Diab Nasr & Anor V. Antoine Rossek (1973)
LawGlobal-Hub Lead Judgment Report
FATAYI-WILLIAMS, J.S.C.
The plaintiff, a general merchant and hotelier, is the brother-in-law of Diab Nasr,the 1st defendant who is married to his sister. The second defendant is a nephew of the 1st defendant and was at all material times an employee of the 1st defendant.
On 17th August, 1962, both the plaintiff and the 1st defendant, by virtue of a deed of lease dated 13th November, 1959 became the co-lessees of a property at No. 194 Broad Street, Lagos, which they had leased for a term of 75 years at a yearly rent of 600(pounds). Earlier, on 1st October, 1961 they had also jointly taken a lease of the adjoining property at No. 196 Broad Street, Lagos, for the same term of 75 years at a yearly rent of 150(pounds).
At the time of these transactions, the plaintiff already owed the first defendant the sum of 4,300(pounds). Being in need of more money, he asked the 1st defendant for a further loan of 1,500(pounds). As the plaintiff’s total indebtedness had now reached the sum of 5,800(pounds), the first defendant asked the plaintiff for a security. In reply, the plaintiff undertook to mortgage to the 1st defendant his half shares in the two properties to which we had earlier referred. This undertaking was reduced into writing as shown in the document dated 20th November, 1961, (Exhibit C) which reads
“I, the undersigned Antoine Rossek, hereby declare that as I am partner with Mr Diab Nasr on properties situated at Nos. 194 and 196 Broad Street, Lagos, that I am willing to mortgage my share of those properties to Mr Diab Nasr, that we have an outstanding account and plus a cheque to K.L.M. to be paid by Mr Diab Nasr, later we should verify the account and settle the whole account before end of November, 1961.
(Sgd.) A. ROSSEK.
Soon after receiving this document, the 1st defendant requested the plaintiff to execute in his favour a power of attorney to enable him to mortgage or lease the plaintiff’s interest in their joint properties in order to raise money if and when the need arose. The plaintiff agreed. Two days later, the 1st defendant telephoned the plaintiff to say that the power of attorney dated 29th November, 1961 (Exhibit D) was ready for execution. The plaintiff asked the 1st defendant to send him the power of attorney which he did. When it was brought to him, the plaintiff signed the power of attorney without reading the contents, but still believing that it was for the purpose of mortgaging or leasing his interest in the properties. In actual fact, the power of attorney gave the 1st defendant the power to sell the two properties at any price which he might deem fit, to complete such sale, and to receive all monies arising therefrom. For some inexplicable reason, the 1st defendant was in the same document also given the power-
“to rescind or agree to the modification or cancellation of any such contract of sale of the premises aforesaid.”
Pursuant to this power of attorney, the 1st defendant by a deed dated 21st November, 1962 (Exhibit E), assigned the plaintiffs undivided share of the leasehold interest in No. 194 Broad Street, Lagos, to the 2nd defendant for 2,500(pounds). The 2nd defendant, it will be recalled, is the nephew and employee of the 1st defendant. Within four months of the purported assignment to the 2nd defendant, the 1st defendant obtained from the second defendant another power of attorney dated 14th March, 1963 (Exhibit F), which gave the 1st defendant wide and absolute powers of disposition of the said leasehold interest of the 2nd defendant in the said property. Three months after the grant, that is on 5th July, 1963 and purporting to act under this second power of attorney (Exhibit F) which he had obtained from the 2nd defendant, the 1st defendant, for himself as the owner of one half undivided share and for the 2nd defendant as owner of the other half, granted a sublease of the property at No. 194 Broad Street, Lagos, to one Edward Bouari (3rd P/W) for a term of five years from 1st June, 1963 at a yearly rent of 2,500(pounds).
When the plaintiff did not receive any notificaiton from the Lands Registry regarding the lease to Bouari, he became suspicious. As a result, he went to the Lands Registry where he discovered, for the first time, that his half share in 194 Broad Street, Lagos, had been transferred to the 2nd defendant. He thereupon commenced proceedings in the Lagos High Court in Suit No. LD/241/68 wherein he claimed against the defendants in his amended writ of summons:-
“(i) an order rectifying the Register of Titles No. LO 1704 by deleting therefrom the name of the 2nd defendant as proprietor of one half undivided share in the leasehold interest originally owned by the plaintiff and substituting therefor the name of the plaintiff;
(ii) an order setting aside the deed of transfer dated the 21st day of November, 1962 and registered under Title No. LO 1704;
(iii) an order setting aside the power of attorney dated 29th day of November, 1961 and registered as No. 45 at page 45 in Volume 1187 and directing the 1st defendant to deliver the same up for cancellation.”
