Atiba Iyalamu Savings & Loans Limited V. Mr. Sidiku Ajala Suberu & Anor (2018)

LAWGLOBAL HUB Lead Judgment Report

KUDIRAT MOTONMORI OLATOKUNBO KEKERE-EKUN, J.S.C.

The 1st respondent herein (plaintiff at the trial Court), as the owner of a business centre known as Amusement International Guest House Ltd., on 10th September 1996, secured a loan of N600,000.00 from the appellant. The facility was secured with his landed property situate at No. 11, Adamu Road, Off Taiwo Road, Ilorin, covered by a statutory Right of occupancy No. KW 7052. The parties duly executed a deed of mortgage wherein it was stipulated that the interest on the loan shall be per annum. It was the 1st respondent’s contention that not only had he repaid a total sum of N826,476.00 to the 1st respondent, he had in fact made an overpayment of N179,905.00 between October 1998 and March 1999. He set out in his pleadings the schedule of repayments. It was also the appellant’s contention that although the parties originally agreed that the loan would be repaid within one year, it was later agreed that the repayment would be extended beyond one year. The 1st respondent’s case was that notwithstanding fully liquidating the loan with the accrued interest,

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the appellant and the 2nd respondent sought to auction the mortgaged property by virtue of an auction notice published in the Tribune Newspaper of 2/2/1999. It was also the 1st respondent’s contention that notwithstanding an order for injunction obtained by him and served on the appellant and 2nd respondent on 9/3/1999, the 2nd respondent pasted an auction notice on the property on the instruction of the appellant.

By paragraph 18 of his Further Amended Statement of Claim dated 31/01/2003, which was deemed properly filed and served on 30/4/2003, the 1st respondent (as plaintiff) sought the following reliefs against the appellant and 2nd respondent (the auctioneer):

“Whereof the plaintiffs claims against the defendants as follows:

1. A declaration that the notice of sale by auction contained in the Nigerian Tribune Newspaper of 2/2/99 and the notice of sale by auction pasted on 11/3/99 are null and void.

PARTICULARS

(i) The two notices contravene the auctioneers Law.

(ii) Auction notice was pasted on plaintiffs building after a Court Order.

2. A declaration that the defendants are not entitled to auction the building of

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the plaintiff who does not owe the 1st defendant.

3. A declaration that non-disclosure of the plaintiffs statement of account and non-demand of a correct outstanding debt does not entitle the defendants to auction the plaintiff’s property.
4. A declaration that under the Money Lenders Law, the 1st defendant is not entitled to charge excessive interests on loans.
5. An injunction restraining the defendants, their agents, servant or privies from auctioning, selling or doing anything whatsoever with the said plaintiff’s landed property situate at No. 11 Adamu Road Off Taiwo Road, Ilorin.
6. An order that the defendant should refund to the plaintiff the overpayment N179,805.00 paid by him to the 1st defendant.
7. An order that the 1st defendant should release to the plaintiff his Certificate of Occupancy (C of O) No. KW 7052.”

The appellant filed an Amended Statement of Defence and counter claim wherein it was averred that the terms of the agreement for the credit facility were contained in a letter dated 10th September 1996 and that the 1st respondent accepted all the terms pursuant to which the facility was fully disbursed to him

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between 10th September 1996 and 28th October 1996. It was also its contention that the said terms included interest on the loan at the rate of 3% per month, service charge and all other legitimate dues as approved by the controlling authority and that the loan and charges were to be fully liquidated within 12 months. It was the further contention of the appellant that the sum of N80,661.99 paid by the 1st respondent on 28/10/1996 was in respect of a different facility. That as at 30th November 2000, the 1st respondent’s indebtedness to it stood at N861,110.00 and had risen to N1,466,802.00 by 31st May 2002. It was the appellant’s contention that the 1st respondent never disputed the amount of his indebtedness as stated in demand notices sent to him and that at a point in time, through his solicitors, he not only admitted his indebtedness but undertook to liquidate same by installment payments of N1,700.00 per day. It also asserted that the total amount of the loan re-paid by the 1st respondent is N655,550.00 only.

By paragraphs 33-37 of its pleading, the appellant/1st defendant counter claimed as follows:

i. The 1st defendant avers that as at

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31st May, 2002 the plaintiffs indebtedness to her stood at N1,466,802.00 made up of the loan interest and other charges.

ii. The 1st defendant avers that the agreed period for the total repayment of this loan and all dues was twelve months from 10th September, 1996, which period has lapsed several times over.

iii. The 1st defendant will also rely on the plaintiffs several admissions of his indebtedness to her, and several undertakings, albeit unfulfilled, to settle the outstanding indebtedness and the many repeated demands.

iv. WHEREOF the 1st defendant claims against the plaintiff the sum of N1,466,802.00 as 3% interest rate per month from 31st May, 2002 until the amount is totally liquidated.”

The 2nd respondent (as 2nd defendant) also filed a statement of Defence wherein he pleaded that he does not bear the name I.K. Ayinde, the name in which he was sued, but Lere Arinde. He also averred that the auction notice was pasted before the order of injunction was made and that once served with the order, he suspended the auction.

The 1st respondent filed a Reply to the 2nd respondent’s statement of defence.

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At the trial, the parties testified in line with their pleadings. At the conclusion of the trial, the learned trial Judge dismissed the 1st respondent’s suit, except the claim that the notice of auction was unlawful, and granted the appellant’s counter claim. Being dissatisfied with the decision, the 1st respondent appealed to the lower Court. In a considered judgment delivered on 12/3/2007, the Court allowed the appeal, granted the 1st respondent’s claims and dismissed the appellant’s counter claim.

It was the appellant’s turn to be aggrieved and it accordingly filed a notice of appeal dated 11/4/2007 containing 5 grounds of appeal. The appellant subsequently sought leave to raise a fresh issue by filing an additional ground of appeal. It also sought leave to amend its Notice of Appeal and appellant’s brief accordingly. On 8/1/2018, the appellant’s Amended Notice of Appeal containing 7 grounds of appeal and its Amended Brief of Argument were deemed duly filed and served. The 1st respondent’s Amended Brief of Argument and the appellant’s Reply Brief were also deemed properly filed and served the same day.

