International Textile Industries (Nig) Ltd Vs Dr Ademola Oykanmi Aderemi & Ors (1999)
LAWGLOBAL HUB Lead Judgment Report
O. UWAIFO, J.S.C.
The property in dispute in this case is plot No. 98 at No.2 Abudu Smith Street, Victoria Island, Lagos. It is State land covered by Title Certificate No. LO5166 of 1963 which was leased to late Oba Adesoji Aderemi by the Governor of Lagos State under a deed of lease dated 4 June, 1963. It was developed by the said lessee and at his death, it became vested in the 1st to 4th respondents who are his executors/executrix (hereinafter called the landlords).
Sometime in February, 1986, the appellant indicated its interest in taking a sublease of the said property. The landlords, acting through their solicitors, made an offer by letter dated 18 February. 1986 (exhibit A-A2) to the appellant. The letter contained details which I do not need to state in full. ‘It is enough to say that the sublease was to be for ten years with an option for a further five years; the annual rent was to be N75.000.00 with effect from June 1, 1986, the first five years rent or N375.000.00 being payable in advance by the sublessee; and the landlords were to be responsible for the payment of the ground rent.
The letter stated that the property was offered in the condition in which it was, a detached two-storey house together with stewards’ quarters and garage, but that “you are permitted, at your own expense, to add to, alter or extend it and in other respects carry out all renovations and refurbishments you consider necessary to suit your intended use and taste, subject to you (sic) obtaining necessary planning approval and also subject to your submitting your proposals to us for our clients’ prior approval. In addition, there were the following two paragraphs:
“If you are in agreement with the above terms and conditions, we shall be grateful if you would kindly endorse the attached copy of this letter accordingly and return it to us. You have already deposited with us two cheques totaling N297.500.00. In returning to us the endorsed copy of this letter, you should please let us have also your cheque for the balance of the rent.
Kindly let us know whether you will directly instruct your own solicitor or we should instruct one on your behalf to prepare a draft sublease in accordance with the above terms and conditions.” This letter was marked ‘subject to contract’
In reaction , the appellant accepted the offer in its letter of 20 February, 1986 (exhibit B-B1 ) with some requests which included the limit of 10% increase in rent after the first five years, how to determine the rent for the option period, the landlords to bear the cost of erecting a wall fence and that all necessary approvals by the Lagos State Government to be obtained by the landlords. The landlords virtually consented by their letter dated 24 February, 1986 (exhibit C-C1) adding in their last two paragraphs:
“We have tried as much as possible to acceed (sic) to your various requests in order to bring this negotiation to completion. We trust that you would now kindly confirm your acceptance of our offer by sending us your cheque for the balance of the rent in the sum of N77,500.00.
You may then wish to pass copies of our two letters to your solicitors to enable them prepare a draft sublease for the approval of the parties.”
This letter was also marked ‘subject to contract’
Yet again, the appellant replied by letter dated 28 February, 1986 (exhibit D-D1) requesting a ceiling of 15% increase in rent in respect of the option period and offering to pay N21,250.00 in final settlement of the rent due owing to the uninhabitable condition of the property of which the landlords were said to have agreed to make funds available for renovation, but now the appellant said it was going to spend about N300,000.00 “on improvements which will ultimately revert to the Landlord after the lease period.” A cheque for the said N21,250.00 was actually forwarded to the landlords. The landlords by their letter of 28 February, 1986, (exhibit E-E5) accepted the said cheque for N21,250.00 and the suggested 15%; ceiling increase in rent for the option period. The letter ended with the following two paragraphs:
“We expect that you would endeavour to ensure that the refurbishment and improvements you propose would be carried out and completed within the four months of grace so that your sublease would commence on 1st July, 1986.
You should please instruct your solicitors to put in hand the preparation of the draft sublease agreement for approval of the parties and let us have the draft in due course.”
Again, this letter was marked ‘subject to contract’
At a stage the appellant proposed erecting a new building of three storeys in place of the existing building but only on a portion of the land in question. This led to a meeting being held by representatives of the parties on 30 October, 1986. Decisions were reached which were recorded (exhibit E-E5) and signed by one of the solicitors for the landlords. Thereafter, a letter dated 14 May, 1987 (exhibit F) was written to appellant’s solicitors by the landlords’ solicitors, which reads in part:
“We are pleased to confirm on behalf of our clients that your clients. International ile Industries (Nigeria) Limited, are granted a rent-free period of fifteen months from the date planning permission is granted for the proposed redevelopment of the above premises.
We are also pleased to confirm the preparedness of our clients to assist in obtaining the planning approval. We trust that your clients would kindly put in hand forthwith the preparation of the plans so that the plans can be submitted before the end of May, 1987.”
This letter was not marked ‘subject to contract’.
