Adaran Ogundiani V. O.a.l. Araba & Anor (1978)

LawGlobal-Hub Lead Judgment Report

IDIGBE, JSC 

When these proceedings commenced as LD/729/72 in the High Court of Lagos State on the 6th day of July, 1972, the property in dispute, that is, the premises known as No. 46 Akpata (sometimes spelt ‘Apata’) Street at Shomolu in Lagos State, already had had a chequered legal history. It had been the subject of a court action in the High Court of Western State, holden at Ijebu-Ode (Suit HCJ/16/71 which commenced on 25th March, 1971) between Alhaji Adam Badejoko Ashiru, a businessman of 30 Isoku Street at Ijebu-Ode, through whom the appellant in these proceedings claims title to the property in dispute, on the one hand and three defendants i.e. Barclays Bank of Nigeria Ltd., (the second respondent herein), Chief A. Oresanya and O.A.L. Araba – the first respondent herein – who also claimed, (and still claims), title to the property in dispute through the second respondents herein on the other hand. About a month before commencement of these proceedings, to be precise, on the 19th day of June, 1972 the said Alhaji Adam Badejoko Ashiru (hereinafter referred to as “Ashiru”) had – as will be shown later in this judgment – to the knowledge of the appellant herein, lost his claim (as plaintiff in HCJ/16/71) for a declaration that the sale of the premises at 46 Akpata Street, Shomolu, Lagos State (hereinafter referred to as the “disputed property”) to the first respondent herein by the second respondents “on or about the 6th March, 1971, is null and void and of no effect”.  

Put in a short compass, the facts which form the background to the present proceedings are as follow: Between 1951 and 1959 Ashiru, now a retired businessman was actively engaged in trade and in order to enjoy overdraft facilities from his bankers, the second respondents herein, he lodged with them, by way of equitable mortgage, the title deeds to two of his properties, that is, the premises at 30 Isoku Street at Ijebu-Ode and the disputed property.

At a later date Ashiru executed in favour of his bankers formal Memoranda of Deposit of the two deeds in respect of these two properties, and in each of these memoranda he covenanted in the second clause to execute a legal mortgage in respect of each of the premises, on demand by his bankers, in the event of failure on his part to reduce the overdraft in terms of the covenants and stipulations on his part therein. These Memoranda of Deposit of deeds are registered (in respect of the premises at 46 Akpata Street, Shomolu) as No. 5 at Page 5 in Volume 288 at the Lands Registry Ibadan, and (in respect of 30 Isoku Street, Ijebu-Ode) as No. 4 at Page 4 in Volume 173 of the Lands Registry at Ibadan.   In due course, following his breach of the said covenants and his inability to reduce or retire the overdrafts, the second respondents brought an action against Ashiru in the High Court at Ijebu-Ode in Suit J/18/63 claiming inter alia:-   “(1) A declaration that Clause 2 of Memoranda of Deposit of Deeds dated the 22nd day of January, 1957 and registered as No. 4 at Page 4 in Volume 173 of the Lands Registry at Ibadan and the 26th day of January, 1959 and registered at No. 5 at Page 5 in Volume 288 of the Lands Registry at Ibadan made between the defendant of the one part and the plaintiff of the other part is a binding contract upon the defendant. (2) An order for specific performance by the defendant of the said contract; (3) Damages amounting to £3,670.3.9d. (4) ………..

In a reserved judgment dated the 4th day of February, 1965, the learned trial Judge in that Suit – J/18/63, (Oyemade, J., as he then was) came to the conclusion that the bank (i.e. 2nd respondents herein) was entitled to a declaration that clause 2 of the Memoranda of the Deposit of Deeds is a binding contract on Ashiru and entered judgment accordingly. In respect of the second and third claims, however, the learned Judge stated:   “As regards the claim for specific performance and damages for the sum of £3,670.3.9d. I give judgment for the sum of £2,474.5.10 in lieu of ordering specific performance at this stage”.  