At the hearing of the appeal on 8/1/2018, T.A.B.

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Oladipo Esq. leading Jude Ezea Esq., adopted and relied on the Amended Appellant’s brief and appellant’s Reply brief deemed filed on 8/1/2018 in urging the Court to allow the appeal. Adeola Omotunde Esq. adopted and relied on the 1st respondent’s brief deemed filed on 8/1/2018 in urging the Court to dismiss the appeal. J.S. Muhammad Esq. for the 2nd respondent did not file any brief and had nothing to urge on the Court.

Six issues have been formulated for the determination of this appeal in the appellant’s brief. They are:

1. Whether the terms of the written offer, Exhibit D1, accepted absolutely and unconditionally by the 1st respondent on the basis of which appellant fully performed the contract for loan can without such an intendment be overidden by a Deed of Legal Mortgage, Exhibit D2, collateral to the primary agreement, not in existence at the time of appellants performance and the purpose of which is merely to secure the loan.
2. Whether the Court of Appeal is vested with the jurisdiction to suo motu raise the issue of excessive usurious and illegal” interest rate not raised by parties and without citing any law, regulation or guideline

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which the interest rate contravened resolved the issue in favour of 1st respondent.

3. Whether the Court of Appeal was not in error in its casual holding that there is no evidence to back up the appellant’s counter-claim without considering in the slightest regard the evidence painstakingly evaluated and believed by the trial Court.
4. Whether the Court of Appeal was justified on the evidence in its holding that the action of the appellant is condemnable and bad in law in pasting an auction notice on the mortgaged property.
5. Whether the 1st respondent proved any overpayment on his loan and dues on it to warrant the Court of Appeal’s Order for a refund of the sum of N179,805,00 to him by the appellant.
6. Whether the 1st respondents Further and Better Amended Statement of Claim discloses any Reasonable cause of Action against the appellant.

The 1st respondent also distilled six issues for determination as follows:

1. Which of the loan contracts is binding between the parties The one dated 04/10/1996 (Mortgage Deed) bearing 21% interest per annum and signed by both parties or the appellant’s letter of offer dated

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10/09/1996 carrying 3% interest per month and also signed by both parties. (Ground 1)

2. Whether the repayment of N826,426 to the appellant, the 1st respondent was still indebted to the appellant to warrant the auctioning of his property under the Mortgage Deed Exhibit D2. (Ground 4)
3. Whether the Court of Appeal rightly dismissed the appellant’s counter claim against the 1st respondent. (Ground 3)
4. Whether the respondent overpaid the appellant’s loan. And if so, whether he is entitled to a refund. (Ground 5)
5. Whether the Court of Appeal is not in order in holding that the interest rate of 3% per month is excessive, usurious and illegal in the circumstances. (Ground 2)
6. Considering the totality of this case, whether the 1st respondent through his Further and Better Amended Statement of Claim did not disclose a reasonable cause of action at the trial Court. (Ground 7)

The issues raised by the parties are similar. I shall therefore resolve this appeal on the issues formulated by the appellant. A cursory look at Issues 2 and 4, to my mind, reveals that learned counsel for the appellant is attacking comments made in passing by

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the learned Justices of the lower Court and not the ratio decidendi of the case. The ratio decidendi of a case is the principle or rule of law upon which a Court’s decision is founded. See: A.I.C Ltd Vs. NNPC (2005) 11 NWLR (Pt. 937) 563; Ajibola vs. Ajadi (2004) 14 NWLR (Pt. 892) 14. Where, in the course of determining a cause or matter, a Judge expresses an opinion, which does not decide the live issue in the matter, it is said to be an obiter dictum. It cannot form the basis of a ground of appeal, as an appeal only lies against decisions of the Court. See: Kayode Babarinde & Ors. vs The State (2014) 3 NWLR (Pt. 1395) 568; (2014) LPELR- 21896 (SC) @ 62 63 D A; NDP vs. INEC (2012) LPELR 19722 (SC) 33 35 C A; Abacha vs. Fawehinmi (2000) 6 NWLR (Pt. 660) 228 @ 351.

The issue before the lower Court was whether the interest rate applicable to the transaction between the parties was 3% per month as per Exhibit D1 or 21% per annum as per Exhibit D2. In resolving the issue, the learned Justice of the Court below who wrote the lead judgment opined thus at page 363 of the record:

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Assuming without necessarily conceding that this Court should accept 3% per month to be applicable interest rate as contained in Exhibit D1 it would still be considered as excessive, usurious and therefore illegal since it contravened the applicable interest rate allowed by the Central Bank of Nigeria at the time the contract was entered into.” (Underlining mine for emphasis)

Thereafter, His Lordship considered the issue and resolved that the applicable interest was as contained in Exhibit D1. The expression “assuming without necessarily conceding …” clearly shows that at that stage, the Court had not reached a decision on the point. His Lordship merely paused, so to speak to express an opinion before resolving the matter. Not being a decision that is appealable, I hold that issue 2 is incompetent. It is hereby struck out. In Issue 4, the appellant complains that the lower Court was unjustified to have held that “the action of the appellant is condemnable and bad in law in pasting an auction notice on the mortgaged property.” Issue 4 is predicated upon Ground 4 of the Amended Notice of Appeal. Particulars (i) and (iii) thereunder are instructive. They state:

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(i) This purely sentimental venom has no basis in law and it is unfortunate;

(iii) The auction notice, which the Court of Appeal purported to cancel was not a prayer before it as the trial Court granted that relief.

Thus, even on the appellant’s own showing, not only was the issue not one of the issues submitted to the lower Court for determination, the trial Court had already granted the 1st respondent’s relief by setting aside the auction notice and there was no appeal against that aspect of the judgment. The statement complained of was merely an opinion expressed by the Court in the concluding part of the judgment, which was of no legal significance since the auction notice had already been set aside by the trial Court. I hold that issue 4 is also incompetent. It is accordingly struck out.

We are now left with Issues 1, 3, 5 and 6, which are hereby renumbered 1, 2, 3 and 4.