The plans were later approved by the Lagos State Government. They were released to the appellant on 15th May, 1989. These facts were stated in a letter dated 17 May, 1989 (exhibit H) by the appellant’s solicitors to the landlords’ solicitors. A draft deed of sublease had earlier been forwarded to the landlords for execution and return to the appellant in order to seek the Governor’s consent. They took no steps to do so but simply avoided further commitment to the appellant. By June, 1989, it had become obvious that the 5th respondent had begun to assert interest in the property in question. The police had even intervened at the instance of one Lt-General T. Danjuma (rtd) who was alleged to be the chairman of the 5th respondent. It was said that the 5th respondent had made an outright purchase of the property. The police subsequently reached a decision that the matter was a civil one and advised the parties to seek a peaceful resolution of the dispute. What finally emerged was that the landlords had turned their backs on the appellant and sold the property to the 5th respondent.
Those were the circumstances in which the appellant went to law to seek a number of relief’s. I shall later in this judgment set out the said reliefs and discuss them in relation to this appeal. On 21 December, 1990, at the High Court of Lagos, Ope-Agbe J., granted most of the reliefs claimed but ignored the alternative claim of N3,842,099.70 being special and general damages for breach of contract by the landlords. He dismissed the counter-claim in which the 5th respondent sought two declaratory reliefs, a perpetual injunction and N1,000,000.00 damages for trespass against the appellant. He considered the effect of the phrase ‘subject to contract’ which appeared on some of the relevant letters from the landlords and held that it did not affect the fact of the existence of a binding contract in the circumstances. As to whether parties could enter into a valid contract for the sale or alienation of land before the Governor’s consent was obtained under s.22 of the Land Use Act, 1978 the learned trial Judge concluded that they could.
On appeal, the Court of Appeal (Lagos Division) – Coram Sulu-Gambari, Kalgo and Ayoola JJCA on 13 May, 1993, set aside the judgment of the trial court. It held that there was no contract by virtue of the use of the phrase ‘subject to contract’. It seemed also to have held that failure to obtain the prior consent of the Governor was fatal. Said Kalgo JCA.: “It is very dear in the circumstances of this appeal that the cardinal issue to the validity of the lease is the consent of the
Governor first had and obtained. There is therefore good reason for saying that the issue of consent is a condition precedent in the sub-lease and so there is no binding contract without such consent. There is no consent of the Governor in this case uptil the time the panics came to court. This means, in my judgment that there is no binding and enforceable contract of lease between the I5t to the 4th appellants and the respondent despite the presence of the 4 certainties i.e. the parties, the property, the length of term, the rent and the commencement date. This is so, because all the correspondences (sic) concerned and relevant to the lease, the phrase ‘subject to contract’ was maintained and therefore applies throughout the negotiations as no where was it expressly or by necessary implication expunged.” The appeal against the dismissal of the counterclaim by the 5th respondent was partially allowed by the Court of Appeal. .
On appeal against that judgment, the appellant has raised four issues for determination, namely:
“1. Was the Court or Appeal right in reversing the decision of the trial court granting reliefs 2, 3 and 4 of the plaintiff/appellant’s claim which reversal was predicated on the ground that there was no valid and enforceable agreement between the parties having regard to the fact that:
(a) Governor’s consent has not been obtained as required by section 22 of the Land Use Act.
(b) That (sic) the correspondence between the panics were marked subject to contract.’
- Was the Court of Appeal right in holding that the plaintiff’s claim for damages is not sustainable since there is no binding agreement between the parties for the reasons stated in issue (1) above
- Was the Court of Appeal right for the reasons given in the judgment that the 5th Defendant is not a trespasser and therefore could not be made liable to ray damages for such act of trespass
- If the judgment or the trial court is restored, should the Supreme Court not order that damages suffered by the plaintiff be assessed as claimed in paragraph 34(5)(A) of the amended statement of claim”‘
The landlords filed no brief or argument but the 5th respondent did. At the hearing of this appeal on 8 March, 1999, learned counsel for the landlords proferred oral argument with the leave of court by virtue of order 6, r. 8(5) of the Supreme Court Rules, 1985. As regards the 5th respondent, it raised three issues for determination as follows:
“(i) Whether the negotiations between the plaintiff/appellant and the 1st to 4th defendants/respondents ever crystallized into a specifically enforceable contract’
(ii) Whether the alleged demise pleaded by the plaintiff in its statement of claim as the foundation for a declaratory relief sought for in the action was not void having regard to the provisions of sections 22 and 26 of the Land Use Act.
