Chief A.N Onyiuke iii v. G.E. Okeke (1976)

LawGlobal-Hub Lead Judgment Report

D. A. R. ALEXANDER, C.J.N.

The appellant was the plaintiff and the respondent the defendant in Suit No. 0/15/1972 in which the plaintiff claimed from the defendant-

“the sum of one thousand six hundred and fifty pounds (1 ,650) being the value of 110 tins of palm oil sold and delivered to the defendant about the month of February 1969, which the defendant has  refused and/or neglected to pay despite repeated demands.”

Pleadings were ordered by the trial court and were duly filed and delivered by the plaintiff and defendant respcetively. Before evidence was adduced at the trial, learned counsel for the plaintiff and for the defendant both agreed that, for the purpose of eliminating unnecessary evidence, they would be bound by the following summary of the issues before the trial court

“1. That there was a transaction of sale of 110 tins of oil at 1,650 biafran currency.

2. Plaintiff states that the sum of 1 ,650 biafran currency was never paid; on the other hand, defendant states that he paid the sum of 1,650 pounds into A.C.B. on behalf of plaintiff.

3. After the end of the war, following demands made by plaintiff for payment of 1,650, pounds there were two compromise meetings; at the first 20 was offered by the defendant but rejected by the plaintiff; at the second “arbitrators” suggested payment of 40 by defendant to plaintiff but plaintiff refused.

4. Defendant states assuming the facts to be true, defendant is not liable in law
(i) because contract was illegal;
(ii) because contract was unenforceable.”

Both counsel agreed that the defendant should begin by first adducing evidence. The defendant testified that he bought 110 tins of palm oil from the plaintiff for 1,650 biafran currency and paid 1,650 biafran currency for them. The plaintiff in his own testimony confirmed that he sold 110 tins of oil to the defendant for 1,650 biafran currency, but denied that the defendant paid anything at all, and one of the plaintiffs wives also testified to the same effect.

The learned trial judge, in his judgement, stated

“The plaintiff admits that the price was expressed in biafran currency and would have been paid in biafran currency had the defendant paid promptly. The defendant in his evidence said he paid that sum of 1 ,650 in biafran currency to plaintiffs wives but owing to threats from Federal troops and the imminent occupation of the area, the wives asked him to deposit this sum of 1,650  pounds in the African Continental Bank Ltd.

I do not believe that the defendant is truthful in this point. I do not believe that he paid this sum of 1 ,650 pounds to plaintiffs wives or that the said wives gave him the same money with a request to deposit it in the Bank or that he deposited the money in the Bank.”

And again

“In paragraph 17 of the statement of defence the defendant averred that the transaction is unenforceable in law being tainted with illegality. It is common ground that the transaction took place at Igbariam, a place then in February 1969 under the control of the illegal regime called the republic of Biafra and there is no dispute that the parties entered into the contract of sale upon the understanding   that the price agreed at 1,650 pounds would be paid in Biafran currency.-

The learned trial judge concluded –

“In the result I am clearly of opinion that contracts made in biafra were not illegal but these contracts have become unenforceable on the ground that their supporting consideration has wholly and totally failed by reason of its non-existence since the end of the civil war.”

We consider that what the learned trial judge was saying, in effect, was that the particular contract, the subject-matter of the suit, was unenforceable because the consideration for it which was 1,650 biafran currency had failed when biafran currency ceased to be a medium of exchange in the former East-Central State. He had also earlier stated, in effect, in his judgment, quite erroneously in our view, that a contract made in Biafra was not invalid by reason only that the consideration was to be in biafran currency. He therefore dismissed the suit on the ground that the contract between the plaintiff and defendant, although in his view not illegal, was unenforceable in consequence of failure of consideration.

The plaintiff thereupon appealed to this Court on the following grounds which were argued together
“(i) “Error-in-Law: The learned trial judge erred in law when he held that the contract entered into between the plaintiff and the defendant though valid, was unenforceable.
(ii) Error-in-Law and Non-Direction: the learned trial judge failed to direct his mind sufficiently or at all to exhibit “A” and thus erred in law in holding that the supporting consideration has wholly and totally failed……    ”

Learned counsel for the appellant conceded that the case was contested on the issues of illegality or unenforceability of the contract, that at the time the suit was filed, that is, on 17th February, 1972, the Civil War was over and that “biafran currency was not in legal use” in any part of the Federation. He complained, however, that the learned trial judge did not avert to exhibit A, which is a written acknowledgement of the transaction involving the purchase by the respondent from the appellant of 110 tins of palm oil for 1,650 pounds “pending payment at any time requested” Consequently, he contended, the consideration for the contract was “money” owed by the respondent and which, so long as the debt was not statute-barred, the appellant was entitled to be paid, in the currency in circulation at the time he instituted the action, that is, Nigerian pounds.