In his amended statement of claim, the plaintiff averred in paragraph 10 thereof that his signature to the power of attorney was obtained by “false and fraudulent representation of fact” and that it was therefore void. He further averred in paragraphs 12, 13, 15 and 16 of the amended statement of claim as follows:-
12. The plaintiff further avers that even if the said power of attorney were valid and effective the purported exercise of the said power by the assignment of the plaintiff’s interest in Title No. LO 1704 to the 1st defendant’s servant and nephew for 2,500(pounds) is a gross undervalue, fraudulent, unconscionable and a fraud, inequity, and should be set aside.
13. In support of the allegations in paragraph 12 above, the plaintiff avers as follows:-
(a) The 2nd defendant is a nephew of the 1st defendant.
(b) The 2nd defendant was at all material times a servant of the 1st defendant on very low remuneration.
(c) The 2nd defendant was at all material times impecunious and that the consideration was fictitious.
(d) Within four months of the purported assignment to the 2nd defendant the 1st defendant obtained from the 2nd defendant another power of attorney registered as No. 44 at page 44 in Volume 1212 of the register of deeds in the Lagos Land Registry which gave 1st defendant wide and absolute powers of disposition of the property covered by Title No. LO 1704 previously sold to the 2nd defendant by the 1st defendant.
(e) Within three months thereof and by deed dated the 5th day of July, 1963 and purporting to act under and by virtue of the power of attorney from the 2nd defendant the 1st defendant for himself as owner of one-half undivided share and for the 2nd defendant as owner of one-half undivided share granted a sub-lease of the property at No. 194 Broad Street, Lagos to one Edward Bouari for a term of 5 years from the 1st day of June, 1963 at the yearly rent of 2,500(pounds) which sum the 1st defendant received for himself.
15. The plaintiff will contend that the 1st defendant acted in fraud of the power of attorney obtained from the plaintiff with the sole intention of giving himself sole beneficial interest in the property of 194 Broad Street, Lagos, and that he merely used the 2nd defendant as a nominal owner and conduit pipe in his plot to acquire beneficial ownership of the plaintiff’s share of the lease-hold interest in the said property .
16. The plaintiff avers that even if the alleged power of attorney were valid and binding on him the 1st defendant had not effectively assigned the plaintiff’s interest under Title No. LO 1704 as required by law and the purported assignment is therefore void.”
The defendants in their statement of defence denied most of the allegations made in the amended statement of claim. They averred further that all the allegations enumerated above were not now open to the plaintiff because he could have made them in another case between the same parties (Suit No. LD/55 1166) but chose not to make them then. It was further averred that since the plaintiff elected to treat the power of attorney as valid in the earlier case, he had waived his cause of action for rectification of the register or to set aside the deed or the power of attorney. Finally, the second defendant averred in paragraph 4 of the statement of defence as follows:-
“4. The second defendant avers that the court ought not to rectify the register as claimed by the plaintiff because-
(a) the power of attorney in favour of the first defendant was made by deed for valuable consideration and expressed to be irrevocable;
(b) he (the said defendant) is a purchaser for valuable consideration.”
It must be pointed out at this juncture that neither of the defendants testified at the trial in support of the averments in their statement of defence.
The plaintiff, on the other hand, gave evidence and called four witnesses in support of each and every one of the allegations made in his amended statement of claim.
Benjamin Epega (1st P/W), an estates surveyor and valuer, testified that at the time of the sublease of the property at No. 194 Broad Street to Bouari for 2,500 per annum, the interest of the sub-lessors, who had an unexpired term of 74 years and enjoying a profit rental of 1,900(pounds) (being the difference between the 600(pounds) per annum which they paid for the lease and the 2,500(pounds) which they received from Bouari), was worth 30,000(pounds). He further testified that a sale of the half-share of the unexpired term to the 2nd defendant for 2,500(pounds) was “very unreasonable” and that a fair amount would be 15,000(pounds).
