Dr. Moses Obajimi V. Mr. P. T. Adediji (2007)
LawGlobal-Hub Lead Judgment Report
JOHN AFOLABI FABIYI, J.C.A.
This is an appeal against the judgment of Yerima, J. while sitting at the High Court of Justice in Ibadan, Oyo State of Nigeria on 28th May, 2003.
At the lower court, the appellant as plaintiff, claimed against the respondent, as defendant thus:
“1) A declaration that by the terms of the Memorandum of Understanding dated 04/02/1999 entered into by the plaintiff and the defendant at SW9/1406 Ring road, Ibadan and executed by the plaintiff and the defendant at the plaintiff’s office in Ibadan, the plaintiff is neither indebted to the defendant in the sum of N500, 000 (Five Hundred Thousand Naira) or indeed any sum at all, nor liable of refund the sum of N500, 000 (Five Hundred Thousand Naira) to the defendant nor indeed any sum at all.
2) The sum of N1, 000, 000 (One Million Naira) being general damages for breach of the aforesaid Memorandum of Understanding by the defendant on 30/04/1999.
3) 21% interest on the sum claimed from 01/05/1999 till judgment is given and thereafter at 21% till judgment sum is fully recovered.
4) Further and other reliefs.
5) Cost of this action.”
On his own part, the defendant counter-claimed against the plaintiff as follows:
“a) The sum of N500.000.00 paid by the defendant to the Central Bank of Nigeria as part of the Statutory Deposit on an agreement with the plaintiff to buy the plaintiffs International Insurance Group Limited which purchase was not conclusive.
b) Interest at the rate of 21% on the said sum of N500, 000.00 from 8th day of March, 1999 until judgment is given and thereafter until the entire Judgment sum is liquidated.”
The facts of the matter should be assembled, albeit briefly. The appellant wanted to sell his business concern, to wit: International Insurance Group Nigeria Limited and the respondent desired to buy same sometime in 1999. They entered Into a Memorandum of Understanding as in Exhibit 7 on 4-02-1999. Therein, it was agreed that the respondent shall complete the purchase price of N5, 000, 000 on or before 30th April. 1999. In addition, it was agreed that the respondent shall also bear some sundry expenses including statutory deposit with the Central Bank, As extant in exhibit 12, the respondent paid the sum of N500, 000 as statutory deposit to the appellant who paid same to the Central Bank of Nigeria.
As at 30-4-99 when the purchase sum should be paid in full, the respondent failed to fulfill his contractual obligation to the appellant as contained in exhibit 7. The appellant maintained that by the breach, he suffered colossal damages as he rebuffed other prospective purchasers of his concern. For some time, the respondent left the appellant in limbo and suspense.
On 26-10-99, the respondent wrote to the appellant to demand for the sum of N500, 000 paid to the Central Bank relying on Clause v(i) of exhibit 7 which provides ‘that in the event of the sale not conclusive the above stated expenses borne by the purchasers may be reimbursed by the Vendor.
The learned trial Judge assembled the evidence as put forward by the parties. Thereafter, she was duly addressed by learned counsel on both sides of the divide. In the reserved judgment handed out on 28th May, 2003, the learned trial Judge found the respondent to be in breach of a fundamental term of the Memorandum of Understanding that the full purchase price should be paid on or before 30-4-99. Curiously, the judgment ended as follows as extant on page 69 of the transcript record of appeal:
“I therefore in the interest of justice and on the principle of equity order the refund of the defendant’s N500, 000 paid in respect of the plaintiff’s company which said contract has been frustrated having formed part of the asset of the company to which the plaintiff is now vice Chairman.
I will not award any interest on the said sum even though the defendant claimed that interest is payable thereon by CBN, I have no proof of that before the court.”