(iii) Whether the plaintiff/appellant is entitled to any of the reliefs claimed on the writ of summons. A corollary to this issue is whether the prayer for specific performance can be properly made in a situation when damages would provide adequate remedy”
I think the issues raised by the appellant and the 5th respondent, properly understood, are largely the same. I am satisfied that they encompass the general spectrum of the nine grounds of appeal filed. I intend to deal with them together along with the arguments canvassed by the three parties to this appeal in the form of a running commentary before giving specific answers to the issues where necessary.
The appellant’s case, as argued, is that
(1) there was a binding contract to enter into a sublease at the point at which the parties can be said to have agreed to the length of terms, the rent payable and the commencement date notwithstanding the marking of some of the correspondence that passed between the parties ‘subject to contract’, when clearly that phrase was no more than a mere surplusage;
(2) the Land Use Act, 1978 does not prohibit a contract to transfer or alienate land so long as any further step which tends to give effect to such alienation is made with the consent of the Governor by virtue of s.22(1) of the Land Use Act;
(3) the fact that an outright sale of the property in question has been made to the 5th respondent will not affect the right to specific performance of the contract between the landlords and the appellant for a sublease since the 5th respondent takes subject to the interest of the appellant;
(4) the 5th respondent having come to the said property upon which the appellant was already in lawful possession. it became a trespasser liable to pay damages; and
(5) the appellant’s claim to damages against the landlords was not considered by the trial court and the lower court did not also deal with it in the appellant’s cross-appeal to that court; that being so, the Supreme Court can direct that damages suffered by the appellant be assessed.
The landlords submitted through the oral argument of their counsel. Mr. T.E. Williams, that (i) because all the material correspondence were marked ‘subject to contract’ there was no binding contract made: and (ii) the court will not order specific performance because the sublease is still subject to the Governor’s consent who will not be compelled to give it, more so that he was not made a party to the case. He urged that the appeal be dismissed,
As regards the 5th respondent the contention is that
(a) there was no binding and enforceable contract but only mere negotiations by correspondence marked ‘subject to contract’, which phrase must be given its full meaning;
(b) the parties were never ad idem as to the cardinal terms of a valid agreement hence ‘a deed was never executed or delivered”
(c) s. 22 or the Land Use Act makes the consent of the Governor to a lease transaction a condition precedent to the validity of the lease, which consent in this case was not obtained: and
(d) the court will not order specific performance when it is impossible for the defendant to comply with the order and where damages will be sufficient compensation.
It seems to me that the landlords and the 5th respondent have been unable to distinguish between the two stages involved in transactions of the transfer on sale of an estate in land. it is important to bear this phenomenon in mind in order to be able to appreciate the stage at which the consent under s.22(1) at the Land Use Act, 1978 (hereinafter called the Act) becomes relevant in a bargain to alienate land. The two stages are well known in conveyancing procedure. Parties have to agree to the terms of sale before the property in question is conveyed. In Conveyancing law and Procedure by Barnsley, 1973 edn. page 4, it is stated:
“A transfer on sale of an estate in land is divisible into two distinct stages: (i) the contract stage, ending with the formation of a binding contract for sale. (ii) the conveyance stage, culminating in the legal title vesting in the purchaser by means of the appropriate instrument under seal”
It follows that it is only after a binding contract for sale is arrived at that the need to pursue the procedure for acquiring title will arise. That is when the obtainment of the necessary consent to alienate the property becomes an issue in order to make the alienation valid. It is rather surprising that the landlords and 5th Respondent did not seem to appreciate this, more especially as they cited copiously from a recent decision of this court in Awojugbagbe Light Industries Ltd v. Chinukwe (1995) 4 NWLR (pt..390) 379. This court in that case approved the Privy Council’s approach in Denning v. Edwardes (1961) A.C. 245 in similar circumstances where consent was by statute necessary for the valid sale of land. I shall discuss these cases later in this judgment.
In considering the first stage, i.e. the contract stage which ends with the formation of a binding contract for sale, it is pertinent to examine the real relevance, and indeed the effect, of the phrase ‘subject to contract” in our own circumstances. a phrase the landlords’ solicitors freely and unilaterally marked on some of the relevant letters constituting at least some memorandum of agreement relating to the contract in question. The first point to make (and I consider this quite paramount) is that that phrase may seem to serve well in the established land sale procedure that operates in England where the insistence on a formal contract has acquired a tradition and some meaning.
