Alhaja K.F. Ibiyeye V. A.A. Fojule & Ors (2008)

LAWGLOBAL HUB Lead Judgment Report

G.A. OGUNTADE, JSC

The 1st respondent was the plaintiff at the Ilorin High Court of Kwara State where he instituted against the 2nd and 3rd respondents and appellant respectively as 1st, 2nd and 3rd defendants a suit claiming jointly and severally against them the following reliefs: “(a) A declaration that the plaintiff only owes the 1st defendant a maximum of N30,158.12k as at 31-12-92. (b) A declaration that the 1st defendant can only charge 6 per cent interest per annum on the N37,500.00 paid to the plaintiff. (c) The purported sale of the plaintiff’s property to the 3rd defendant is null and void as it is contrary to section 19 of the Auctioneers Law.” The parties filed and exchanged pleadings after which the suit was heard by Kawu J. At the trial, the plaintiff testified in support of his claim and tendered two documentary exhibits. He called one witness. The 1st and 2nd defendants called no evidence. The 3rd defendant (now appellant) testified on oath and tendered three exhibits. On 1-8-97, the trial judge in his judgment concluded in these words: “Section 19(1) of the Conveyance Act 1881 conferred on a mortgagee the statutory power of sale when the debt is due. This however can be done only after a notice in writing has been served on the mortgagor. See Darocha V. Hussain (1958) SCNLR 280 holding 7 at page 281. Exhibit D1 dated 4th September, 1990 is both a notice of demand and of intended sale by the 1st defendant to the plaintiff (in) compliance with the decision in Darocha’s case supra. I am satisfied that the 3rd defendant is a bona fide purchaser of property for value without notice. I accordingly hold that the sale to the 3rd defendant is not null and void as contended by the plaintiff. I also resolve this issue in the negative. All the declaratory reliefs brought by the plaintiff fail and are hereby dismissed.” PAGE| 2 The plaintiff was dissatisfied with the judgment of the trial court. He brought an appeal against it before the Court of Appeal, Ilorin Division (hereinafter called the ‘court below’). The court below in its judgment on 13-7-2000 allowed the appeal in part. Directly relevant to this appeal is the conclusion of the court below that the sale of the mortgaged property to the 3rd defendant (now appellant) by the 2nd defendant (now 3rd respondent) on the instruction of 1st respondent (now 2nd respondent) was null and void. The 3rd defendant before the court of trial to whom the property was sold was dissatisfied with the judgment of the court below. She has brought this appeal against the judgment. In the appellant’s brief filed, the issues for determination in the appeal were identified as the following: “(i) Whether the Court below was not in error when it held that the Conveyancing Law of Property Act 1881 (then a statute of general application in Kwara State) was not applicable as to length of notice of auction sale and that the applicable law was the Auctioneers’ Law. (ii) Whether non compliance with the provision of section 19 of the Auctioneers Law as to length of auction notice automatically renders the sale carried out by the 3rd respondent on behalf of the 2nd respondent in professed exercise of the latter’s power of sale as an unpaid mortgage invalid and void (iii) Whether the court below had any justifiable reason in law to have set aside the sale of the mortgaged property in issue to the appellant.” The 1st respondent in his brief raised one issue for determination. The solitary issue however is similar to the appellant’s second issue. Further, the 1st respondent in the said brief raised a preliminary objection to the appellant’s grounds of appeal nos. 1, 2 and 3. It was contended that those grounds although described as “Error in Law” were when considered along with the particulars supplied under each ground in fact grounds of mixed law and fact for which the appellant required the leave of this court or the court below in order to raise them validly. 1st respondent’s counsel relied on Nwadike & Ors. V. Ibekwe & Ors. (1987) 11-12 SCNJ 72 at 99 and Orakosim & 2 Ors. V. Menkiti (2001) 6 SCM169, (2001) F.W.L.R. (pt. 52) 2068 at 2079. This court was asked to strike out the appeal. I shall consider later in this judgment the preliminary objection raised by the appellant. The facts relevant to the questions of law to be considered in this appeal are virtually undisputed. The 1st respondent obtained a loan from the 2nd respondent. As a collateral security for the loan, the 1st respondent executed a deed of mortgage exhibit P1 in favour of 2nd respondent. The deed covered 1st respondent’s property at No. 21 Offa Road, Ilorin. Clause 10 of the deed of mortgage exhibit P1 confers the power of sale on the 2nd respondent in a clear language. The power of sale was to be exercisable if any of the following happened: “(a) Notice requiring the payment of the principal sum payable hereunder or part