The plaintiff felt irked with the stance of the learned trial Judge and has appealed to this court. The notice of appeal filed on 5-6-03 carries five grounds of appeal. The reliefs sought from this court are as follows:
“a. An order setting aside the judgment of the learned trial Judge dated 28-5-2003.
b. An order entering judgment for the appellant.
c. Such further and other orders as this Honourable Court may deem fit to make in the circumstance:”
The respondent sought the leave of this court to cross-appeal on the part of the judgment touching on non-award of interest on the sum of N500.000 awarded to him. His notice of cross-appeal was accompanied by one ground of appeal. The relief sought by him is for:
“An order setting aside part of the judgment of the learned trial Judge dated 28th May, 2003 on the non-award of interest to the cross-appellant and award interest on the judgment sum.”
The briefs of argument relied upon by the appellant are:
1) Appellant’s brief dated 11th April, 2005 and filed on the same date and
2) Appellant’s reply brief with appellant’s/cross-respondent’s brief of argument filed on 3-4-06.
On his part, the respondent filed:
(1) The respondent/cross appellant’s brief of argument dated 19-1-05 filed on 20-106 and
(2) Cross appellant’s reply brief to cross respondent’s brief of argument dated 11-10-06 and filed on the same date.
On 21-3-07 when this appeal fell due for hearing, K. Odole Esq. learned counsel for the respondent, at the earliest opportunity, referred the court to the preliminary objection contained at pages 4-6 of the respondent’s brief of argument. He urged that grounds 1, 2, 3 and 4 contained in the notice of appeal filed by the appellant be struck out as being incompetent. He felt that the grounds of appeal nos. 1, 2 & 3 do not arise from the findings of the lower court but based on the interpretation of the judgment of the lower court by the appellant or his counsel. He observed that ground 4 which touched on proper parties against whom the counter-claim could be raised is a new issue not canvassed at the lower court. And since no leave was sought and obtained by the appellant from this court, ground 4 and issue 3.3 distilled therefrom are incompetent. He cited A.-G., Anambra State v. Okeke (2002) 5 S.C. (Pt.11) 58 at 80, (2002) 12 NWLR (PT. 782) 575; Lebile v. Registered trustees of C & S (2003) 1 SC (Pt.1) 25 at 33 (2003) 2 NWLR (Pt 804) 399: Jetua v. Ahmed (2003) 1 SC (PT.11) 178, (2003) 4 NWLR (Pt 811) 498; NDIC V. Okem Enterprises Ltd. (2004) 4 SC (Pt. 11) 77; (2004) 10 NWLR (PI. 880) 107.
He urged us to uphold the preliminary objection and strike out the stated grounds of appeal. He opined that once grounds 1, 2, 3 & 4 are struck out, the only ground left is the omnibus ground which is incapable of dealing with the issues raised by the appellant in his brief of argument: more especially as the omnibus ground did not attack the specific findings of fact by the learned trial Judge. He cited Adelusola v. Akinde (2004) 5 SC (Pt. 2) 71; (2004) 12 NWLR (Pt. 887) 295. He finally urged that based on the preliminary objection, the appeal should be dismissed.
Put succinctly, learned counsel for the appellant observed that the learned trial Judge found that the respondent breached a fundamental term of the contract as in exhibit 7 and still went ahead to find in his favour; relying on part-performance to hold that he was not in total breach. He felt that the grounds of appeal contained in the notice of appeal derive their breath from the judgment of the lower court.
On ground 4, learned counsel for the respondent maintained that issue of proper patties came up at the trial court. He felt that even if it was not raised, such a point can be taken in this Court. He cited Alabi v. Doherty (2006) All FWLR (Pt. 299) 1527 at 1541; (2005) 18 NWLR (Pt. 957) 411.
Learned counsel further contended that issues 3.01 and 3.02 contained in the respondent’s brief do not relate to the appellant’s grounds of appeal and as such, should be struck out. He cited Malizu v. Assistant Commissioner of Police (2002) 7 NWLR (Pt. 767) 527: Isibor v. The State (2002) 3 NWLR (Pt. 754) 250; Igago v. State (1999) 14 NWLR (Pt. 637) 1.
For a clear perception, I need to reproduce grounds 1, 2, 3 and 4 of the grounds of appeal. They read as follows without their particulars:
“Ground 1
The learned trial Judge erred in law when she held that irrespective of the fact that the respondent breached the contract between him and appellant, the respondent was entitled to the sum of N5000, 000 being money raid by the respondent in part-performance of the contract.
