Simm Computer Resources Limited & Anor V. First Inland Bank Plc (2016)

LawGlobal-Hub Lead Judgment Report

YARGATA BYENCHIT NIMPAR, J.C.A.

This appeal is against the judgment of HON. JUSTICE A. M. LIMAN sitting at the Federal High Court, Lagos delivered on the 1st July, 2013 wherein the trial Court entered judgment for the Respondent and dissatisfied with the said judgment, the Appellants filed an Amended Notice of Appeal dated 11th June, 2015 on the 15th June, 2015 setting out 2 grounds of Appeal.

Brief facts leading to this Appeal are that the Appellants a customer of the Respondent was offered a loan facility which they accepted on behalf of the 1st Appellant. The facility was to be secured by a Deed of Legal Mortgage over the 1st Appellant’s property at No. 40, Old Ota Road, Orile Agege, Lagos. The legal mortgage was only perfected and registered at the Land Registry, Lagos two years after the draw down by the Appellants. An attempt to recover the loan made the Appellants to initiate an action against the Respondent by way of a Writ of Summons seeking the following:
a. A declaration that their Customer-Banker

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relationship is governed by the Offer of Credit Facility Agreement dated the 15th December, 2003 and that any alteration to it, in the form of unilateral decision by either party is null, void and of no effect.
b. A declaration that the Defendant unilateral decision raising interest rate from 20.5% per annum to above 40% without or negotiation with the Plaintiff is incompetent, null, void and must be reversed immediately.
c. An interlocutory injunction restraining the Defendant and her agents, servants and otherwise from sending prospective buyers, estate agents and valuers to invade the 2nd Plaintiff home, the purported security for the facility as the loan/facility sought to be recovered by this “purported power to sell does not exist”.
d. An order of perpetual injunction restraining the Defendant, her agents, servants and or privies from selling, alienating or disposing the 2nd Plaintiff aforesaid property in any manner whatsoever, and or dealing adversely with the proprietary rights of the plaintiffs in the aforesaid property.”

The matter proceeded to trial and the claim of the Appellants was dismissed thus this appeal.

The Appellants’ brief settled by Akhigbe

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Negbenose is dated 26th January, 2016 filed on the 28th January, 2016 and deemed on the 2/2/16. It distilled 2 issues for determination as follows:
1. Whether the failure to obtain the required prior consent of the Governor under Section 22 of the Land Use Act 1978 before the creation of the deed of legal Mortgage Exhibit “B” rendered the deed null and void ab initio thereby disenabling the defendant’s power of sale under the Mortgage un-exercisable.
2. Whether the trial Court was right when it struck out the claim concerning the unilateral raising of interest rate from 20.5% to 405 after it pleading and of evidence held that the claimant had abandon it.

The Respondent’s Brief was settled by Anunka Otoghagwa dated 29th February, 2016 filed on the same date and it adopted the two issues distilled by the Appellant for determination in this appeal. The Court shall also resolve this appeal on the two issues presented by the Appellant.

ISSUE ONE
Counsel to the Appellant contended that based on S. 22 of the Land Use Act, the consent of the Governor ought to have been first obtained before the mortgage deed was created. He submitted that prior consent of the

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governor is a pre-condition for a valid mortgage, that failure to obtain same renders the Deed of mortgage null and void and the mortgage illegal which consequently implies that there is no more power of sale left for the Respondent to exercise and referred to K. AKPENE V. BARCLAYS 1987 1. SC 30, SAVANNAH BANK OF NIGERIA LTD V. AMMEL O. AJILO (1989) 1 NWLR (PT 97) 254, ALHAJI NAKYAUTA V. MACKIMA (1977) 6 SC 34, CCC THRIFT AND CREDIT SOCIETY LTD V. EKPO SUIT NO SC/262/2002 DELIVERED ON FEBRUARY, 2008. He therefore submitted that all the Respondent has is an equitable interest which only gives a right to payment out of the property but not a right to sell or appoint a receiver by order of Court, cited ADARAN OGUNDIAMI v. ARABA S.C. 470/1975.

On the other hand, the Respondent was of the view that there is nothing in the Land Use Act that prevents prior execution of an instrument before an approach is made to the governor. That by the provision of S.22 of the Land Use Act, an executed mortgage deed merely remains inchoate until the governor’s consent thereon is sought and obtained, relied on FIRST BANK OF NIGERIA PLC V OLUFEMI SONGONUGA (2007) 3 NWLR (pt. 1021)