thereof has been served on the borrower and default has been made in payment of the sum demanded or part thereof for one calendar month after such service or PAGE| 3 (b) Some interest under these presents is in arrear and unpaid for one calendar month or (c) There has been a breach of some provisions contained in these presents and on the part of the borrower to be served and performed other than and besides the covenant for payment of the said principal sum and interest.” The 1st respondent defaulted in the payment of the mortgage loan. The 2nd respondent in writing asked the 1st respondent to redeem the mortgaged property by paying the outstanding sums. The demand notice was tendered in evidence as exhibit D1. Following 1st respondent’s inability to redeem the mortgaged property, the 2nd respondent instructed the 3rd respondent to sell the mortgaged property. Following a printed auction notice, the property was on 30/3/92 sold to the appellant. It was undisputed that the auction notice was pasted on the mortgaged property on 28/3/92 and the property sold on 30th March, 1992. In effect only 2 days notice was given of the public action. Now Section 19 of the Auctioneers Law Cap. 10 Laws of Northern Nigeria applicable in Kwara State provides: “No sale by auction of any land shall take place until after at Least seven days’ public notice thereof made at the principal town of the district in which the land is situated, and also at the place of the intended sale. The notice shall be made not only by printed or written documents, but also by beat of drum or such other method intelligible to uneducated persons as may be prescribed, or if not prescribed as the divisional officer of the district where such sale is to take place may direct, and shall state the name and place of residence of the seller” As against the above section 19 of Cap. 10, there is also the Law of Property Edict Cap. 128, Laws of Kwara State which became operative with effect from 15-8-91. Section 123 thereof provides: “123(1)A Mortgagee exercising the power of sale conferred by this Edict (Law) shall have power, by deed to transfer the property sold, for such interest therein as he is by this Edict (Law) authorized to sell or transfer or may be the subject of the mortgage, freed from all interests and rights to which the mortgage has priority, but subject to all interests and rights which have priority to the mortgage. (2) Where a transfer is made in exercise of the power of sale conferred by this Edict (Law) the title of the purchaser shall not be impeachable on the ground: (a) that no case has arisen to authorize the sale; (b) that due notice was not given; or (c) whether the mortgage was made before or after the commencement of this Edict (Law), that the power was otherwise improperly or irregularly exercised; PAGE| 4 (3) A transfer on sale by a Mortgage, made after the commencement of this Edict, (Law) shall be deemed to have been made in exercise of the power of sale conferred by this Edict (Law), unless a contrary intention appears.” (underlining mine) The straight issue in this appeal is – which of the two Kwara State Law above is applicable to the facts of this case. Whereas Section 19 Cap 10 provides that 7 days notice shall be given before a property is autioned, Section 123 of Cap 128 provides that the sale of a mortgaged property shall not be impeachable on the ground that due notice was not given. The court of trial took the view that since the appellant purchased the property in good faith for value and without notice, the fact that the notice of sale was less than the 7 days stipulated under the auctioneers Law would not render the sale invalid. The court below thought otherwise. The court below relied on Sunday Abigbite Taiwo V. Serah Adegboro & Ors. (1997) 11 NWLR (pt. 528) 224 to arrive at the conclusion that the sale was invalid. Another case relied on was Chief F. B. Oseni V. American International Insurance Company Ltd. (1985) 3 NWLR (pt. 11) 229. I shall pause here for a while. The next matter I like to consider is the preliminary objection to the 1st, 2nd and 3rd grounds of appeal. The said grounds read: “GROUND ONE ERROR IN LAW The lower court erred in law when it held, after referring to section 19 of the Auctioneers’ Law of Kwara State as follows ‘In my considered view, the provision is very clear and unambiguous. There is no lacuna in the provision to be filled by reference to any law. In that case, it is not permissible, also in my considered view, to refer to or to apply any ‘received law’ be it a statute of general application or whatever, in interpreting the provision. This is because the local law by its completeness supplanted any foreign law in that regard’ and this has occasioned a serious miscarriage of justice. Particulars of Error in Law (i) The subject matter under consideration is the law in relation to mortgages and the appropriate and only existing governing law is the Conveyancing Law of Property Act 