Ashiru on the 30th day of March, 1965, appealed from the said judgment of Oyemade, J., and the second respondents cross appealed as a result of their failure to obtain the order for specific performance. While the appeal was pending and without waiting for the result of the appeal Ashiru sold to the appellant the disputed property (which is covered by the Memorandum of Deposit of the Deed, registered as No.5 at Page 5 in Volume 288 at the Lands Registry Ibadan) on the 28th day of January 1966, in respect of the sale he later executed a Deed of Conveyance dated 23rd January, 1967, and registered as No. 36 at Page 36 in Volume 983 of the Lands Registry at Ibadan. We should add here that it was also clear from the evidence in these proceedings that when the appellant bought the disputed property he knew full well that the pending appeal from the judgment of Oyemade, J., was in respect of a claim by the second respondents (herein also referred to simply as ‘the Bank”), for specific performance by his vendor of his obligation under the equitable mortgage to convey to the Bank a legal mortgage in respect of the disputed property.

The appeal was eventually heard in December, 1968, and the Supreme Court in a judgment dated 19th December, 1968, in Suit S.C. 362/66, in respect of the said appeal made the following observations:   “By depositing two title Deeds with the Bank and signing one Memorandum of Deposits of Deeds in respect of each title Deed, the defendant created equitable mortgages which the bank is entitled to have perfected subject to the terms of the Memoranda Clause 2 of which is as follows:-

‘I hereby undertake that I and all other necessary parties (if any) will on demand at my own costs make and execute to you or your nominee a valid legal mortgage or registered charge of or on the said hereditaments and property or any part thereof in such form and with such provisions and powers of sale leasing and appointing a receiver as you may require.   To enable legal mortgages to be executed by the parties, approval of the Commissioner of Lands Western State, is required under the Native Lands Acquisition Law, Cap, 180, and such approval is given after an application form (Form 1A) has been executed by the parties, and sent to the proper authorities. On the 15th January, 1963, the Bank caused Form 1A to be sent to the defendant for execution, and he was informed that:     ‘If you fail to sign the enclosed Lands Form 1A and the relative legal mortgages that will be submitted to you shortly…………………our instructions are to issue a writ against you claiming specific performance of the covenants made by you in favour of the bank whereby you undertook to sign legal mortgages when called upon to do so’. The defendant refused to sign the form, hence this action.

In the circumstances of this case we are of the view that it is appropriate to order the decree for specific performance sought by the Bank.” .   The Supreme Court, therefore, set aside the monetary award in lieu of specific performances made by the High Court at Ijebu-Ode and ordered that “the plaintiff/respondent (i.e. 2nd respondents herein) is hereby granted a decree for specific performance as sought in the second head of claim” (brackets and underlining supplied by this court),   Pursuant to the order made by the Supreme Court and, the failure of Ashiru to either, pay the outstanding dues on his overdraft account or, in the alternative, execute legal mortgages in respect of the two properties (i.e., that at 30 Isoko Street, Ijebu-Ode and the disputed property) and also to endorse the relevant Lands Forms 1A, at the request of the second respondents herein, the latter caused legal mortgages and Lands Form 1A in respect of the said properties to be endorsed on behalf of Ashiru – pursuant to the provisions of Order X rule 11 of the Judgments (Enforcement) Rules made under the Sheriffs and Civil Process Law, Cap. 116 of the 1959 Edition of the Laws of Western Region of Nigeria then applicable in the Western State of Nigeria – by the Registrar of the High Court at Ijebu-Ode.

Armed with these legal mortgages, (i.e. the legal mortgage in respect of 46 Akpata Street, Shomolu registered as No. 12 at page 12 in Volume 1321 in the Lands Registry Lagos; the legal mortgage in respect of 30 Isoku Street, Ijebu-Ode registered as No. 3 at Page 3 in Volume 1171 in the Lands Registry, at Ibadan, and the Lands Forms 1A in respect of the said properties covered by the equitable mortgages (i.e. the Memoranda of Deposit of Deeds aforesaid), the second respondents caused the two premies to be sold by public auction, (a) to the first respondent herein (in regard to the disputed property) and (b) to Chief Oresanya- the second defendant in Suit HCJ/16/71 aforementioned – in regard to the property known as 30 Isoku Street Ijebu-Ode. It was the sale of these properties by the second respondents herein that precipitated the action for declaratory judgments in Suit HCJ/16/71 earlier on mentioned in this judgment; and as was stated earlier on that action was lost by Ashiru, the vendor of the appellant, on the 19th day of June, 1972.

