Standard Bank Nigeria Ltd. v. Chief Festus M. Ikomi (1972)

LawGlobal-Hub Lead Judgment Report

O. MADARIKAN, J.S.C.

The appellants before us were the plaintiffs in an action instituted in the High Court Warri (Suit No. W/29/65) and in which their writ was endorsed as follows:

“The plaintiffs’ claim against the defendant is for the specific performance on his undertaking given to the plaintiffs on the 11th July, 1960 to make and execute to the plaintiffs on demand a valid Legal Mortgage of Land situate at Ogbe-Ijoh, Delta Province and covered by Deeds registered as No. 21 at page 21 in Volume 550 of the Lands Registry in the Office at Lagos and No. 28 at page 28 in Volume 187 of the Lands Registry in the Office at Ibadan to secure the repayment on demand of all sums now or hereafter due and owing by him to the plaintiffs and whether as principal or surety or otherwise in such form and with such provisions and powers as the plaintiffs may require and which the defendant has refused to execute although requested to do so. And for the cost of this suit.”

As the main issues involved in the case were clearly set out in the pleadings, we propose to reproduce them in extenso.

The amended statement of claim read:

“1. The plaintiffs are Bankers and the defendant is an Auctioneer.

2. On the 11th July, 1960 the defendant in consideration of the plaintiffs granting or continuing banking accommodation to A. G. Yon Dan Kolo and Sons guaranteed the payment to the plaintiffs on demand of all sums then or at any time thereafter owning by the said firm to the plaintiffs up to a limit of 6,000pounds by a written guarantee the full terms whereof will be referred to at the trial of this action.
3. As security for the said Guarantee on the same date the defendant executed in favour of the plaintiffs a Memorandum of Deposit of Deeds which said Memorandum provided ‘inter alia’ that the documents referred to in the Schedule to the same were deposited with the intention of creating an Equitable Mortgage.
4. The said Memorandum has been registered as No. 14 at page 14 in Volume 412 of the Lands Registry in the Office at Ibadan and the full terms thereof will be referred to at the trial of this action as if they have herein been set out in extenso.
5. The documents deposited were declared by the said Memorandum to have been deposited with the intent to create an equitable mortgage upon all the property comprising therein for securing the payment and discharge on demand of all sums which may then or at any time thereafter be due from the defendant to the plaintiffs.
6. The Schedule to the said Memorandum reads:

Lands situated at Ogbe-Ijoh, Delta Province containing an area of approximately 5,329.04 square yards. Rent ‘a3340 per annum. Lease expires Indenture 21/21/550 dated 25th November, 1938. Indenture 28/28/187 dated 18th October, 1957 relating to the above.

7. The said Memorandum also provided inter alia that the defendant would on demand at his own cost make and execute to the plaintiffs a valid legal mortgage of or on the property covered by the documents deposited or any part thereof in such form and with such provisions and powers of sale leasing and appointing a receiver and otherwise as the plaintiffs may require.
8. The validity of the said Memorandum and of the said Guarantee were upheld by the High Court of Western Nigeria sitting at Warri on the 31st January, 1962 in Suit No. W/50/60 between the defendant and the plaintiffs and an appeal against the said decision by the defendant (F.S.C. 172/1963) was dismissed by the Supreme Court of Nigeria on the 18th January, 1965.
9. By a letter dated 27th May, 1965 the plaintiffs demanded of the defendant that he do execute a valid legal mortgage in accordance with the above recited covenant in the said Memorandum and the defendant in his reply to the said Letter stated that he with regret would not execute the same.
10. There is now due and owing from the said A. G. Yon Dan Kolo and Sons to the plaintiffs a sum of 7,182:11s:1d and the plaintiffs have demanded payment from the defendant in accordance with his afore cited guarantee but the defendant has neglected or failed to reply to the letter of demand or to make payment of the same or any part thereof and the plaintiffs claims as per writ of summons.”

The defendant in paragraphs 2 to 10 of his statement of defence averred as follows:

“2. Defendant admits paragraph 1 of the alleged amended statement of claim and adds that he is an Itsekiri and native of Nigeria while plaintiffs are an alien company incorporated in England.