1881, a statute of general application and thereby a received English Law. (ii) The Auctioneers’ Law governs sales by auction generally without any reference to sale in professed exercise of power of sale under a deed of mortgage. (iii) The Conveyancing Law of Property Act 1881 is the actual legislation applicable in the instant case. GROUND TWO ERROR IN LAW PAGE| 5 The Court of Appeal erred in law when it held as follows:- ……….. “it is my view that the purported sale of the mortgaged property to 3rd respondent is invalid because of non-compliance with the provisions of section 19 of the Auctioneers’ Law” and this has occasioned a grave miscarriage of justice. Particulars of Error in Law (i) The decision of the lower court is in utter disregard of section 21(2) of the Conveyancing Law of Property Act 1881 (a statute of General Application) which provides as follows: ‘Where a conveyancing is made in professed exercise of the power of sale conferred by this Act, title of the purchaser shall not be impeachable on the ground that no case had arisen to authorize the sale, or that the notice was not given, or that the power was otherwise improperly or irregularly exercised; but any person damnified by an unauthorized, or improper, or irregular exercise of the power shall have his remedy in damages against the person exercising the power.” (ii) The cases of Taiwo V. Adegboro & Ors. (1997) II NWLR (Pt. 528) 244 and Oseni V. All CO. LTD. (1985) 3 NWLR (Pt. II) 229 were decided under different circumstances, quite different from the one at hand. (iii) The Court of Appeal wrongly disregarded the Supreme Court decision on Okwonkwo V. C.C.B. (Nig.) Ltd. (1997) 5NWLR (Pt. 507) 58. (iv) Section 19 of the Auctioneers’ Law does not render invalid a sale carried out without the requisite length of Notice. (v) The only sanction for non compliance with section 19 of the Auctioneers’ Law is imposition of a fine on the defaulting auctioneers. (vi) Section 19 of the Auctioneers’ Law is not intended to defeat the title of a bona fide purchaser for value without notice. (vii) The 2nd respondent sold the mortgaged property through the 3rd respondent to the appellant in exercise of her power of sale under a Deed of Mortgage. (viii) The validity of the Deed of Mortgage was not called to question. GROUND THREE: ERROR IN LAW The Court of Appeal erred in law when it held that the sale of the Mortgaged Property to the appellant was invalid, even though the finding of the trial court that the appellant was a bona fide purchaser for value without notice was in no form reversed. Particulars of Error in Law PAGE| 6 (i) The finding of the court that the appellant was a bona fide purchaser for value without Notice was not made an issue before the Court of Appeal by the 1st respondent. (ii) Against the background of the unchallenged finding that the appellant was a bona fide purchaser for value without Notice the Court of Appeal ought to dismiss the appeal. (iii) The Court of Appeal erroneously disregarded the case of Oguehi V. Fed. Mortgage Bank of Nigeria (1990) 6 NWLR (Pt. 153) 330 cited before it which is a decision of the self same Court of Appeal. (iv) The bona fide of the purchaser in Taiwo Adegboro & Ors. (1997) 11 NWLR. (Pt.528) 224 relied upon by the lower court was seriously attacked.” Now in Ogbechie & Ors. V. Onochie & Ors. (1986) 1 NSCC 443 at 445, this Court per Eso JSC observed: “There is no doubt that it is always difficult to distinguish a ground of law from a ground of fact but what is required is to examine thoroughly the grounds of appeal in the case concerned to see whether the grounds reveal a misunderstanding by the lower tribunal of the law or a misapplication of the law to the facts already proved or admitted, in which case it would be question of law. Where however the grounds are such that would reveal or are grounds that would question the evaluation of facts by the lower tribunal before the application of the law, that would amount to question of mixed law and fact. The issue of pure fact is easier to determine.” See also on the point Nwadike & Ors. V. Ibekwe & Ors. (1987) 2 NSCC 1219 at 1235-1236. The appellant’s grounds of appeal have not in my view raised any issue of fact. Rather, it is simply necessary to determine whether the ascertained or undisputed facts are to be considered under section 19 of Cap. 10 or under section 123 of Cap. 128. The simple question is which of the two laws apply to the facts as found. Indeed the court below at page 156 of the record recognized that the facts are not in dispute when it said: “I observe that the lower court however, in its wisdom found as follows:- ‘I hold that the auction notice was given to the plaintiff on 28/3/92 ………..’ I also hold that the auction sale took place on 30/3/92. There is no cross appeal against the above findings of the lower court. They are deemed therefore to have been correctly made. The respondents are also deemed to have accepted the findings. This court will not interfere with the findings.” I therefore overrule the preliminary objection. As I observed earlier, the main issue in the appeal is the determination of the applicable law. Happily, the matter falls within an area of jurisprudence in which this court has made a declaration of the law applicable in a situation such as this. I am bound by these judicial authorities which are Okwonkwo V. C.C.B (2003) 8 NWLR (Pt. 822) 347 (2003) 4 SCM 76, and A.C.B. Ltd. V. Ihekwoaba (2003) 16 NWLR (Pt. 846) 249, (2003) 10 SCM 53. PAGE| 7 Now in Okwonkwo V. C.C.B. (Nig.) Plc (2003) 8 NWLR (Pt. 822)347 at pp. 388-389, this court per Uwaifo JSC observed: “However, there are certain acts which will affect the proper conduct of an auction sale. These are improper or fraudulent acts which are likely to prevent the property put up from realizing its fair value. Collusion or want of good faith is an obvious one: See Haddington Island Quarry Co. Ltd. V. Huson (1911) AC 722 at 727; Eka-Eteh V. Nigerian Housing Development Soceity Ltd. (1973) 6 SC. 183 at 198. It is also recognized as another, any act which is likely to ‘chill’ the sale, for example, the solicitor in a cause in which property is sold bidding for it: see Nelthorpe V. Pennyman 14 Ves. 517; 33 E.R 619 per Lord Eldon L.C. who said: ‘It would be a very wholesome rule to lay down, that the solicitor in the cause should have nothing to do with the sale; as the certain effect of abiding by the solicitor in the cause is, that the sale is immediately chilled’. See also Mason V. Armitage (1806) 13 Ves. 25; 13 E.R. 204 at 208. as Lord Mansfied said in Bexwell V. Christie (1776) 1 Cowp. 395 at 396; 98 ER. 1150: ‘The basis of all dealings ought to be good faith; so, more especially in these transactions, where the public are brought together upon a confidence that the articles set up to sale will be disposed of to the highest real bidder.’ I have held that section 19 of the auctioneers’ Law was not complied with. The effect of this would have been perhaps that an important condition for, what I might call, a popular auction sale not having been met, the sale would be held invalid. But a provision of another statute, section 21(1) of the Conveyancing Act, 1881 applicable in Abia State, has interplayed with section 19 of the Auctioneers’ Law. It provides: ‘Where a conveyance is made in professed exercise of the power of sale conferred by this Act the title of the purchaser shall not be impeached on the ground that no case has arisen to authorize the sale, or that due notice was not given or that the power was otherwise improperly or irregularly exercised, but any person damnified by all unauthorised or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power.’ This is obviously to protect a bona fide purchaser who merely purchased under irregular circumstances as no purchaser who is tainted with fraud or collusion cannot be expected to benefit from this provision. Equity will intervene since as said by Sir Lloyd Kenyon M.R. in Twining V. Morrice (1788) 29 E.R. 182 at 184. ‘It is not every contract which is entered into that a court of equity will carry into execution.’ In Sanusi V. Daniel (1956) SCNLR 288, the Federal Supreme Court per Jibowu Ag. FCJ, after considering section 21(2) of the Conveyancing Act in almost similar situation as this case observed at page 291 thus: ‘The appellant’s complaint is against an irregular exercise of the power of sale on the ground that there was a contravention of section 19(1) of the Sales by Action Ordinance. It seems to me that the title of the 2nd respondent cannot be impeached since the property was conveyed to him, and that the appellant’s remedy is in damages against the 1st respondent as provided by section 21(2) of the Conveyancing Act, 1881,’ PAGE| 8 Section 19(1) of the Sales by Auction Ordinance is in pari materia with section 19(1) of the Auctioneers’ Law. The property in question has been duly conveyed to the 3rd respondent following the auction sale. Nothing has been shown to have been done by her to attract the intervention of equity to deny her the right to the property.” This Court in A.C.B. Ltd. V. Ihekwoaba (supra) made observations similar to the above. It is obvious that the 2nd and 3rd respondents had not given the requisite notice for auction sale conducted on the 1st respondent’s property. This was a clear infraction of section 19 of Cap. 10 Laws of Northern Nigeria. However, the appellant in my view derives adequate protection from under section 123, it being shown that she was a purchaser for value without notice who bought in good faith. She therefore acquired a valid title to the property. In the final conclusion, this appeal succeeds. It is allowed. The judgment of the court below is set aside and the judgment of the trial court is restored. The appellant is entitled to costs in the court below and this court, which are fixed at N5,000.00 and N10,000.00 respectively against the 1st respondent.

SC. 199/2001