Issue 1

Whether the terms of the written offer, Exhibit D1, accepted absolutely and unconditionally by the 1st respondent on the basis of which appellant fully performed the contract for loan can without such an intendment be overridden by a Deed of Legal

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Mortgage, Exhibit D2, collateral to the primary agreement, not in existence at the time of appellant’s performance and the purpose of which is merely to secure the loan.

It is the submission of learned counsel for the appellant that a contract comes into existence where there is consensus ad idem between the parties as to offer and acceptance. He argued that Exhibit D1 represents the appellant’s offer to the respondent, which the 1st respondent accepted unconditionally by his endorsement thereon and is therefore bound by all its terms. He submitted that in addition, by Exhibit P1 he reiterated his absolute unconditional acceptance of the terms in Exhibit D1 and his commitment to its performance. He referred to the terms as contained in Exhibit D1, which were accepted by the 1st respondent, which are reproduced at pages 235 – 236 of the record. He submitted that Exhibit D1 contains all the terms of the contract between the parties including the interest rate at 3% per month. He submitted that although one of the terms of Exhibit D1 is that the interest rate is subject to change, the change contemplated did not envisage the deed of legal mortgage.

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He referred to paragraph 5 of Exhibit Q, an affidavit sworn to by the 1st respondent on 25/2/1999 at page 24 of the record after the execution of the mortgage deed, where he confirmed that the interest rate was 3% per month and that no other interest rate had been communicated to him. Learned counsel submitted that the 1st respondent’s case was predicated on an interest rate of 3% per month and not 21% per annum. He submitted that the Court is not permitted to make a contract for parties and that where the language and intent of a contract are apparent, the Court must not distort its meaning. He referred to Olatunde Vs Obafemi Awolowo University & Anor. (1998) 4 SCNJ 59 @ 74 – 75 and Layade Vs Panalpina World Transport (Nig) Ltd, (1996) 7 SCNJ 11; (1996) 6 NWLR (Pt.456) 544. He submitted that since both parties understood the applicable interest rate to be 3% per month, it was wrong of the lower Court to have discountenanced the concurrence of the parties on the issue and hold that the interest rate of 21% per annum as contained in the mortgage deed prevails. He submitted that the 1st respondent is bound by the admission he made in Exhibit Q.

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Learned counsel argued that it was wrong for the learned Justices of the lower Court to have held that the terms of the deed of legal mortgage, Exhibit D2 supersede the terms of Exhibit D1. He argued that a deed of legal mortgage is a collateral agreement, which is meant solely to secure the appellant’s financial exposure to the 1st respondent and to ensure that it is in a position to recover the whole or at least part of the loan in the event of default. He submitted that clause 2 of Exhibit D1 stipulated clearly that the loan shall be secured by a legal mortgage on the 1st respondent’s hotel. He submitted that without a clear statement to that effect, the deed of legal mortgage cannot override the primary contract document, which is Exhibit D1. He referred to Olatunde Vs Obafemi Awolowo University & Anor. (supra). He noted that the loan of N600,000.00 was disbursed to the 1st respondent between 10/9/96 and 28/9/96 before the execution of the mortgage deed on 4/10/96. He contended that if it was understood by the parties that the contract was conditional until the execution of the mortgage deed, the funds would not have been disbursed to the 1st respondent prior

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to the execution of the deed. Learned counsel also rejected the view of the lower Court that by executing Exhibit D2 it had waived the 3% per month interest rate and adopted 21% pet annum. He submitted that any such waiver would have been communicated to the 1st respondent. He submitted that the 1st respondent re-affirmed in Exhibit Q that the only interest rate communicated to him was 3% per annum. He maintained that the Court below had no basis for setting aside the judgment of the trial Court on the issue.

In response, learned counsel for the 1st respondent urged this Court to hold that the binding contract between the parties is as contained in Exhibit D2. Learned counsel reproduced the appellant’s letter of offer, which contains six terms or conditions. He submitted that where there are conditions attached to an offer, its acceptance only means that a contract would be entered into upon fulfillment of the terms. He submitted that Exhibit D1 is a conditional contract, which was intended to crystallize into Exhibit D2. He submitted that Exhibit D2 is the contract eventually entered into between the parties and therefore the binding interest rate is

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21% per annum. He referred to Clauses 2 and 6 of Exhibit D1 where it was stipulated that the loan was to be secured by a legal mortgage and that the interest rate stated therein was subject to change. He noted the following words in the last two paragraphs of Exhibit D1:

“Please you must accept the offer by signing and returning the acceptance copy within 7 days or it will lapse.

Similarly, all the conditions must be fully carried out or this offer can be withdrawn.”

He submitted that the extract shows that Exhibit D1 is a conditional contract, On what constitutes a conditional contract, he referred to Tsokwa Oil C. Vs Bank of the North (2002) 5 SCNJ 176 and NBCI Vs Integrated Gas Ltd., a Court of Appeal decision cited with approval in Tsokwa Oil (supra). In further support of his contention that Exhibit D2 is the binding agreement between the parties, he drew the Court’s attention to the fact that while Exhibit D2 contains the company’s seal, Exhibit D1 does not.

With regard to the alleged admission in Exhibit Q, learned counsel submitted that it is on record that the 1st respondent complained at the trial Court that after signing Exhibit D2,

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he was never given a copy and despite repeated demands, the appellant refused to do so until so ordered by the Court on 10/7/2002. Thus the 1st respondent only became aware of the 21% interest rate when he received a copy of Exhibit D2.

Alternatively, he submitted that even if this Court were to hold that Exhibit D1 is a binding contract, the said contract has been varied by the execution of Exhibit D2, which stipulates an interest rate of 21% Per annum.

It is trite, as rightly submitted by learned counsel for the appellant, that for there to be a binding contract between parties, they must be in consensus ad idem with regard to the essential terms and conditions thereof. The parties must intend to create legal relations and the promise of each party in a simple contract, not under seal, must be supported by consideration. There must be a concluded bargain which has settled all essential conditions that are necessary to be settled and leaves no vital term or condition unsettled. See: Alfotrin Ltd. Vs A.G. Federation & Anor. (1996) 9 NWLR (pt.475) 634 @ 656 H; Dangote Gen. ile Products Ltd. & Ors. vs. Hascon Associates Nig. Ltd. &

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Anor. (2013) 12 SCNJ 456; Akinyemi Vs Odua Investment Co. Ltd. (2012) 1 SCNJ 127: Bilante International Ltd. Vs N.D.LC. (2011) 15 NWLR (pt.1270) 407 @ 423 C F; BPS Construction & Engineering Co. Ltd. vs. F.C.D.A (2017) 1 SC (Pt. II) 125 @ 146 148.