3. Paragraphs 2, 3 and 5 of the alleged amended statement of claim are denied. Defendant states that the alleged guarantee and the said documents referred to therein were obtained from him by fraud and misrepresentation perpetrated by plaintiffs’ servant and manager, Mr. Knight.
4. In still further answer to paragraphs 2, 3 and 5 of the alleged amended statement of claim, the defendant avers that the alleged guarantee and documents were obtained from him in respect of a consideration that has totally failed or if there was any consideration in the regard, which is denied, the same was so grossly inadequate that fraud can and will be founded upon it.
5. Defendant is not in a position to admit or deny paragraphs 4 and 6 of the alleged amended statement of claim.
6. As regards paragraph 7 of the alleged amended statement of claim, defendant repeats paragraphs 3 and 4 hereof.
7. Defendant avers that Suit No. W/50/60 and F.S.C. 172/1963 referred to in paragraph 8 of the alleged amended statement of claim have no bearing on the relief now sought by the plaintiffs.
8. Paragraph 9 of the alleged amended statement of claim is admitted.
9. Regarding paragraph 10 of the alleged amended statement of claim, defendant states that he is not in a position to admit or deny whether A. G. Yon Dan Kolo & Sons are owing to the plaintiffs the sum alleged or any sum at all.
10. At the trial of this action the defendant will contend:

(a) That the alleged mortgage intended to be created by the transaction between plaintiffs, a company incorporated in England, and the defendant, an Itsekiri and native of Nigeria, is void and of no legal effect and cannot support the claim advanced by plaintiffs.

(b) That if valid, which is denied, the contract relied upon by plaintiffs is not one admitting of the relief sought by them.

(c) That clause or paragraph 4 of the alleged mortgage contains a provision clogging the defendant’s equity of redemption, which constitutes a bar to plaintiffs’ claim.”

The plaintiffs then filed a reply in the following terms:

“1. The plaintiff joins issue with the defendant on his statement of defence.

2. In further answer to paragraphs 3, 4, 6 and 10 of the statement of defence the plaintiff avers that the defendant ought not to be admitted to make the pleas contained therein because on the 11th day of August, 1960 before the commencement of this action the defendant brought an action against the now plaintiff in the High Court of Justice of Western Nigeria, in the Warri Judicial Division, Holden at Warri, being Suit No. W/50/60 in which the now defendant sought a declaration that the mortgage the subject-matter of this suit was void and that it be set aside on the ground of fraud and/or mistake and/or failure of consideration and in support of his claim raised the issues pleaded in paragraphs 3, 4, 6 and 10 of the statement of defence in this suit, and the plaintiff joined issue on the said defence, and the said action and issues were tried before the Honourable Mr. Justice Kester who delivered judgment in the said suit on the 31st day of January, 1962 when he dismissed the defendant’s claim with costs.
3. The defendant appealed against the said judgment to the Supreme Court (F.S.C. 172/63) who on the 18th day of January, 1965 dismissed the appeal with costs.
4. Further or in the alternative, if, which is denied, the defendant did not raise all or any of the issues averred in paragraphs 3, 4, 6 and 10 in the first mentioned suit the same were issues that should have been raised by him in the said suit and the plaintiffs aver that he is barred from raising them in this suit.
5. That in further answer to paragraph 10(a) of the statement of defence the plaintiffs aver that the defendant is barred by law from raising such an issue in respect of an instrument that has been registered and further or in the alternative that the said instrument is valid.”

In consequence of which the defendant filed a rejoinder as follows:

“1. Defendant joins issue with the plaintiffs on their reply.

2. Defendant states in his rejoinder to paragraphs 2, 3 and 4 of the reply that the subject-matter of this action is not the same as the one determined in Suits Nos. W/50/1960 and F.S.C. 172/63.
3. Defendant puts the plaintiffs to the strictest proof of the averments contained in paragraph 5 of their reply.”

At the trial, the plaintiffs relied on two documents in support of their case. The first document (exhibit A) was a personal guarantee dated the 11th of July, 1960, whereby the defendant guaranteed the payment to the plaintiffs with interest at 5% per annum of all sums then due or which might become due to the plaintiffs by Messrs. A.G. Yon Dan Kolo and Sons up to the limit of 36,000. pounds. The second document (exhibit B) was a memorandum of deposit of deed. As, by this action, the plaintiffs were seeking part performance of one of the undertakings in exhibit B, it is essential to reproduce exhibit B. It reads as follows:

“TO SECURE SIX THOUSAND POUNDS (36,000 pounds).

I. The documents specified in the Schedule hereto have been deposited with you by the undersigned with intent to create an equitable mortgage upon all the property contained therein or to which the same or any of them relate for securing the payment and discharge on demand of all sums which now are or at any time or times hereafter may become due or owing or may be accruing or becoming due to you by the undersigned either alone or jointly with any other person or persons company or companies on any account or liability whatsoever and whether in the character of principal debtor or guarantor or surety or otherwise howsoever and also all usual Bank charges and commission and interest at the rate of 10 per centum per annum or at such other rate as may be arranged from time to time to be calculated on the balance owing from day to day and to be payable by monthly installments on the last day of each month.