We think it is necessary, at this stage, to set out in detail, so far as it is necessary for the purpose of this appeal, that portion of the claims in Suit HCJ/16/71 which the High Court at Ijebu-Ode (Olu Ayoola, J.), dismissed; and these read:   “The plaintiff’s claims against the defendant jointly and severally are as follows :- ……… (3) a declaratory judgment that the deed of mortgage registered as No. 12 at Page 12 in Volume 1321 in the Lands Registry, Lagos in respect of the property situate at No. 46 Akpata Street, Shomolu purported to be executed by the plaintiff or on behalf of the plaintiff at Ijebu-Ode in favour of the first defendant (second respondent herein some time in 1970 or thereabout is irregular, null and void and of no effect on the grounds of (a) non est factum and or (b) that conditions precedent to the purported execution thereof were not complied with in law and in fact;  

(4) a declaratory judgment that any sale or disposition or alienation of the property described in the said Deed of Mortgage referred to in Claim 3 above made by the first defendant (second respondent herein) to the third defendant (first respondent herein) on or about the 6th March, 1971, is null and void and of no effect.” (Brackets and underlining supplied)   In that suit, the High Court at Ijebu-Ode rejected pursuant to its findings on the issue of facts in evidence before it and on its interpretation of the law in so far as the provisions of Section 22 of Cap. 44 (High Court Law Western Nigeria) and Order X rule 11 of Cap. 116 aforesaid were concerned, the contentions inter alia put forward on behalf of Ashiru that; (1) the provisions of Order X rule 11 of Judgments (Enforcement) Rule made under Cap. 116 being inconsistent with the provisions o Section 22 of the High Court Law Western Region Cap. 44 of the 1959 Edition of the Laws of Western Region of Nigeria “were repugnant and consequently void and of no effect”; (2) that the Registrar of the High Court could not validly execute the legal mortgage on behalf of Ashiru without (a) the latter first being given notice of the deed sought to be executed, (b) a prior demand by the Bank on the respondents to execute the same and (c) a prior order of the court made en banc for execution of the same by the Registrar.  

On appeal, however, to the Western State Court Appeal, that court (hereinafter referred to as ‘the Court of Appeal”) by a majority decision in the Appeal No. CAW/50/71 reversed the decision of Olu Ayoola, J., in HCJ/16/71. The Bank’s (the second respondents herein) appeal from the judgment of the Court of Appeal in CAW/50/91 was allowed by this court for detailed reasons given in our judgment in S.C. 92/76 and which we need not reproduce here. We would, however, like to observe in passing that the expression “the court” in Section 22 of Cap. 44 aforesaid must mean the court sitting en banc (being an expression used in an Act of Parliament, that is, a substantive statute, but that expression (i.e. “the court”) when used in ‘Rules’ made pursuant to an Act of Parliament or substantive statute) does not necessarily mean the court sitting en banc; it can, and quite often does mean, the Judge or the court sitting in Chambers and sometimes does mean a Master or the Registrar. (See Baker v. Oakes (1877) 2 QB 171 also para. 2004, of the White Book or the Annual Practice 1976, Volume, 2). the postiion, therefore, is that the decision of the High Court at Ijebu-Ode in HCJ/10/71 dated the 19th day of June, 1972, having been affirmed, is extant.  