Edward Bouari (3rd P/W) also testified for the plaintiff. Part of his testimony reads:-
“I was put in possession by the 1st defendant by a deed of lease …
It is dated July 1963; before July 1963 I was already living in the premises having taken possession in January 1963. Agreement about rent was reached verbally about October 1962. I carried out repairs on the premises from January till the end of June 1963.”
This witness was not cross-examined. It must be noted that the assignment of the property by the 1st defendant to the 2nd defendant by the deed of transfer (Exhibit E) was made on 21st November, 1962, that is, about one month after the 1st defendant and Edward Bouari had verbally reached agreement that the rent would be 2,500(pounds) per annum.
In his own testimony, the plaintiff denied any knowledge of the contents of the power of attorney (Exhibit D) which he gave to the plaintiff. He said that what was agreed was that he should give the plaintiff the power of attorney to enable him to mortgage or lease his interest in the properties in case he (the 1st defendant) needed money and that, if he had known that it contained a power of sale, he would not have executed it. He admitted owing the 1st defendant the sum of 5,800(pounds) at the time he gave him the power of attorney (Exhibit D). He testified further as follows:
“Since 1963 when the 1st defendant leased the premises out at 2,500(pounds), he would have collected a total of 20,000(pounds) by now. In respect of 196 Broad Street he has received 10,500(pounds) since 1965 when he leased it out at 1,750(pounds) per annum. He has realised much more than owed him. I know the 2nd defendant very well … he is a nephew of the 1st defendant. The 2nd defendant’s father died many years ago. The 1st defendant has been responsible for 2nd defendant’s upbringing; he lives with him under the same roof and virtually treats him as his son. He also works for 1st defendant as his employee at a salary of about 70(pounds) or 80(pounds) per annum. I am sure the 2nd defendant had no money of his own to pay 2,500(pounds). My share and that of the 1st defendant were to be taken by the U.A.C. for 40,000(pounds); the offer was made to me by Mr Silva, the legal adviser to U.A.C. I told the 1st defendant and he refused the offer between 1960 an 1961. The sale for 2,500(pounds) of my half-share interest is therefore ridiculous.”
To questions asked under cross-examination about his transactions with the 1st defendant, the plaintiff replied as follows:-
“I have not repaid the 5,800(pounds) I owe him. The property was leased to Edward Bouari for 2,500(pounds) up till today I have not received a penny from both properties. I gave him the power of attorney so that he might deduct what l owed him. I once owed him 30,000(pounds) and have paid it. I brought him to Nigeria from somewhere where he was starving … I was extremely busy in the Hotel when the power of attorney was brought to me. I was then standing at the bar. I signed the power of attorney and put it back in the envelope … I signed the power of attorney without reading it.”
In his judgment, the learned trial judge, in the course of his review of the evidence adduced before him, referred to the testimony of the plaintiff where he said that if he had read the contents of the power of attorney (Exhibit D) he would not have signed it as he and the 1st defendant did not at any time discuss the sale of his half-share interest in the property. He then found, rightly in our view, as follows:-
“By this evidence, the plaintiff was in effect repudiating the power of attorney and setting up the plea of “non est factum” in regard thereto. In my view, upholding the submission of learned counsel for the defendants, this plea is not available to the plaintiff in view of the recent decision of the House of Lords in the case of Saunders (formerly Gallie) v. Anglia Building Society reported in the London Times of 10th November, 1970.”
In Saunder’s case, reported in [1970] 3 All E.R. 961 (H.L.), to which the learned trial judge referred, the House of Lords held that the plea of non est factum can only rarely be established by a person of full capacity, and that although it is not confined to the blind and the illiterate, any extension of the scope of the plea should be kept within narrow limits; in particular, it is unlikely that the plea would be available to a person who signed a document without informing himself of its contents and their meaning. Since this is precisely what happened in the case in hand, we are in complete agreement with the views of the learned trial judge that the plea of no nest factum is not available to the plaintiff ..