Ground II
The learned trial Judge erred in law when she held that irrespective of the contract by the respondent the appellant suffered no loss.
Ground III
The learned trial Judge erred in law when she held that irrespective of the breach of the contract by the respondent, the respondent was entitled to the reliefs on his counter-claim.
Ground IV
The Honourable trial Judge erred in law and misdirected herself as to the fact when she held that the appellant personally benefited from the payment of N500.000 made by the respondent to the Central Bank of Nigeria on behalf of the Limited Liability Company, to wit: International Insurance Group (Nig.) Limited and is liable to refund the said sum of N500, 000 to the respondent.”
Let me observe here that it can hardly be contested that the learned trial Judge found the respondent to be in breach of a fundamental term of exhibit 7. The germane term that was breached relates to the non-payment of the sum of N5, 000, 000 being the purchase price on the due date which is 30-4-99. It is extant in the record of appeal that the learned trial Judge then turned round to find against the appellant and in favour of the respondent on ground of pan performance, equity and the like. I shall treat these points in detail later in this judgment. For now, I want to say that grounds 1, 2 and 3 as produced above rightly complained against the stance of the learned trial Judge. I agree with the learned counsel for the appellant that the stated grounds 1, 2 & 3 of the grounds of appeal derive their breath from the judgment of the lower court.
In short, the preliminary objection in respect of grounds 1, 2, and 3 of the grounds of appeal is hereby overruled.
As for ground 4, I cannot see where the point in respect of proper parties to the suit was canvassed at the lower court. To raise a fresh point of law not taken at the lower court, it is necessary to seek and obtain leave of this court. The appellant who failed in that direction cannot hide under any other cover. In Saraki v. Kotoye (1990) 4 NWLR (Pt. 143) 144, the apex court pronounced that it is a well established proposition of law in respect of which there can hardly be a departure that the grounds of appeal against a decision must relate to the decision and should constitute a challenge to the ratio of the decision. See Fasoro v. Beyioku (1988) 2 NWLR (Pt. 76) 263: Adejumo v. Ayantegbe (1989) 3 NWLR (Pt. 110) 417; Agbaka v. Amadi (1998) 11 NWLR (Pt. 572) 16; Iweka v. S.C.OA. (Nig) Ltd. (2000) 7 NWLR (Pt. 664) 325 at 338.
In short, since no leave was sought and obtained to raise the fresh point relating to parties, objection in respect of ground 4 of the grounds of appeal is sustained. The said ground 4 is hereby struck out while issue 3.3 distilled therefrom is hereby discountenanced.
After the preliminary objection was taken on behalf of both sides, same was followed by adoption of briefs of argument by learned counsel on both sides.
The two subsisting issues of the appellant read as follows:
“3.1 Whether the respondent having expressly breached the contract between him and the appellant, the respondent is entitled to the sum of N500,000 (Five Hundred Thousand Naira) being money paid as statutory deposit to the Central Bank of Nigeria as supposed part-performance of the contract as contained in the Memorandum of Understanding (exhibit 7).
3.2 Whether the appellant is entitled to damages for breach of contract by the respondent.”
The three issues couched on behalf of the respondent for a due determination of the appeal read as follows:
“3.01 Whether having regards to the entire provisions of exhibit 7, the Memorandum of Understanding between the appellant and the respondent, the respondent could be said to have breached the contract between him and the appellant for the sale of appellant’s International Insurance Group Nigeria Limited.
3.02 Whether from the pleadings and evidence before the trial court, the appellant could be said to have suffered damages.
3.03 Whether the respondent was entitled to his counter-claim at the lower court.”
Let me now consider appellant’s issue 3.01 which is fairly similar to the respondent’s issue 3.01. Parties are ad idem that exhibit 7 -the Memorandum of Understanding hinds the panics to same.
The two sub-clauses therein which form the bone of contention herein is (II) (iii) and veil which read as follows:
“(II) (iii) That the payment of the N5 million agreed to by the vendors shall be paid by the Purchasers either instalmentally or in full not exceeding the end of April, 1999.