It is equally settled that where a contract is made subject to the fulfillment of specific terms and conditions, the contract is not formed and not binding unless and until those terms and conditions are fulfilled. See:Tsokwa Oil Marketing Co. Vs B.O.N Ltd. (2002) 11 NWLR (Pt. 777) 163; Best (Nig) Ltd vs. Blackwood Hodge (Nig) Ltd. (2011) 5 NWLR (Pt. 12239) 95. I shall now examine the terms and conditions contained in Exhibit D1, which are as follows:

10th September, 1996

S.A. Suberu (Mr)

Amusement Guest House

Adamu Road,

IIorin,

Kwara State

LETTER OF OFFER NO. 4013020203

We are happy to inform you that a Mortgage Loan of N600,000.00 (Six Hundred Thousand Naira Only) repayable within 12 (twelve) months at 3% per month has been granted to you. Thus the loan is approved subject to the under listed conditions:

1. Your understanding that

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the loan is required to be spent to renovate your Hotel (Amusement Guest House).

2. Your understanding that the loan will be secured with legal mortgage on your Hotel as per Deed of Mortgage executed by you.
3. Effective maturity date 10th September, 1996 to 9th September 1997.
4. Your paying a management fee of N9,000.00 i.e. 2.5%.
5. Your understanding that the repayment of both the principal and the interest shall be on 12 equal installments i.e N50,000,00 plus interest every month.
6. Your understanding that the current interest rate is subject to change.
7. Your understanding that a penalty of 3% per month will be charged on your loan account to redeem it fully when due.
8. Your understanding that the loan is being released through your Bank Account No. 6005096601.

Please, you must accept this offer by signing and returning the acceptance copy within 7 days [or] it will lapse. Similarly, all the conditions must be fully carried out or this offer can be withdrawn.

Yours faithfully,

ATIBA IYALAMU SAVINGS & LOANS Ltd.

T.O. ADEBOYE

Managing Director”

(Underlining mine)

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It is clear from the underlined portions of Exhibit D1 that the offer was conditional. It was contingent upon the happening of certain events. The first paragraph states that the loan is approved “subject to the underlisted conditions .” The 1st respondent was also reminded in the last paragraph that failure to fulfill all the conditions would result in the withdrawal of the offer. These are the terms the 1st respondent agreed to by endorsing his acceptance on the letter of offer. Thus, while there were still conditions to be fulfilled, the contract was inchoate. See: Best (Nig) Ltd vs. Blackwood Hodge (Nig) Ltd. (supra). There are two significant conditions in Exhibit D1 that are relevant to this appeal. The first is the condition that the 1st respondent must secure the loan with a legal mortgage on the hotel for which the funds were sought. Thus, the offer remained conditional until the mortgage deed was executed. Secondly it was clearly stated that the current interest rate was subject to change. Now, Exhibit D2, the mortgage deed executed by the parties on 4th October, 1996 sets out the terms of the loan agreement between them. It clearly stipulates

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that interest on the loan shall be at the rate of 21% per annum. The Court below, at pages 362 – 363 of the record, per Muntaka Coomassie, JCA (as he then was, now of blessed memory) held thus:

“I think it is safe for me to state that it is not in doubt that in Exhibit D1, some conditions were distinctly listed to be fulfilled before the transaction between the parties could become a valid one of which is the execution of a Deed of Mortgage. Consequently, Exhibit D2 was made in line with that stance. At this juncture it may not be out of place to attempt to know what is in fact a Mortgage. In Strouds Judicial Dictionary 5th Ed. at p. 1632, Mortgage was defined as follows:

A Mortgage is a conveyance of land or an assignment of chattels as security for the payment of a debt or the discharge of some other obligation for which it is given the security is redeemable on the payment or discharge of such debt or obligation any provision to the contrary notwithstanding

As a necessity, a Mortgage must state the debt being secured and the conditions for the facility, i.e. the rate of interest as it is in the case at

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hand. In the instant case a Deed of Legal Mortgage was prepared, executed by the parties and registered with the appropriate government authorities. With tremendous respect to both the trial judge and the learned counsel to the respondent that Deed of Legal Mortgage is binding on the parties and its provisions override that of Exhibit D7 which is a mere letter of offer. I therefore have no hesitation in holding that 3% per month cannot be applicable in this case instead 21% interest per annum that is applicable in this transaction. The 1st issue was resolved in favour of the appellant, that is to say the 21% interest rate per annum is binding on the parties.

In her concurring judgment, particularly at pages 373 – 374 of the record, Ogunwumiju, JCA, after examining the decision of this Court in U.B.N vs. Ozigi (1994) 3 NWLR (Pt. 333) 385 @ 400 per Adio, JSC, held as follows:

“… I cannot agree with the learned trial Judge that the initial preliminary agreement contained in Exhibit D7 determines the rights and liabilities of the parties. He seemed to regard Exhibit D1 the deed of legal mortgage as a collateral document drawn up merely for the

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purpose of providing additional security for the repayment of the loan. With the greatest respect that is not the position of the law. The current position is that all ancillary and preliminary agreements during negotiations both oral and in writing which are inconsistent with the provisions of the final and ultimately binding agreements are null and cannot be used to contradict the legally binding agreement it would be absurd to reduce a deed of legal mortgage duly executed by parties to the status of a collateral and thus insignificant document. I hold without hesitation that Exhibit D2 is binding on the parties and thus the 21% interest rate per annum is binding on the parties.”

Their Lordships’ reasoning is sound and cannot be faulted. I agree with the Court below that Exhibit D2 supersedes Exhibit D1. Having affixed its seal to Exhibit D2 and registered same with the relevant authorities, the appellant cannot resile from the fact that the applicable interest was 21% per annum as clearly stated therein. This issue is accordingly resolved against the appellant.