Counsel for the appellant nevertheless conceded that at the time of entering into the contract the parties must have had in contemplation that payment would be made in biafran currency. At this stage he returned to the proposition which the learned trial judge discussed at length in his judgment, but which has not been supported by any authority either in the judgment or in the submissions of counsel for the appellant, that persons under the control of a rebellious leadership are legally entitled to a “medium of exchange”, even if such a “medium of exchange” is illegal currency issued by the rebellious leadership. He then submitted that in the circumstances of this case the respondent should be ordered to pay a reasonable price for the 110 tins of palm oil.

Learned counsel for the respondent, on the other hand submitted, quite rightly in our view, that as there was no dispute that the 110 tins of palm oil were to be paid for in biafran currency, which was an illegal currency, the consideration for the contract was illegal and the contract itself was therefore illegal and, consequently, void and unenforceable by the courts. He contended further that the Central Bank (Currency Conversion) Decree, 1968 (Decree No. 48 of 1968) having made it an offence to deal in biafran notes, the courts could not be asked to enforce a contract to pay in biafran notes for goods sold and delivered, as contemplated by the parties at the time they entered into the contract.

Section 1B (2) of Decree No. 48 of 1968 provides as follows:

“It shall likewise be an offence for any person without lawful excuse:

(a) to have in his possession or under his apparent control in Nigeria, or

(b) to bring into any part of Nigeria from any other part of Nigeria, notes issued by or on behalf of a bank called or known as the Bank of Biafra, and indicating an apparent face value.”

Subsection (3) prescribes for an “attempt” similar penalties as for the offence itself, with a possible reduction in the term of imprisonment. By section 2(1) the Decree has retrospective effect as from 30th December, 1967, and applies throughout the Federation. We therefore hold that the provisions of Decree No. 48 of 1968 applied at the time the contract was entered into by the appellant and the respondent at Igbariam in the former East-Central State, which was legally part of the Federation of Nigeria, that possession of, or dealing in, biafran currency in the former East-Central State, without lawful excuse, was an offence against Decree No. 48 of 1968, punishable by fine and imprisonment and the forfeiture of any such currency, and that no such lawful excuse has been proved by the appellant.

It is the law that a contract is illegal if the consideration or the promise involves doing something illegal or contrary to public policy or if the intention of the parties in making the contract .is thereby to promote something which is illegal or contrary to public policy; and an illegal contract is void and cannot be the foundation of any legal right. This proposition of law was clearly enunciated by Brett, M.R., in Herman v. Jeuchner (1885), 15 Q.B.D. 561, at page 563 as follows:

“When the object of either the promise or the consideration is to promote the committal of an illegal act, the contract itself is illegal and cannot be enforced.”

In Halsbury’s Laws of England, 3rd Edition, Volume 8, page 126 para. 218, the law on the point is also succinctly stated as follows:

“A contract is illegal where the subject-matter of the promise is illegal or where the consideration or any part of it is illegal.”

And in William Hill (Park Lane) Ltd. v. Hoffman (1950) 1 ALL E.R. 1013, it was held that a deed of charge executed in respect of gaming debts must by virtue of the Gaming Act 1835, be deemed to have been executed for an illegal consideration, and was therefore void.

As regards the contention of learned counsel for the appellant that it would have been reasonable in the circumstances for the trial court to award and equivalent amount of the currency now in force in substitution for the amount of 1,650 biafran currency, he had to concede that this was not even practicable, since there could be no official rate of conversion or exchange of biafran currency, which is an illegal currency, into Nigerian pounds, which was the legal currency at the time the action was instituted, or into naira, for that matter. Further, the court cannot create a new contract for the parties by substituting a consideration in legal currency for a consideration in illegal currency with reference to which the parties entered into the contract.

Finally, the learned trial judge harped a great deal in his judgment on the great hardship that a finding that such contracts are illegal would inflict on persons under the control of the rebel leadership during the Civil War. Suffice it to say that it has long been settled that
“It is necessary that courts of justice should act on general rules, without regard to the hardship which in particular cases may result from their application” (See Bosanquet v. Shortbridge 4 Exch. 699 at  page  718).

For the foregoing seasons, this appeal must fail, and it is accordingly dismissed with N120.00 costs to the respondent.

Other Citation: (1976) LCN/2367(SC)