(v) That in the event of the sale not conclusive the above stated expenses borne by the purchasers may be reimbursed by the Vendor.”
Now then, it is basic that the terms of a contract must be construed as agreed by the parties. The general rule is that where the parties have embodied the terms of their contract in a written document, extrinsic evidence is not admissible to add to, vary, subtract from or contradict the terms of the written document. See Union Bank of Nigeria Ltd. v. Prof Albert Ozigi (1994) 3 SCNJ 42 at 55; (1994) 3 NWLR (Pt. 333) 385.
It has also been pronounced that the basic principle of law is that it is not the duty of any court to make contracts for the parties. Contracts, as a rule, are made by the parties thereto who are bound by the terms thereof and the courts are always reluctant to read into a contract terms which there is no agreement. See Gabriel Olatunde v. Obafemi Awolowo University & Anor. (1998) 4 SCNJ 59 at pages 74-75; (1998) 5 NWLR (Pt. 549) 178. The above two authorities were cited by the learned counsel for the appellant.
Learned counsel for the appellant seriously contended that since the learned trial Judge found that the respondent was in breach of a fundamental term of exhibit 7 for failing to pay the purchase price at the end of April 1999 or at all, it was a strange proposition of law that the respondent who was in pernicious breach could still be made to enjoy the fruits of such breach as was done in this case.
Learned counsel contended that the only plausible reason why the appellant may reimburse the respondent as per exhibit 7 is where the contract was frustrated by an Act of God, the appellant himself or by mutual consent of the parties that the respondent be reimbursed. He felt that it will be stretching the interpretation of exhibit 7 too far to hold that reimbursable expenses would cover situations where the respondent is in clear breach of a fundamental term of the contract.
The learned trial Judge at page 58 lines 1-18 of the transcript record of appeal found as follows:
“The defendant neither in his evidence nor pleadings stated the reason for his inability to conclude the contract nor why he did not formally terminate same for whatever his reasons were. The plaintiff was still anticipating payment as per paragraphs (II)(iii) of the M.O. U. but it was not forthcoming neither was any reason given before the defendant’s move towards a recovery of the sum of N500,000.00 paid as contained in paragraph 14 the statement of defence and relying on exhibit 6 written to the plaintiff’s agent – Stagum Consultants dated the 26th of October, 1999.
One wonders whether in such a contract where one of the conditions was that money was supposed to be paid by a certain time i.e. 30th April, 1999, the defendant waiting until the 29th October, 1999 without any act in furtherance of the contract was taken, can be said to be reasonable under the circumstance, no explanation, no cancellation of the contract, but leaving the plaintiff in a limbo. This was followed up by other letters of demand i.e. exhibits 8, 9, 11 dated the 10th of November, 2006; 28th April 2006; 23rd April, 2001 respectively.”
Having found the respondent culpable for breaching the fundamental term of the contract between him and the appellant, one would have thought that the next thing was to sanction the respondent accordingly. Curiously, and with respect, contrary to reasoning, she found in favour of the respondent on ground of part-performance, interest of justice and equity. All these, to my mind, appeared to have been raked up without any prompting by the parties. I shall treat them in seriatim anon.
It was submitted on behalf of the appellant that the doctrine of part-performance was misapplied by the learned trial Judge. Let me say it clearly that the respondent’s defence/counter claim was not based on part-performance of the contract by him. He rested his case on Clause veil of exhibit 7 which has been reproduced earlier on in this judgment. It is ‘that in the event of the sale not conclusive the above stated expenses borne by the purchasers may be reimbursed by the vendor’. I have carefully perused the record of appeal and I am unable to pinpoint the portion of same where the learned trial Judge was addressed by the parties on part-performance. It must be stated here that the doctrine of part-performance arose by sheer intervention of equity. Equity intervened to mitigate the losses that may arise by rigid application of contracts that by law ought to be in writing but were made orally. The doctrine is based on estoppel that a defendant who plainly indicated by his conduct the existence of a contract could not be allowed to give him the lie and take shelter under a statute. It is designed to prevent fraud from being perpetrated on the other side that has altered his position on the faith of the contract. See International ile Industries (Nig.) Ltd. V. Dr. Ademola Oyekanmi Aderemi & Ors. (1999) 8 NWLR (Pt. 614) 268.
