported sale of the property on the 28/4/89 that they had asked for an enlargement of time of four weeks within which to retire the mortgage debt and redeem their property.”

Para 12

“The plaintiffs aver that the defendant having been fully aware of a better offer of N1.3. Million net and having also been notified of their intention to retire the mortgage debt within four weeks from 17/4/89 in accordance with the plaintiff’s letter of that date, the defendant had acted fraudulently and on bad faith by proceeding to effect sale of the property on 28/4/89 for N1.2 Million that is, before the expiration of the four weeks.”

It is evidence that on the face of the pleadings before the court below the fact that the mortgaged property was sold on 28/4/89 was pleaded. The averment was even contained in the plaintiffs’ pleadings. Again, the evidence in proof of the averment of sale of the property came from the 2nd plaintiff. That plea is no doubt adverse to the plaintiffs’ case. The law is sacrosanct that statement or admission, which is oral or written, made by a party which is adverse to his case is admissible in law. See Igyuse v. Ocholi & Anor (1997) 2 NWLR (Pt.487) 352. Even, if none of the plaintiffs nor their witnesses led evidence to substantiate the averment, the defendant whether he had made that averment in his statement of defence or not will be at liberty in law to lead evidence to establish an averment in the plaintiff’s pleadings which supports his case. As observed supra, in law, evidence led on fact not pleaded goes to no issue and accordingly is inadmissible. And where it has been mistakenly admitted it should be expunged. This is the legal position whether the evidence was elicited in Chief or under cross-examination. However, in some decided cases the Supreme Court has held that despite the rule that a party shall not be allowed to lead evidence outside his pleadings, a plaintiff will be entitled to lead evidence on points raised in the defendant’s pleadings. See (1) Emegokwue & Ors. v. Okadigbo & Ors. (1973) 4 S.C. 113 and (2) Bamigboye v. Olarewaju (1991) 4 NWLR (Pt.184) 132. It seems to me consistent with the principle of fair hearing or fair trial that a defendant in similar circumstance should be permitted by law to lead evidence on issues contained in the pleadings of the plaintiff.The result is that on this issue, I am of the clear view that the court below was right in holding that the property was sold on 28th April, 1989.

From the pleadings and evidence led, the parties are adidem that the appellants (plaintiffs) in the court below had defaulted in the payment of the loan. The appellants also admitted that the 1st Respondent addressed a letter to them calling for the payment of the loan and interest. For purpose of clarity, I wish to restate here that the 1st respondent in this appeal was the mortgagee. A mortgagee’s power of sale becomes exerciseable if it has arisen and once it has so arisen the title of a subsequent purchaser will not be affected by its improper or irregular exercise and the sale will be regarded as valid. See Majekodunmi & Ors. v. Co-op Bank Ltd. (1997) 10 NWLR (Pt.524) 198. But, in exercising the power of sale a mortgagee is under duty to take reasonable care to obtain the true value of the property, see Temco Eng. & Co. Ltd. v. S.B.N. Ltd. (1995) 5 NWLR (Pt.397) 607. However, a mortgagee will not be restrained on the exercise of his power of sale merely because the mortgagor objects to the manner in which the sale is being arranged or because the mortgagor has commenced a redemption action in court, but he (mortgagee) will be restrained if the mortgagor pays the amount claimed by the mortgagee into court; that was the decision of the Supreme Court in Nigerian Housing Development Society Ltd. & Anor v. Yaya Mumuni (1977) 2 S.C. 57. No money was paid into the court by the mortgagor. Rather all the mortgagor did was to make a spirited effort by presenting a cheque dated 11/5/98 for N1.3 Million after the property had been sold on 28/4/89. Although, the appellants tried to show that they asked for an extension of time within which to pay the loan. There is no evidence that such request met with the 1st respondent’s favour. In fact such a concession could not have been granted because as at the time it was made, the property had been sold to a third-party – the 2nd respondent. That was a spirited attempt to redeem. The right to redeem, as was said by the Supreme Court in Ejikeme v. Okonkwo (1994) 8 NWLR (Pt.362) 266, is so inseparable an incident of mortgage that it cannot be taken away by an express agreement of the parties that the mortgage is not to be redeemable or that the right is to be confined to a particular time or to a particular description of persons. Continuing with the said judgment OGUNDARE JSC who delivered the leading judgment, said at page 278 and I quote:

“The right continues unless and until the mortgagor’s title is extinguished or his interest is destroyed by the sale either under the process of court or of a person in the mortgage incident to the security.” There is the over-whelming evidence that the property had been sold on 28/4/89, It therefore follows that the mortgagor’s title in the said property has since become extinguished. I have said somewhere in this judgment that on the evidence before the court, the property had been sold to the 2nd Respondent. The plaintiff’s alleged fraud in the exercise of the power of sale. But there is no scintilla of evidence to prove that crime. It has now been established and it finds support in decided cases, that once the mortgagee exercises his right of sale bona fide for the purpose of realizing his debt, as in the instant case, and without collusion with the ultimate purchaser (again as in the instant matter), the court will not interfere even if the sale is disadvantageous unless the price is so low as in itself to be evidence of fraud see Okonkwo v. C.C.B. (Nig) Plc (1997) 6 NWLR (Pt.507) 48. I have said above, in line with the decisions in Haruna v. S.B.N. Ltd (1995) 2 NWLR (Pt.377) 326 and the Majekodunmi supra that the title of a purchase of property from a mortgagee who exercised this power of sale cannot be impeached. It follows therefore that the remedy of a mortgagor who holds himself out as having been damnified by the improper or irregular exercise of a mortgagee’s power of sale is in damages, against the person who exercised it. See Okonkwo and Majekodunmi cases supra. There was no evidence that the property was sold at rock-bottom price. Indeed, no valuer was called to give evidence of the true value of the property. For the umpteen time, I like to observe that from the evidence adduced in the court below, the mortgagee did not exercise the power to sale until it arose. The net result of all I have been saying is that the title of the 2nd Respondent – the purchaser remains unimpeachable for all times.

As observed earlier, all the issues raised by the parties in their briefs of arguments are interwoven. They all focus on whether the power of the mortgagee to exercise its right of sale ever arose; whether there was a sale of the mortgaged property and if the sale was regular or proper. From what has been said above, the answers to these posers cannot, but be in the affirmative. All these issues are therefore resolved in favour of the 1st and 2nd respondents respectively.

In the final analysis, from all that has been said above, the only conclusion I can reach and which I now reach is that this appeal is unmeritorious. It is dismissed in its entirety and the judgment of the court below is hereby affirmed. I assess the cost of this appeal in favour of the respondents at N3,000.00.

Other Citations: (1999)LCN/0504(CA)