The matter did not, however, rest with that finding because the learned trial judge went on to find further as follows:-
“But notwithstanding this, a person holding a power of attorney stands in a fiduciary relationship to the donor of the power. In one word, the relationship of principal and agent is created. One then has to examine the conduct of the 1st defendant in purported exercise of his powers under the power of attorney. One half share of the property in question with an unexpired term of 74 years which was said to be worth 15,000(pounds) was wholly assigned by the 1st defendant under the said power of attorney to his nephew (the 2nd defendant) for 2,500(pounds). With regard to the 2nd defendant, there is evidence, which is unchallenged, that when his father died some years ago, it was the 1st defendant, his uncle, who assumed parental responsibility for his upbringing; they lived under the same roof and the 1st defendant virtually treated him as his son. In addition, the 2nd defendant is employed by the 1st defendant at a salary of between 70(pounds) and 80(pounds) per annum. The plaintiff, on this point, said:
“I am sure the 2nd defendant had no money of his own to pay 2,500(pounds).”
The learned trial judge agreed with the plaintiff that no money passed between the 1st and 2nd defendants in respect of the purported assignment to the 2nd defendant. After stating that the whole conduct of the 1st defendant in respect of the transaction was fraudulent, he observed further as follows:-
“From what looks like a conspiratorial arrangement between the 1st and 2nd defendants, the former has succeeded in purchasing plaintiffs property by devious arrangements with his impecunious nephew, the 2nd defendant. In addition to 1st defendant’s unscrupulous and reprehensible behaviour in purchasing property which came into his possession by virtue of his appointment as attorney, and without making any disclosure of the fact to the plaintiff, he had purported to sell plaintiffs interest in the property to his nephew at a gross undervalue.”
While dismissing the claim for setting aside the power of attorney dated 29th November, 1961 (Exhibit D), the learned trial judge gave judgment for the plaintiff with respect to the remaining two heads of his claim after finding finally as follows:-
“In my opinion, looking broadly at all the circumstances of this case, particularly the purported assignment by the 1st defendant of plaintiff’s interest in the property at 194 Broad Steet, to his nephew (the 2nd defendant) at such a gross undervalue, I cannot help coming to the conclusion that the 1st defendant was actuated by fraudulent intent from beginning to the end of the transaction.”
In the appeal now before us against that decision, a number of submissions were made by Chief Williams, who appeared for the defendants/ appellants, after pointing out that the real point in issue in the appeal is the order setting aside the deed of transfer. The reason for this, explained Chief Williams and we agree with him, is that the order for the rectification of the register of titles is merely consequential upon the order setting aside the deed of transfer. Now, Chief Williams’ argument, as we understand it, may be summarised as follows. Since the first defendant/appallent is an agent of the plaintiff/respondent with express authority or power, coupled with an undertaking by the plaintiff/respondent to ratify whatever he does, the court cannot or ought not to set aside anything done in the exercise of that power. This is more so where the power of attorney is irrevocable and is given for valuable consideration. To set aside the deed of transfer as had been ordered by the learned trial judge is a negation of the donor’s promise to ratify and confirm anything done by the donee in the exercise of that power.
Secondly, it was wrong for the learned trial judge to base his decision on the fiduciary relationship between the parties because the rule governing fiduciary obligations is made for the benefit of the beneficial owner and he, the beneficial owner, is free to relax the rules or contract out of it or waive its protection as had been pointed out in Boulting v. Association of Cinematograph, Television and Allied Technicians [1963] Q.B. 606 at pp. 636 and 637. Consequently, by permitting his agent to sell at any price and by saying that he would ratify anything the agent did, the plaintiff/respondent had “sheathed his sword.” In any case, where an agent or trustee commits a breach of fiduciary duty, the remedy is one of restitution of the profits or benefits derived by the agent or trustee from the transaction. Moreover, whatever may be the plaintiff/respondent’s remedy, he cannot bring an action to invalidate a transaction which he has himself expressly undertaken to ratify because if he is allowed to do so, he will be using the court as a vehicle for committing a breach of contract. For these reasons, learned counsel finally submitted, the learned trial judge was in error when he ordered that the deed of transfer should be set aside on the ground that the 1st defendant/appellant had committed a breach of the fiduciary duty which he owed to the plaintiff/respondent.