Exhibit 7 herein is a written contract between the parties. They did not enter into any oral contract in which the appellant made the respondent alter his position adversely on the faith of the contract. So the doctrine of part-performance imported into the judgment did not hold any water.
The learned trial Judge, with respect to her, talked about interest of justice to the respondent who was in breach of a fundamental term. I am afraid; interest of justice must be to the appellant as well and I dare say even to the court itself. The respondent did not pay the purchase price on 30-4-99 as agreed. Within 30-4-99 and 29-10-99, the respondent put the appellant in limbo; to use the language of the trial Judge. The respondent failed to pay up on scheduled date. For about six months, the respondent put the appellant in suspense and had the audacity to say that the appellant was negotiating with others for the sale of his concern. I sincerely feel that interest of justice should have swayed in favour of the appellant and against the respondent who evinced a recalcitrant behaviour. It is the same respondent who was charging at the appellant requesting for a refund to which he was clearly not entitled having put the appellant in some losses.
The learned trial Judge also talked about equity. Equity is fairness. Vide exhibit 7, the law of contract is seriously at play and equity must stay on the side line; it seems to me.
It has been stated by the Supreme Court that a valid contract between parties may be discharged in one or four ways known to law; namely:
a) By performance; or
b) By express agreement; or
c) By the doctrine of frustration; or
d) By breach.
See Tsokwa Oil Marketing Company v. B.O.N. Ltd (2002) 11 NWLR (Pt. 777) 163 at 200. There is no gainsaying the point that a breach of contract is committed when a party to the contract without lawful excuse fails neglects or refuses to perform an obligation he undertook in the contract or either performs the obligation defectively or incapacitates himself from performing the contract. See Adeoti & Anr. v. Ayorinde & Anr. (2001) 6 NWLR (Pt. 709) 336.
To my mind, the only tenable reasons why the appellant may reimburse the respondent as per Clause V(i) of exhibit 7 is where the contract was frustrated by the appellant himself or by an Act of God or if by mutual consent, the parties agree that the respondent be reimbursed. Reimbursement ordered upon a ‘pernicious breach’ of exhibit 7 by the respondent who tried to cry wolf to no avail was not good enough. It was no doubt, justice misplaced to the wrong side. Such creates an absurd situation where the culpable side is turned into a saint. Certainly, it stretched the interpretation of exhibit 7 too far and beyond reasonable limit to hold that the respondent was entitled to reimbursement in the circumstance created by him. In construing the word ‘may’ in clause veil of exhibit 7, a lot of discretion needed to be employed taking into remembrance the whole gamut of the matter. Such discretion has to be done not only judicially, but judiciously as well. A lot of circumspection was needed. I am unable to pitch my tent with the learned trial Judge in this regard. See University of Lagos v. Olaniyan (1985) 16 NSCC (Pt. 1) 98 at 113, (1985) 1 NWLR (pt. 1) 156; Eronini v. Iheuko (1989) 2 NSCC (Pt. 1) 503 at 513; (1989) 3 SC (Pt. 1) 30; (1989) 2 NWLR (Pt. 101) 46.
With the above position as discussed by me, I cannot see how I can allow the refund of N500.000 ordered in favour of the respondent based on his unwarranted claim to stand. And it is hereby set aside. Consequently, his counter-claim fails and it is hereby dismissed. His cross-appeal is now of no moment. He wants interest on a refund to which he was not entitled. The cross-appeal is hereby dismissed.
Since I have set aside the undeserved award of the refund of N500.000. I do not intend to award any further damages against him in favour of the appellant. In my opinion, such may, indirectly, amount to double compensation.
On the whole, I come to the conclusion that the appeal is meritorious. And it is hereby allowed while the cross-appeal is accordingly dismissed.
The respondent shall pay N5.000 costs to the appellant.
Other Citations: (2007)LCN/2430(CA)