PAGE| 6   In the case in hand, the appellant (as plaintiff) claims from the first and second respondents (as defendants) jointly and severally as follows:   “(1) a declaration of title in fee simple to a piece or parcel of land with the buildings at No. 46 Akpata Street, Shomolu, Lagos State which is the subject of a Deed of Conveyance dated 12th July, 1956, registered as No. 14 at Page 14 in Volume 149 of the Lands Registry, Ibadan and legally transferred to the plaintiff by a Deed of Transfer dated 23rd January, 1967 and registered as No. 36 at Page 36 in Volume 983 of the Lands Registry, Ibadan;   or in the alternative (2) a declaration that the purported public auction sale of the said piece or parcel of land with the buildings thereon, situate and being at No. 46 Akpata Street, Shomolu, Lagos State by the second defendant company to the first defendant on or about 6th March, 1971, at Shomolu, Lagos is wrongful, illegal, void and of no effect.”   We think it is necessary to set out certain paragraphs of the Statement of Claim; these read:- “(7) On 28th January, 1966, Adam Badejoko Ashiru sold the land in dispute to the plaintiff and thereafter conveyed the land with the completely burnt dilapidated house thereon to the plaintiff vide the Deed of Transfer dated 23rd January, 1967, and registered as No. 36 at Page 36 in Volume 983 in the Lands Registry, Ibadan. (8) Before the plaintiff purchased the land in dispute he made enquiries thereon, and discovered that there was no legal document registered against the property except a Memorandum of Deposit of Deeds to secure an advance in favour of the second defendant by the plaintiff’s vendor A. B. Ashiru. (9) On further enquiries from the said A. B. Ashiru, he exhibited to the plaintiff the correspondence between himself and the second defendants on the issues of the arson committed on the buildings on the land in dispute during the Western Nigeria political crisis and the subsequent decision to sell the land in dispute.    (10) Thereafter the plaintiff re-built the completely burnt down house at a cost of over £3000 between 1966 and 1967. (12) In or about 1971 the plaintiff saw some public auction notices pasted on his house on the land in dispute at the instance of the second defendant. (13) The plaintiff thereafter contacted his vendor – A. B. Ashiru . about the advertised sale of the land in dispute based upon a deed of legal mortgage in favour of second defendants dated 25th May, 1970 registered as No. 12 at Page 12 in Volume 1321 at the Lands Registry, Lagos. (15) Upon further inquiry, it was discovered that the second defendants without any application to the court and without any order of the court simply procured, by exchange of correspondence, a Mr. Bakare, Higher Registrar of the High Court Ijebu-Ode to execute the legal mortgage purporting same to be executed for and on behalf of Adam Badejoko Ashiru, on or about 17th March, 1970.” (Underlining supplied by the court).  

In their reply the second respondents referred to the court actions in J/18/63 decided by Oyemade, J., and HCJ/16/71 decided by Olu Ayoola, J., both of which were referred to earlier on in this judgment and pleaded, in portions of their Statement of Defence, thus:-   (16) The Bank will contend at the hearing that: (a) When the plaintiff made the inquiries referred to in paragraphs 8 and 9 of the Statement of Claim he knew (i) that his vendor had been taken to court in respect of the Memoranda; (ii) the nature of the claim and (iii) the terms of the ground of appeal to the Supreme Court. (b) the plaintiff is not a purchaser for value without notice; (c) the subsequent litigation by the vendor in respect of the land was at the instance of and with the knowledge and consent of the plaintiff; (d) the plaintiff is therefore estopped per rem judicatam by reason of the action referred to in paragraphs 13 and 14 hereof (N.B. these two paragraphs refer to the decisions in HCJ/16/71) (e) the vendor went through the purported sale to the plaintiff in fraud of the judgment creditor in Suit No. J/18/63 and Appeal No. S.C. 362/66 and the plaintiff purchased with full knowledge and all antecedent cloggs on the land; (f) the judgment in HCJ/16/71 is a judgment in rem as regards the status of the mortgage sale and concludes the matter for all time ……. and the plaintiff is estopped per rem judicatam from re-litigating the issue.”

More importantly, the first respondent in paragraph (5) of his Statement of Defence pleads thus:- “The defendant avers that the plaintiff well knew of the trial in Suit No. HCJ/16/71, between Mr. Ashiru referred to in the plaintiff’s Statement of Claim and the defendant in respect of the subject matter of this action, but did nothing and the defendant as against the plaintiff therefore pleads res judicata and will at the trial contend that the plaintiff is estopped by the judgment in the said suit from denying the defendant’s (meaning the first respondent’s) title to the property the subject matter of this action” (Brackets and underlining supplied by the court).  

In the course of his evidence the appellant testified that when he bought the house in 1966 there was a “partially burnt-out” building thereon and that he paid £200 to Ashiru for the land. In his Statement of Claim ,he pleaded that at the time of purchase of the property by him the dilapidated building thereon was “completely burnt”. Further, he stated that his solicitor told him, at the time of purchase of the property, that “the second defendant Bank was interested in the land” and that Ashiru his vendor had “borrowed £1,500 from the Bank and executed a Memorandum of Deposit in respect of the land”.