In his reply, Mr G. O. K. Ajayi, learned counsel for the plaintiff/respondent, submitted that the court, in the exercise of its equitable jurisdiction, has an overriding power to set aside any unconscionable exercise of any powers granted to any agent and that the jurisdiction of the court in this respect is very wide. Learned counsel then pointed out that there could be no doubt that the relationship of principal and agent is created by the power of attorney (Exhibit D) and that once it is created the agent (that is, the 1st defendant/appellant) is enjoined not to commit a breach of the fiduciary duty arising out of this relationship. There are certain things, learned counsel continued, which an agent cannot do. For example, an agent cannot buy the principal’s property for himself or for his relations. Any abuse of the fiduciary relationship by an agent will constitute an equitable fraud as distinct from fraud generally. Learned counsel then submitted that the evidence which the learned trial judge accepted showed clearly that the 1st defendant/ appellant had abused his position as the agent of the plaintiff by assigning the half-share of the plaintiff/respondent in the property to the 2nd defendant when he had already agreed to let the whole property to Bouari at a very profitable rent; and that having so found, the judge was not in error in setting aside the deed of transfer which was made pursuant to the abuse of his position as agent.
There is no doubt that by the power of attorney (Exhibit D) the relationship of principal and agent, as between the plaintiff/respondent and the 1st defendant/appellant, was created. It is also trite law that every agent owes his principal certain fiduciary duties which are otherwise known as duties of loyalty. While many of these duties are imposed on the agent by the terms, express or implied, in the contract, others are duties arising independently of the contract and are imposed by equity on the agent as a result of his special relationship with his principal.
The next question to be considered, therefore, is whether the learned trial judge was right in holding as he did that there was a breach of any of these fiduciary duties by the defendant/appellant who was at all material times, the agent of the plaintiff/respondent. In considering this question, the general background of the case in hand as given by the plaintiff/respondent, and not disputed by either of the defendants/appellants, is very material and particularly relevant. Firstly, there is the fact that the plaintiff/respondent is the brother-in-law of the 1st defendant/appellant while the 2nd defendant/appellant is a nephew of the 1st defendant/appellant and was at all material times his employee. Secondly, there is the undisputed evidence which the learned trial judge accepted, rightly in our view, that the 2nd defendant/appellant had no money with which to buy the half-share of the plaintiff/respondent in the property for 2,500(pounds) and thereby found that the conduct of the 1st defendant/appellant was fraudulent. Thirdly, there is the evidence, also undisputed, that before the execution of the power of attorney (Exhibit D), the UAC, through their legal adviser, offered to buy the property for 40,000(pounds) (in which case, the plaintiff/respondent’s share would have been 20,000(pounds)) but that the 1st defendant/appellant refused the offer. Added to all these is the significant but undisputed fact that, prior to the assignment of the plaintiff/respondents’ halfshare in the property to the 2nd defendant/appellant on 21st November, 1962, the 1st defendant/ appellant, without disclosing this to the plaintiff/respondent, had reached agreement with Bouari (3rd P/W) in October 1962, to let the property to Bouari for 5 years at 2,500(pounds) per annum. It cannot, of course, be gainsaid that if the plaintiff/respondent had been apprised of this agreement with Bouari, he would, in all probability, have dissuaded the 1st defendant/appellant from assigning his share in the property to the 2nd defendant/ appellant. This assignment, which is clearly in breach of his fiduciary duty to the plaintiff/respondent, is the real gravamen of the case against the 1st defendant/appellant. It is significant that he did not see it fit to dispute any of the allegations made against him and the 2nd defendant/appellant.
A number of cases were cited by Chief Williams in the course of his ingenious argument before us. In addition to the decision in Boulting v. Association of Cinematograph, Television and Allied Technicians to which we have referred earlier, Chief Williams also referred to the following cases: –
MacCormick v. Grogan (1870) 4 App. Cas. 82 at p. 96;
Usenfowokan v. Idowu & Anor. (1969) 1 N.M.L.R. 77 at p. 84;
Tingley v. Muller [1917] 2 Ch. 144 at p. 165;
Phipps v. Boardman & anor. [1965] 1 All E.R. 849 at p. 856; and
In re Dellow’s Will Trusts [1964] 1 W.L.R. 451 at p. 454.