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Issue 2

Whether the Court of Appeal was not in error in its casual holding that there is no evidence to back up the appellant’s counter claim without considering in the slightest regard the evidence painstakingly evaluated and believed by the trial Court.

Learned counsel for the appellant submitted, relying on Mufutau Bakare Vs The State (1987) 3 SCNJ 1 and Igbanude Vs Emmanuel Ogba & Ors. (1987) 3 SCNJ 82, that the evaluation of evidence, the credibility of witnesses and the conclusions drawn therefrom both of fact and of law are within the exclusive competence of the trial Judge who saw, heard and believed the witnesses and that an appellate Court would only interfere with the Court’s decision where it is shown to be perverse. He submitted that evidence of a party, which supports the case of his adversary is admissible evidence and must be accepted as the truth of what is stated. He relied on: Okoya Vs Santili (1994) 4 SCNJ 333 @ 364. Referring to several paragraphs of the 1st respondent’s affidavit in support of his application for injunction (Exhibit Q), filed along with the writ of summons, he submitted that the 1st respondent admitted that he had not fully discharged the principal loan and that he had not made any

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payments towards discharging his indebtedness since the inception of the suit. He argued that with the admission, the burden on the appellant of proving the actual amount owed was lightened. He referred to the 1st respondent’s evidence under cross-examination at pages 178 – 179 and 180 of the record and contended that the 1st respondent failed to establish that the payments he allegedly made were in respect of the loan he took on account no. 6005090601 and not in respect of any other account kept with the appellant. He submitted that the 1st respondent did not challenge the letters of demand (Exhibits D9, D10, and D11) or his indebtedness stated therein and in fact fully admitted the sums quoted in Exhibits D13 and D14. He noted that he did not refute the sum of N558,485.00 claimed by the appellant in Exhibit D11 dated 4th August 1998 and that in response to Exhibits D13 and D14, he not only admitted his indebtedness but also gave an undertaking to pay by daily installments of N1,700. He also referred to Exhibit D12, written to the appellant by a firm of chartered accountants retained by the 1st respondent wherein the appellant was prevailed upon to accept the offer of

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payment by installments. He also submitted that PW1, the chartered accountant who testified on behalf of the 1st respondent stated that the interest rate known to him was 3% per month. He submitted that the said witness also conceded that the tellers tendered by the 1st respondent bore different account numbers and that if the ones with different numbers are deducted from those relating to account number 6005096601, the outstanding amount would be different from what he stated in his evidence.

Learned counsel submitted that the evidence shows that the 1st respondent is still indebted to the appellant and that he lumped tellers from a different account with the ones relating to the account in issue in order to falsely claim that he had liquidated his indebtedness in full. He submitted that as at May 2002, his indebtedness stood at N1,466,862.00 calculated at the rate of 3% per month. He contended that the learned trial Judge was right when he held that as at 4th August 1998, the 1st respondent was indebted to the appellant, at least in the sum of N558,485.00, based on admission and in the absence of any other payment since then. He urged the Court to

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hold that the appellant proved its counter claim.

Replying, learned counsel for the respondent submitted that the learned trial Judge at page 256 lines 9 – 12 of the record, rejected the appellant’s counter claim and held thus:

“the Court has no concrete and convincing evidence of how the 1st defendant came to the conclusion that the plaintiff was owing up to N1, 466, 802.00 at 3% per month as at 31st May 2002,”

and then surprisingly turned around at lines 19 – 25 to hold as follows:

“on the counter claim therefore, the Court finds that the 1st defendant can only recover on the plaintiff’s account with her No. 6005096607, the sum of N558,485.00 as at the 4th August, 1998 at the rate of 3% interest per month until the date this judgment is delivered and thereafter at the rate of 10% per annum until the judgment amount is totally liquidated.”

He noted that the appellant claimed the sum of N1,466, 802.00 only in its counter claim and that its rejection by the learned trial Judge includes the rejection of N558,485.00. He noted that the counter claim was for N1,466,802.00 made up of loan interest and other charges and that there was no

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basis for the award of N558,485.00, which did not specify whether what was awarded was the principal, interest or other charges.

He submitted that a counter claim is an independent action, and although it can be taken together with the main claim, it must be proved in the same manner required of a plaintiff in any civil claim i.e. it must be proved upon a preponderance of evidence. He referred to Narindex Ltd. Vs N.I.M.B. (2001) 4 SCNJ 208. He noted that in the course of its judgment, the trial Court made observations regarding Exhibits D7 and D8, the statements of account of the 1st respondent, tendered by the appellant, to the effect that the manner in which the appellant’s indebtedness was calculated was not clear. He referred to page 255 lines 28 – 32 of the record. From paragraph 10.10 – 10.12 at pages 27 -31 of his brief, learned counsel analysed Exhibits D7 and D8 and urged the Court to find and hold that the documents are unreliable, as they do not paint an accurate picture of the operation of the 1st respondent’s account. He submitted that there is no nexus between the two and they can therefore not be used by the appellant to sustain its counter

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claim. He urged this Court to consider the report prepared by the 1st respondent’s accountant, (PW1), which was rejected by the trial Court.

In reply on points of law, learned counsel for the appellant argued that in the absence of an appeal against the rejection of the report at the Court below, the admissibility of the report is a new issue being raised before this Court for the first time without leave and should be discountenanced. He submitted that the admissibility of Exhibit D7 is also being raised for the first time in this Court without leave and should also be discountenanced. While maintaining that the appellant proved its counter claim, he submitted that even if that were not the case, the Court was entitled to award the sum of N558,485.00 admitted by the 1st respondent.

Although I had reproduced the appellant’s counter claim earlier in this judgment, I deem it necessary to repeat the exercise for ease of reference. In support of its counter claim, the appellant repeated paragraphs 1 – 32 of its statement of defence and counter claimed as follows:

“34. The 1st defendant avers that as at 31st May, 2002 the plaintiffs indebtedness to

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her stood at N1,466,802.00 made up of the loan interest and other charges.