2. The undersigned will on demand at his or their own cost make and execute to you or as you may direct a valid legal mortgage of or on the said property or any part thereof in such form and with such provisions and powers of sale leasing and appointing a receiver and otherwise as you may require.
3. The powers of leasing or agreeing to lease and of accepting or agreeing to accept surrenders of leases and tenancies conferred on borrowers by any statute or ordinance in that behalf shall not be exercised without your previous consent in writing and no restriction on consolidation of mortgage shall apply to this security.
4. This security shall not be considered as satisfied or discharged by any intermediate payment or satisfaction of the whole or any part of the monies hereby secured but shall constitute and be a continuing security to you notwithstanding any settlement of account or other matter or thing whatsoever and shall not operate so as in any way to prejudice or affect the security created by any deposit which may have already been made with you of the said documents or any other security which you may now or at any time hereafter hold in respect of the monies hereby secured or any part thereof.
5. The liability of the undersigned if more than one shall be joint and several and no one of the undersigned shall be nor shall this security be released or discharged by death or by the death release or discharge of any other of them or by the substitution of any other debtor or security or any change in the constitution of any partnership of which any of the undersigned may be a member.

Dated this eleventh day of July, 1960.

The Schedule above referred to:

Land situated at Ogbe-Ijoh, Delta Province containing an area of approximately 5,329.04 square yards. Rent 340 pounds per annum. Lease expires 190pt.

Indenture 21/21/550 dated 25th November, 1938. Indenture 28/28/187 dated 18th October, 1957 relating to the above.”

It was not disputed that at the time the action was brought, the account of Messrs. A.G. Yon Dan Kolo and Sons was overdrawn to the tune of 37pounds,18211s:1d which they had refused to pay despite repeated demands.

The defendant testified that he did not read exhibits A and B before signing them on the 11th July, 1960; and that consequent upon what Yon Dan Kolo told him the following day, he (defendant) decided to recover exhibits A and B from the plaintiffs. He then asked the plaintiffs to return exhibits A and B but they refused.

In rejecting the evidence of the defendant that he did not read exhibits A and B before signing them the learned trial judge commented as follows in his judgment:

“No reasonable tribunal will accept the evidence of the defendant that he signed exhibits A and B with his eyes shut to the contents.”

In regard to the defence of fraud, mistake and insufficiency of consideration, the learned judge said:

“On the issue of fraud, mistake or insufficiency of consideration the defendant cannot be heard as the decision in the previous case Suit W/50/60 (F.S.C. 172/1963) between the parties settled those issues finally.

Section 53 of the Evidence Act reads:

‘Every judgment is conclusive proof as against parties and privies, of facts directly in issue in the case, actually decided by the Court and appearing from the judgment itself to be the ground on which it was based unless evidence was admitted in the action in which the judgment was delivered which is excluded in the action in which that judgment is intended to be proved.’

The learned judge then considered the submission of learned counsel for the defendant that exhibit B was unenforceable because it was neither approved by the Governor-in-Council nor by the appropriate Minister as required by s. 3 of the Native Lands Acquisition Law, and came to the conclusion that exhibit B was unenforceable. Finally, he stated that as the plaintiffs were in effect seeking specific performance of a contract of guarantee, they were not entitled to that remedy, as it is an equitable remedy. He then dismissed the claim with costs.

It is against this decision that the plaintiffs have now appealed. On behalf of the appellants, Mr. Bentley pointed out that in suit No. W/50/60, the present respondent had instituted an action in the High Court, Warri, against the present appellants seeking:

“1. A declaration that the deed of Guarantee and/or Charge on the landed property of the plaintiff lying and situate at Chico co Market Warri, dated on or about the 11th day of July, 1960 and signed by plaintiff in favour of defendant is VOID.

2. That the deed of Guarantee and/or Charge on the landed property of the plaintiff lying and is situate at Chicoco Market Warri, dated on or about the 11th day of July, 1960 and signed by plaintiff in favour of defendant be set aside on the ground of fraud and/or mistake and/or failure of consideration.
3. An Order for return to plaintiff of plaintiff’s deed of lease in respect of plaintiff’s property lying and situate at Chicoco Market Warri, which deed was delivered by plaintiff to defendant on or about the 11th day of July, 1960.”

That that action related to the documents marked as exhibits A and B in the present proceedings; that on the 29th January, 1962, the action was dismissed by Kester J. (as he then was); and that in Appeal No. F.S.C./172/1963, the judgment of Kester J. was affirmed by the Supreme Court on the 18th January, 1965. Arguing the 6th ground of appeal, it was the contention of Mr. Bentley that as the present respondent had failed to obtain the declaration sought in suit No. W/50/60 that the documents (exhibits A and B) were void, it was an abuse of process to allow him to re-open the matter by challenging the validity of exhibits A and B again in the present proceedings whether on the grounds relied upon by him in the previous case or on any new grounds.