While it is proper and helpful to consider all these cases, and we have given due consideration to each of them, it seems to us that, at the end of the day, what the trial judge had to decide, and indeed decided, is the intention of the 1st defendant/appellant in all the particular circumstances of the case in hand. Therefore, except as a general proposition of law, it is, we think, better not to allow ourselves to be unduly affected by decisions, the facts and circumstances of which bear very little relation to and are therefore completely different from those in the instant case.
Looking at the broad substance of the obviously questionable transaction between the first and second defendant/appellants, we cannot find anything in it which can possibly lead us to think that the conclusion of the learned trial judge that the whole transaction was fraudulent and constituted a breach of the fiduciary duty which the 1st defendant/appellant owed to the plaintiff/ respondent under the power of attorney (Exhibit D) with respect to the property in question is in any way erroneous.
Another question that should be considered is this. Having found that there was a fraudulent breach of the fiduciary duty, was the learned trial judge in error in setting aside the deed of transfer which was executed in favour of the 2nd defendant/appellant pursuant to this breach We do not think he was in error, particularly as he had also found, again rightly in our view, that the 2nd defendant/appellant was not a purchaser for value.
The reason for this conclusion is not far to seek. It is settled law that, in all cases where there is a breach of a fiduciary duty which has resulted, as in the case in hand, in an unconscionable bargain, it will be inequitable that the transaction should be allowed to stand. The party complaining of the transaction is entitled, if he so requires, to be relieved against it in equity and, as incidental to the relief, he may ask that the document embodying the transaction should be set aside. (Armstrong v. Jackson [1917] 2 K.B. 822 at pp. 825- 826. Moreover, the court, in the exercise of its equitable jurisdiction, has an overriding power to set aside any unconscionable exercise of any of the powers granted by a principal to his agent. (See Tate v. Williamson (1866) 2. Ch. Appeals 55 at pp. 60-61). This remedy of recission is, however, subject to the rights of innocent third parties who may have acquired interest for value. (See Reese River Silver Mining Co. v. Smith (1869) L.R. 4 H.L. 64). As we have pointed out earlier, the learned trial judge in the case in hand has rightly found that the 2nd defendant/appellant gave no consideration for the deed of transfer and that he could not, therefore, be regarded as a purchaser for value. The position would have been different if the court had found that he gave value for the half share transferred to him.
Thus, in Blakham v. Hay thorpe (1617) 23 C.L.R. 156, the defendants, who were land agents employed by the plaintiff to sell his land to the Crown, during the course of their employment as such agents, acquired the knowledge that the Crown would, in all probability give 5(pounds) per acre for the land. While the agency was still in force, one of the defendants purchased the land on his own account for about 2(pounds): 10/ per acre without disclosing to the plaintiff the fact that there was such a probability and shortly afterwards sold it to the Crown for 5(pounds) per acre. In an action for an account of the money received in respect of the sale of the property to the Crown, and for a declaration that the agreement which the defendants procured the plaintiff to execute in reliance on the agency was fraudulent and therefore void, it was held that non-disclosure was a breach of the defendant’s duty and that the plaintiff was entitled to recover from them the difference between the price received by him and that paid by the Crown. Were in no doubt that the reason why there was no claim to set aside the sale was because the Crown was not only a purchaser for value, but had also paid for the land much more than what the plaintiff was led to expect by the defendant. Again, in Oliver v. Court & others (1820) 146 E.R. 1152, the facts of which are not unlike those of the case in hand, the property of the plaintiff was sold by the trustees of the estate to the son of the surveyor employed for the purpose of measuring and valuing the property. The son was also a surveyor and had assisted his father in making the valuation and measuring the estate. The sale was set aside on the ground that the son (now the defendant) had no right to purchase by reason of the relationship in which he stood to the parties selling the property, that the inadequacy of the purchase price was sufficiently established under the fraudulent circumstances disclosed, and that independently of those circumstances, the omission of the timber in the valuation of the property (although said to be a mistake) would alone have been sufficient ground for setting aside the sale, particularly as the sale was to a person in the position of the defendant.
Another case in point is that of McPherson v. Watt (1877) 3 App. Cas. 254. In that case, a Scottish attorney purchased four houses from his clients, doing so in the name of his brother. He did not disclose to his clients that he was the real purchaser of two of the houses. The House of Lords refused to order specific performance of the contract.