35. The 1st defendant avers that the agreed period for the total repayment of this loan and all dues was twelve months from 10th September, 1996, which period has lapsed several times over.
36. The 1st defendant will also rely on the plaintiffs several admissions of his indebtedness to her, and several undertakings, albeit unfulfilled, to settle the outstanding indebtedness and the many repeated demands.
37. WHEREOF the 1st defendant claims against the plaintiff the sum of N1,466.802.00 at 3% interest rate per month from 31st May, 2002 until the amount is totally liquidated.”

Among the paragraphs of the statement of defence relied on are paragraphs 11 and 16 wherein it is averred:

“11. The 1st defendant avers that among the terms of the loan is an interest of 3% per month, service charge and all other legitimate dues as approved by the controlling authority. The loan and all charges was agreed will be fully liquidated within twelve months.

16. The 1st defendant avers that to date, total payment on the loan granted to the plaintiff is N655,550.00.

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All relevant statements of account and ledger cards are pleaded.”

It is settled law that where the contract between the parties is reduced into writing, extrinsic evidence is not permitted to add, vary, subtract from or contradict the terms of the written instrument. See: Koiki v Magnusson (1999) 8 NWLR (Pt.615) 492; Ogundepo Vs Olumesan (2011) 18 NWLR (Pt. 1278) 54; Olaoye vs. Balogun (1990) 5 NWLR (Pt. 24. Learned counsel for the appellant relies heavily on the fact that the 1st respondent made certain admissions as regards his indebtedness and is bound by them. It is pertinent to note that the calculation of the 1st respondent’s indebtedness to the appellant was based on the application of an interest rate of 3% per month. The appellant also sought to rely, inter alia, on the 1st respondent’s statements of account and ledger cards. In the course of resolving the first issue, I agreed with the Court below that the applicable interest rate, as contained in Exhibit D2, signed, sealed and duly registered by the appellant, is 21%per annum. No extrinsic evidence can be relied upon to vary or contradict the terms thereof. I am of the view, as held by the lower

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Court, that the bottom has been knocked off the counter claim for the sum of N1,466,802.00 since it was founded on a wrong premise. At pages 255-256 of the record, the learned trial Judge found as follows:

“Exhibits D7 and D8 are the statement of account and the plaintiff ledger account respectively produced by the 1st defendant. The statement of account Exhibit D7 was opened on January 2000 with a balance of N622,084.00 brought forward as debit balance. There is no explanation as to how the outstanding loan of N558,485.00 as per the letters Exhibits D9 to D14 rose to that sum of N622,084.00 between 4/8/98 when plaintiff wrote Exhibit D14 by which he admitted the sum of N558,485.00 indebtedness and the January, 2000 when on the statement of account the balance of N622,084.00 was brought up.

The same thing is applicable to the ledger Exhibit D8. That one was opened on 10/9/96 with first deposit of N1,020.00 reference No. 0128001 as credit balance and the last entry on the said ledger account showing N50.66K as credit balance as at the 28/8/99. The Court has found that the indebtedness of the plaintiff to the 1st defendant was N588,485.00 at the interest

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rate per month as at 4/8/95 shortly before this suit was filed on 25th February, 1999; the Court has no concrete and convincing evidence of how the 1st defendant came to the conclusion that the plaintiff was owing up to N1, 466, 802.00 at 3% interest per month as at 31st May, 2002.”

As rightly submitted by learned counsel for the 1st respondent, a counter claim, though filed within an existing suit, is an independent action. The counter claimant becomes the plaintiff while the original plaintiff becomes the defendant. The counter claimant has the onus of establishing his case just as he would if he were the original plaintiff. A counterclaim is subject to the same rules of pleading and standard of proof as the main action. See: Ogbonna vs. A.G Imo State & Ors (1992) LPELR-2287 (SC) @ 33 B G; Gowon vs. Ikeokongwu (2003) FWLR (Pt. 147) 1027; Jeric (Nig) Ltd vs. Union Bank (2000) 15 NWLR (Pt. 691) 147; MAOBISON Interlink Assoc. Ltd vs. U.T.C (Nig) Plc (2013) 9 NWLR (Pt. 1359) 197; (2013) LPELR-20335 (SC) @ 12 B D. The excerpt of the judgment of the trial Court reproduced above shows clearly that the Court was not satisfied with the

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evidence led by the appellant in proof of its counter claim. It was unable to show how it arrived at the sum of N1,466,802.00 as being the 1st respondent’s indebtedness as at 31st May, 2002 calculated with an interest rate of 3% per month. Having held that the applicable interest rate was 21% per annum per Exhibit D2, it follows that whatever figure the appellant came up with based on an interest rate of 3% per month could not be a proper reflection of what was due to it, if anything. The finding that the 1st respondent owed the sum of N588,485.00 calculated on 3% interest per month could also not stand. Furthermore, in awarding the appellant the sum of N588,485.00, purportedly based on the 1st respondent’s admission, the Court failed to indicate what aspect of the loan, interest or charges the figure represents. It is for the counter claimant to establish his case on a preponderance of evidence. The learned trial Judge, having critically analysed Exhibits D7 and D8 and having held that the appellant failed to satisfy him as to how it arrived at the sum claimed, the counter claim could not succeed. The Court below was right to have dismissed it.

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This issue is accordingly resolved against the appellant.

Issue 3

Whether the 1st respondent proved an overpayment on his loan and dues to warrant the Court of Appeal’s order for a refund of the sum of N179,805.00 to him by the appellant.

In support of this issue, learned counsel for the appellant submitted that while in Exhibit Q, the 1st respondent admitted that he had not completed payment of the principal sum and that he had not made any payment since the suit was instituted, in another breath he contended that he had completed payment in October 1998. He referred to pages 170 and 169 of the record respectively. He submitted that in yet another breath, at page 172 of the record he stated that he finished payment on 4/3/99. He noted that the suit was instituted in February 1999, therefore payment must have been made after the suit was filed. He submitted that even if the applicable interest rate was 21% per annum (not conceded), the appellant still owed the sum of N990,080.00. He submitted that the appellant pleaded and led evidence to this effect, which was not challenged under cross examination. He argued further that to succeed in his claim for

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overpayment, he ought to have stated what he ought to have paid, what he has paid and must demonstrate the overpayment of N179,805.00 with certainty. He maintained that there was no evidence to show how the overpayment arose. He submitted that the contradictions in the 1st respondent’s averments in Exhibit Q and his testimony on oath makes his evidence unreliable and it cannot be acted upon. He cited: Ibekendu Vs Ike (1993) 7 SCNJ 50 @ 62; Orepekan & Ors. Vs Amadi & Ors. (1993) 11 SCNJ 68. He submitted that the learned trial Judge examined the tellers relied upon by the 1st respondent (Exhibits A1 – A53, B1 – B70, C1 – C69 & D1 – D13) and held that he was not convinced of the authenticity of some of them. He submitted that the 1st respondent is deemed to have accepted the said findings, having not appealed against them.