According to him, he had pulled down “the burnt-out” building on the land because, as he claimed, “it was valueless” to him and had had a completely new one erected thereon. He said he knew of the legal mortgage relating to the disputed property and advised Ashiru “to go to the bank and put the matters right”. Under cross examination the appellant admitted that the tenants who live on the disputed property have been paying rents to first respondent since June 1972. We pause, to observe that it is significant that Ashiru’s claim in HCJ/16/71 to avoid the sale of the disputed property to the first respondent by the second respondent was lost (i.e., dismissed) in June, 1972, and that these proceedings were initiated nearly a month after in July,1972.

In a reserved judgment the learned trial Judge reviewed the evidence on both sides and came to the conclusion that the appellant’s claims ought to be dismissed. In his view (1) the sale to the appellant by Ashiru was in fraud of Ashiru’s creditors (the Bank – the second respondents herein), and (2) in the alternative the learned Judge was of the view that the appellant was, by virtue of the doctrine of “estoppel by standing by”, estopped by the decision in HCJ/16/71 from contesting, or relitigating the issues as to the validity of the sale by the second respondents to the first respondent.

At this stage, we think that certain relevant parts of the judgment of the learned trial Judge should be reproduced, and these read:     

“While the appeal and cross appeal (i.e. in J/18/63) were pending Ashiru sold for £200 and conveyed the property to Adam Ogundiani, the plaintiff in the present proceedings . I shall return hereafter to this conveyance executed pendente lite by Ashiru in favour of the plaintiff who knew fully about the legal proceedings pending between Ashiru and the Bank. The cross-appeal succeeded. The bank was granted a decree of specific performance ..Ashiru who had already sold the property in dispute to the plaintiff in 1966 and conveyed it to him by Exhibit 2, instituted an action in Ijebu-Ode High Court, Suit No. HCJ/16/71 . On 19th June, 1972, Ayoola, J. dismissed Ashiru’s case after pronouncing in favour of the legal mortgage (in favour of the Bank) .. Chief F.R.A. Williams for the plaintiff had addressed some submissions to the court. The firsts is that Oyemade, J.’s judgment in J/18/63 left the title in Ashiru, and the plaintiff who bought before the “Supreme Court judgment should have the legal estate. I am afraid this submission over-simplifies the facts and the law. The plaintiff “testified that before he bought the property from Ashiru in 1966 he was aware of the action pending between the Bank and Ashiru (i.e. suit J/18/63).

He admitted that his solicitor, Oriyomi informed him that the Bank was interested in the property. He admitted that his solicitor who was acting for him in the matter (i. e. the transaction of sale of the property by Ashiru) informed him that Ashiru had borrowed £1,500 from the Bank and signed a Memorandum of Deposit in respect of the property (which he the plaintiff was about to buy). He and Ashiru belong to the same little town near Ijebu-Ode and so he knew what Ashiru was doing about the property. Although there was no settlement with the Bank the plaintiff bought the property for £200. He told the court that the building on the land had been destroyed.  

This would suggest that all he bought was vacant land. I am unable to accept this testimony. He said in cross-examination that he told the building inspectors that he was merely repairing the building. Of course, if that was not the position he would have needed a building plan (for the building allegedly put up by him on the land after the purchase). On the evidence before me I find it difficult to believe that the building on the land was destroyed. Ashiru was not called nor was Chief Okenla who reported the destruction to the police.

The plaintiff wilfully kept out of all the expensive litigation in which Ashiru had been involved since he sold the land to the plaintiff for £200. On the evidence before the court it is not easy to resist the “view that the sale and conveyance of the property to the plaintiff pendente lite were intended to defeat the execution of the judgment J/18/63 or to defeat the Bank as ashiru’s creditors.

The sale was obviously collusive; it was in fraud of the Bank. That was why the plaintiff did not bother to join (in) the actions of which the property was the subject matter although on his own testimony he knew about them all ……. I would therefore declare void Exhibit 2 (the conveyance from Ashiru to plaintiff, of the disputed property). The plaintiff will therefore not be entitled to a declaration that the sale    of the property by the Bank to first defendant was wrongful, void etc, ……….. If I am wrong in holding on the facts that the Bank then ……………… The present plaintiff knew about the case (i.e. HCJ/16/71). He was in court ………….. during the trial. He left Ashiru who had sold the property to him to fight the battl

Other Citation: (1978) LCN/2044(SC)