The reason for this rather strict attitude of the courts has been aptly stated by McCardie J. in Armstrong v. Jackson (supra) at pages 825-826. The learned trial judge in that case, after referring to two cases- Wilde v. Gibson (1848) 1 H.L.C. 605 at 632 and Angel v. Jay [1911] 1 K.B. 666-where the courts have held that when the contract has been completed, fraud must be proved before recission can be granted, observed, rightly in our view, as follows:-
“In none of these cases did the question of fiduciary relationship arise. Where that relationship exists the rule is infinitely stricter and more severe. The position of principal and agent gives rise to particular and onerous duties on the part of the agent, and the high standard of conduct required from him springs from the fiduciary relationship between his employer and himself. His position is confidential. It readily lends itself to abuse. A strict and salutary rule is required to meet the special situation. The rules of English law as they now exist spring from the strictness originally required by the courts of equity in cases where the fiduciary relationship exists. Those requirements are super added to the common law obligations of diligence and skill: see per Lord Cranworth in Aberdeen Railway Co. v. Blaikie Brothers (1854) 1 Macq 461 at p. 471 and Oliver v. Court (1820) 8 Price 127 at 161.”
Chief Williams, in the course of his argument, referred us to the decision in Boulting v. Association of Cinematograph, Television and Allied Technicians (supra) where Upjohn L.J. referring to the above rule of law and equity, observed as follows at page 637-
“To sum up the position, it is clear that the person entitled to the benefit of this positive rule is the person who is protected by it, but he, and he alone, can in proper circumstances relax it to such extent as he thinks proper. It cannot be used as a shield by the person owing the duty; that is clear; it is a sword and as such only can it be used by the person entitled to the benefit of it, and he may sheath the weapon.”
All that we need to say about the above observation with respect to the appeal now before us is that no matter how one considers the facts, it cannot be said that the plaintiff/respondent waived his equitable rights or “sheathed the weapon”. On the contrary, it is the first defendant/appellant, bearing in mind the arguments which have been adduced before us, who wanted to use it “as a shield”. It is, perhaps, pertinent, at this juncture, to refer also to what Upjohn L.J. said at pages 635 -636 of the same judgment about the rule governing fiduciary relationships. It is this-
“The rule is not directed at corrupt or fraudulent bargains (though, of course, it brings them within its umbrella). The rule is one of principle which depends not at all on any corrupt means rea in the mind of the person holding the conflicting capacity. It will be seldom, if ever, that it will be necessary to reply on the rules in the case of a fraudulent or corrupt bargain; simpler common law rules are normally available. The rule extends to all manner of relationships and the reports are full of examples of its application to many different circumstances. Like all rules of equity, it is flexible, in the sense that it develops to meet the changing situations and conditions of the time …
The rule, however, is one essentially for the protection of the person to whom the duty is owed. Thus the company is entitled to the undivided loyalty of its directors; beneficiaries are entitled to the unpaid services of their trustees, the client is entitled to the services of his solicitor who may not charge more than he is legally entitled to, and must not put himself into a position where he may owe conflicting duties to different clients (see, for example, in re Haslam and Hier-Evans [1902] 1 Ch. 765).”
All we wish to add is that at the time he sold the property to the 2nd defendant/appellant for 2,500(pounds), the 1st defendant/appellant was under a duty, in the particular circumstances of this case, to tell the plaintiff/respondent about the agreement he had reached with Bouari, and, indeed, about his intention to sell the plaintiff/respondent’s share at all.
The ratio of the cases to which we have referred is that, in all transactions with his principal, the agent must disclose every material fact which is known to him (the agent). If this is not done, the transaction is voidable at the principal’s option and the principal may obtain recission of the transaction after it has been completely executed without the necessity of establishing fraud on the part of the agent, although the establishment of fraud, as had been done in the present case, makes the case for recission much more irresistible and conclusive.
In conclusion, we are of the view that the finding of the learned trial judge in the present case was amply supported by the evidence. Moreoever, for the reasons which we have given above, and bearing in mind the ratio of the cases to which we have referred, we also think that, having regard to the facts as found by him, the learned trial judge was right in giving judgment for the plaintiff/respondent. His decision is certainly one with which we ought not to interfere. The appeal is, therefore, dismissed with costs assessed at 84 Naira.
Appeal dismissed.
SC.275/1972