In response, learned counsel for the 1st respondent contended that by virtue of the tellers tendered, it was established that the 1st respondent repaid a total sum of N826,476’00. That PW1, a chartered accountant testified that the interest on the loan at 2!% per annum came to N46,671.00, thus bringing the principal and

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interest thereon to N646,671.00. He submitted that when N646,671.00 is deducted from N826,476.00, the balance would be N179,805.00, which represents the overpayment. He submitted that the lower Court having found that the 1st respondent had repaid the sum of N826,476.00, it follows as a consequential relief that the sum of N179,805.00 overpaid be refunded to him. In answer to learned counsel’s observation that the 1st respondent did not appeal against the finding of the trial Court regarding the overpayment, he submitted that once the sum of N826,476.00 is the subject of the appeal, the sum of N179, 805.00 is included.

I have had another look at the record and the finding of the Court below on this issue. The Court held at page 363 of the record, that having found that the applicable interest rate on the loan was 21% per annum as per Exhibit D2, it was clear that the appellant had since repaid the loan inclusive of interest thereon. The 1st respondent tendered documents in proof of the fact that he had paid a total of N826,476.00 to the appellant. I am of the view that there was a preponderance of evidence before the trial Court establishing the fact that

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the 1st respondent had made payments over and above his indebtedness to the appellant. Although learned counsel attempted to challenge the authenticity of the tellers relied upon by the 1st respondent, it was unable to deny the fact the tellers bore its stamp as having received the amounts stated therein. There was no fraud pleaded or proved in this case. The finding of the lower Court regarding the overpayment by the 1st respondent was premised on its finding that the appellant’s claim all along was based on a wrong calculation of 3% interest per month. I cannot fault the finding of the Court on this issue. I find no reason to disturb it, This issue is accordingly resolved against the appellant.

Issue 4

Whether the 1st respondent’s Further and Better Amended Statement of Claim discloses any reasonable cause of action against the appellant.

It is the contention of learned counsel for the appellant that the mortgage of the 1st respondent’s property by deed creates a transfer or conveyance of his legal right in the property to the appellant and divests him of ownership. He submitted that the mortgage is security for the payment of the loan

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and interest in full and that without full payment of the loan and interest, the Courts will not restrain the exercise of the mortgagee’s power of sale. He referred to: Adetona vs Zenith Int’l Bank Plc. (2011) 18 NWLR (Pt. 1279) 627 @ 644 G 645B & 657 A 658 A; Owoniboys Tech. Services Ltd vs. UBN Ltd. (2003) 15 NWLR (Pt. 844) 545 @ 583 D & 595 B; AIB Ltd. vs. Lee & Tee Ind. Ltd. (2003) 7 NWLR (Pt. 819) 366 @ 4040 H; Ayodele Pharm. Chem. (Nig.) Ltd. vs. NDIB Ltd. (2000) 4 NWLR (Pt. 653) 420. He submitted that the threatened sale of the mortgaged property without more, when the mortgage debt plus interest had not been fully discharged, would not give rise to a reasonable cause of action. He argued that the onus is on the 1st respondent to disclose sufficient facts in his pleadings to show that he has discharged his indebtedness in full. He proceeded from paragraphs 5.65 to 5.68 of his brief to review the pleadings of the 1s respondent along with the evidence led at the trial in support thereof. He submitted that not only had he failed to plead particulars regarding the alleged overpayment, he also failed to

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plead facts showing that he had repaid the principal with interest at the rate of 21% per annum, which he claimed to be the applicable rate. He contended that on this basis the Further and Better Amended Statement of Claim discloses no reasonable cause of action. He urged this Court to strike it out and dismiss the action. He referred to Order 24 Rule 20 of the Kwara State High Court (Civil Procedure) Rules 1987; Thomas Vs Olufosoye (1986) 1 NWLR (Pt.18) 669 @ 690 A; Oloriode Vs Oyebi (1984) SCNLR 390 @ 404 B.

In response, learned counsel for the respondent contended that this issue and the new ground 7 of the Amended Notice of Appeal from which it is distilled, is a new issue being raised in this Court for the first time, without leave. Relying onOseni Vs Bajulu (wrongly cited as Bajumi) (2009) LPELR-2796 (SC) 1 @ 19 A – G; (2009) 18 NWLR (pt.1172) 164, he submitted that the effect of raising a fresh issue without the leave of this Court or the Court below is that the ground and the issue predicated on it are incompetent and liable to be struck out. He urged the Court to strike them out.

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On what constitutes a reasonable cause of action, he relied on several authorities, including Mobil Producing Nig. Unltd. Vs LASEPA & Ors. (2002) 18 NWLR (pt.798) 1 @ 30 E – G, where it was held that once the allegations in the pleadings show a real controversy capable of leading to the grant of a relief, there is a reasonable cause of action and that the mere fact that the case is weak or unlikely to succeed is not a ground for striking it out. He argued that the 1st respondents further amended statement of claim disclosed a reasonable cause of action, as it was predicated on the need to safeguard his interest against the wrongful exercise of its power of sale by the appellant.

He rejected the appellants contention that a deed of mortgage permanently divests the mortgagor of ownership of the mortgaged property. He submitted that mortgage deed merely creates a temporary transfer of the 1st respondents right in the property. He argued that in the circumstances of this case, the mortgage was automatically discharged upon the 1st respondents payment of the loan and interest in full. He submitted that the authorities relied upon by learned counsel for the

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appellant are inapplicable to the facts of this case. He submitted that in a situation where the mortgagee is not exercising his power of sale bona fide, the mortgagor has a reasonable cause of action where he seeks to protect his interest. He urged the Court to resolve this issue against the appellant and in favour of the 1st respondent.