Learned counsel for the respondent could find no answer to the arguments of Mr. Bentley on the 6th ground of appeal and he eventually conceded that the point was well taken.

We consider that Mr. Bentley’s contention is well founded. Indeed, if such a rule does not prevail, litigation would be interminable. Support for this view is to be found in the recent decision of this Court in O. Ogwo and others v. Chief Kanu Ekpeazu and others S.C. 231/1970 delivered on 29th October, 1971 in which we said:

“The effect of what Mr. Ogwo claimed he could do was to ignore the decision of three courts including the then highest possible appellate court (the Privy Council) and to take a point that could (and indeed should as lack of jurisdiction ought to be pleaded though it may otherwise be raised at the hearing) have been taken. We do not think that in such circumstances, notwithstanding the provisions of S.52 of the Evidence Act, that it was in any way an error of the learned trial judge to hold that this was an abuse of the process of the court We therefore refused to allowed Mr. Ogwo to argue on the merits that the learned trial judge was wrong to come to the conclusion that he did that the order transferring the suit to the Aba High Court was in fact validly made as we did not think he was entitled to raise the issue.”

That decision is in accord with the following observations of Wigram V-C in Henderson v. Henderson (1843) 3 Hare 114 reported in 67 E.R. 313 at p. 319:

“I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of the matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

This passage was quoted with approval by the Privy Council in Hoystead and others v. Commissioner of Taxation (1926) A.C. 155 at p. 170 and was therein described as settled law on the subject; and also by the High Court of Lagos in A.G. Ijale v. A.G. Leventis & Co. Ltd. (1961) All N.L.R. 762 at p. 769.

We must therefore come to the conclusion that having unsuccessfully contested the validity of exhibits A and B in suit No. W/50/60, it was not competent for the respondent to contend in any subsequent proceedings between the parties that the documents were void. It follows, in our view, that the learned trial judge was in error in entertaining the defence of the respondent that the documents were void and grounding his judgment upon it. As this disposes of the appeal, it seems to us unnecessary to consider the other grounds of appeal except to refer, in passing, to the observations of the learned trial judge on the doctrine of part performance. He said:

“The plaintiffs are not entitled to the relief sought. Further, the Court of Chancery would not enforce a contract of guarantee. Exhibit B is tied to exhibit A the Guarantee.

The learned authors of Halsbury’s Laws of England dealing with the doctrine of part performance said at p. 294, paragraph 415 of Volume 36 Halsbury’s Laws 3rd Edition:

‘The doctrine of part performance does not extend to contracts which the Court of Chancery would not enforce even if they had been in writing; thus, it does not apply to a contract for work and labour, or for personal service extending over a period exceeding a year, or to a contract of guarantee… A contract which concerns land and also property to which the doctrine of part performance does not apply may not be severable, and, if not, specific performance cannot be obtained under the doctrine of part performance as regards the land.’

Specific performance is an equitable remedy. It is not available on the facts of this case to the plaintiffs.”

We think that the learned trial judge was relying on the statement of the law in Halsbury’s Laws of England 3rd Edition Volume 36 at p. 294 where the learned author said the doctrine of part performance does not extend to a contract of guarantee. A similar statement of the law appears as footnote 34 at p. 87 of Chitty on Contracts (22nd Edition) Volume 1 but, it is to be noted, has been removed in the 23rd Edition Volume 1 at p. 90 where the otherwise re-appears. The authority for the statement would appear from Halsbury’s Laws of England to be the case of Wain v.Warfters (1804) 5 East 10 reported in 102 E.R. 972. In that case, the defendant had promised in writing to pay the debt of a third party and the plaintiff sought to rely upon the written undertaking to ground his action.

Upon the grounds that the document did not satisfy the provisions of section 4 of the Statute of Frauds, and that it was a promise or agreement appearing to be without consideration upon the face of it, the court held that it was a nudum pactum and gave no cause of action. It is sufficient for us to say that having held the view that the learned judge was wrong in entertaining and accepting the defence that exhibits A and B were void, we fail to see how the decision in Wain’s case (supra) could be extended to cover the present case.

In the result, this appeal must succeed and it is hereby allowed. The judgment of the High Court, Warri, in suit No. W/29/65 delivered by Obaseki J. on the 7th December, 1967, together with the order for costs is hereby set aside and judgment is entered for the plaintiffs in terms of the writ.

The plaintiffs/appellants are entitled to costs, which we assess at 74 guineas in the High Court and 130 guineas in this Court.

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SC.124/1968