I shall start by addressing the complaint of learned counsel for the respondent that this issue is predicated upon a ground of appeal that raised a fresh issue without prior leave of this Court or of the Court below. I had noted in the introductory part of this judgment that the appellant sought and was granted leave to amend its notice of appeal by raising a fresh issue and by filing an additional Ground 7 containing the fresh issue among other reliefs. The application was granted on 8/1/18 and the Amended Notice of Appeal and Amended Appellant’s brief both filed on 1/11/17, incorporating the fresh issue, were deemed properly filed and served. This issue and the ground of appeal from which it was distilled are therefore competent.

In Bello Vs A.G. Oyo State (1986) 5 NWLR (pt.45) 828 @ 876 A – B this Court considered

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what constitutes a reasonable cause of action. His Lordship Karibi-Whyte, JSC opined thus:

“I think a cause of action is constituted by the bundle or aggregate of facts which the law will recognise as giving the plaintiff a substantive right to make the claim against the relief or remedy being sought. Thus, the factual situation on which the plaintiff relies to support his claim must be recognised by the law as giving rise to a substantive right capable of being claimed or enforced against the defendant. In other words, the factual situation relied upon must constitute the essential ingredients of an enforceable right or claim.”

This definition was adopted by Obaseki, JSC in Afolayan Vs Ogunrinde (1990) 1 NWLR (pt.127) 269 @ 382 F – H. His Lordship stated:

“In its simplest terms, I would say that a cause of action means:

(1) a cause of complaint;

(2) a civil right or obligation fit for determination by a Court of law;

(3) a dispute in respect of which a Court of law is entitled to invoke its judicial powers to determine.

It consists of every fact which it would be necessary for the plaintiff to prove, if traversed,

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in order to support his right to judgment.”

See also: Thomas Vs Olufosoye (1986) 1 NWLR (pt.18) 669; Adimora vs. Ajufo (1988) NSCC Vol. 19 (Part) 1003 @ 1005; (1988) 3 NWLR (Pt. 80) 1; P.N Udoh Trading Co. Ltd vs. Abere (2001) 11 NWLR (Pt. 723) 114 @ 129 B C; Mobil Producing Nig. Unltd vs. LASEPA & Ors. (2002) 18 NWLR (Pt. 798) 1 @ 30 E G.

It is settled law that in the determination of a reasonable cause of action, the Court would have recourse only to the facts contained in the statement of claim or the affidavit in support of the originating summons or other originating process. The facts therein, for the purpose of the determination, are deemed admitted. The facts would then be examined to ascertain if they would entitle the plaintiff to the remedy sought. See: Dantata & Anor vs. Mohammed (2000) LPELR-925 (SC) 1 @ 27 E F; Opia vs. INEC & Anor (2014) LPELR 22185 (SC) 1 @ 20 D – F. The 1st respondent’s claim at the trial Court was premised on the advertisement for the sale of his property situate at No. 11 Adamu Road, off Taiwo Road, Ilorin Kwara State published by one L.K. Ayinde (auctioneer) on the

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authority of the appellant. The 1st respondent pleaded in his further and better amended statement of claim that he obtained a loan from the appellant, which was secured by a legal mortgage on the property duly executed by the parties. His claim, as evinced in his pleadings is that he had not only fully repaid the loan but had even made an overpayment of N179,805.00 to the appellant. He therefore sought, inter alia, a declaration that the notice of sale by auction contained in the Nigerian Tribune Newspaper of 2/2/99 and the notice of sale by auction pasted on the property on 11/3/99 are null and void, an injunction restraining the defendants, their agents, servants or privies from auctioning, selling or doing anything with the mortgaged property and an order for a refund of the overpayment of N179,805.00. The 1st respondent pleaded facts stating the terms of the loan, extension of the time for repayment, his title to the mortgaged property and a breakdown of payments made.

The nature of a legal mortgage and its legal consequence was correctly stated by the Court of Appeal in: Bank of the North Vs Bello (2000) 7 NWLR (Pt. 664) 244 @ 257 D, where it was

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held that:

A mortgage is defined as the creation of an interest in a property defeasible (i.e. annullable) upon performing the condition of paying a given sum of money with interest at a certain time. The legal consequence of the above definition is that the owner of the mortgaged property becomes divested of the right to dispose of it until he has secured a release of the property from the mortgagee.”

Thus, in a legal mortgage, title to the property is transferred to the mortgagee subject to the proviso that the mortgaged property would be reconveyed by the mortgagor to the mortgagee upon the performance of the conditions stipulated in the mortgage deed and upon payment of the debt at the time stipulated therein. The mortgagor is liable to repay the loan as stipulated, otherwise the mortgaged property is foreclosed. See: Prince Abdul Rasheeed Adetono & Anor. Vs Zenith International Bank Plc. (2010) LPELR-8237 (SC) 1 @ 21 A – C: (2011) 18 NWLR (Pt.1279) 627.

In a nutshell, the plaintiffs claim is that in the circumstances of this case, the appellant’s right of sale under the mortgage deed did not arise, as he had fully discharged his

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obligations thereunder. These assertions, which are deemed admitted for the purpose of this exercise, would certainly entitle the plaintiff to the reliefs he seeks, if proved. Whether the claim is weak or unlikely to succeed, which seems to be the contention of the appellant, is not the concern of the Court at the stage of determining whether the claim discloses a reasonable cause of action. I am satisfied that the 1st respondent’s claim at the trial Court discloses a reasonable cause of action. This issue is accordingly resolved against the appellant and in favour of the 1st respondent.

In conclusion, I hold that this appeal lacks merit. It is hereby dismissed. The judgment of the lower Court delivered on 12/3/2007 setting aside the judgment of the trial Court and ordering the appellant to refund the sum of N179,805.00 to the respondent, is hereby affirmed.

The parties shall bear their respective costs in the appeal.

Appeal dismissed.

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SC.154/2007