English land law is noted for its complexities. In sale of land, there have been fashioned out what are known as General Conditions of Sale, Special Conditions, National Conditions, and The Law Society’s Conditions. I need to quote passages from the Conveyancing Law and Practice (supra) at pp. 109- 110 in this regard. To explain why formal contract is usually necessary:
‘Though in a standard form contract the General Conditions of Sale sometimes appear after the particulars and the Special Conditions, it will be helpful to say something of their basic nature at this stage. It may be asked, why have them The answer lies in an understanding of English land law, whose complexities are such that in any contract for the sale of land, it is essential that the respective rights and duties of the panics are clearly defined. If the parties have not expressly provided for certain important matters, the law will imply terms regulating them. The term ‘open contract’ has already been mentioned … Every open contract is subject to a code of implied obligations, unless specific provision is made to the contrary. These open contract conditions impose onerous terms upon the vendor, and over the years the practice has developed of incorporating within the contract express conditions, designed to facilitate the vendor’s task and to cut down the purchaser’s rights under an open contract. These conditions have now become fairly stereotyped and sufficiently general in nature to be capable of being incorporated simply by reference to a standard form. Every formal contract is made subject to General Conditions of Sale, though they only apply so far as they are not varied by or inconsistent with the Special Conditions…. In reality, General Conditions are incorporated as an insurance measure… Notwithstanding their generality, it is still incumbent upon a solicitor to consider whether the peculiar circumstances of his case are adequately covered by the General Conditions; if not he should frame a suitable special condition. In particular the National Conditions and The Law Society’s Conditions are planned primarily for the sale of houses with vacant possession; consequently either form may require adaptation on the sale of a building land, or agricultural, industrial or investment property:’ (Emphasis mine)
At pages 634-643, the National Conditions of Sale (18th edition) are published. They contain 22 conditions. To take just an example, condition 15 is to protect the vendor from any contravention of the Planning Acts when it says in part that “the property is not to the knowledge of the vendor subject to any charge, order. Restriction, agreement or other matter arising under the Planning Acts but… the property is sold subject to any such charges, notices, order, restrictions, agreements and matters affecting the interest sold … the purchaser shall be deemed to buy with knowledge in all respects of the authorised use of the property for the purposes of the Planning Acts.” I do not think we can say we have the equivalent of the National or The Law Society’s Conditions et seq which have to be complied with and therefore should be brought to the notice of parties to a contract of land sale through a formal contract stipulations. But this is ensured under English procedure where the intention to have such formal contract is usually expressed and each party is given a counterpart of the contract to be signed.
After the parties have signed their respective parts of the formal contract, the exchange of contracts takes a customary form, usually by post. I need not go into that I only need to emphasize that it is clear to me that this procedure of formal contract and the recourse to ‘subject to contract’ do not at the moment, as far as I am aware, fit into our system of land sale particularly as we do not have the equivalent of these General, Special. National and The Law Society’s Conditions. ‘Subject to contract’ in that sense is, in my opinion, no more than an exotic, though convenient, phrase which is employed to meet the various intricate statutory and professional requirements in English conveyancing practice. This is achieved in a common sense approach to meet the intention of the contracting parties by opting to make it a safety device, whatever agreement is reached in land sale subject to contract. The observation of Lord Greene, M.R., in Spottiswoode. Ballantyne & Co. Ltd. v. Doreen Appliances Ltd. (1942) 2 All ER 65 at p. 66 appears to explain the effect of introducing such expression as “subject to the terms of a formal agreement to be prepared” by the solicitor. He said:
..”, the language used here is equivalent to the common and more concise phrase ‘subject to contract’ and if anything is settled, it is that the phrase is one which makes it clear that the intention of the parties is that neither or them is to be contractually bound until a contract is signed in the usual way. ” (Emphasis mine)
That seems to make the use of that phrase irrelevant and perhaps meaningless in our own situation here unless it can be shown in any particular case that the vendor or purchaser or both had evinced as their intention, a special formal contract to embody terms and conditions which go beyond the mere offer and acceptance implication, to be drawn up and executed. Nothing prevents parties to a contract from deciding to adopt such necessary formalism considered to be in the interest of the bargain. Otherwise, in the usual way as used in Spottiswoode case by Lord Greene M.R. can have meaning only where there has been an established procedure and form of contract of sale agreement.
There is authority for saying, by way of a very close analogy, that when a term is inserted in a contract which has no application. it should be regarded as meaningless and ignored or severed from the contract without impairing the contract itself: see Nicolene Ltd. v. Simmonds (1953) 1 All ER 822 where Denning LJ said at p. 825:
“A clause which is meaningless can often be ignored, while still having the contract good, whereas a clause which has yet to be agreed may mean that there is no contract at all, because the parties have not agreed on all the essential terms. I take it to be clear law that, if one of the parties to a contract inserts into it an exempting condition in his own favour which the other side agrees and it afterwards appears that condition is meaningless or is so ambiguous that no ascertainable meaning can be given to it, that does not render the whole contract a nullity. The only result is that the exempting condition is a nullity and must be rejected. It would be strange, indeed, if a party could escape everyone of his obligations by inserting a meaningless exemption from some of them.”
Of course, it must be conceded that when the phrase ‘subject to contract’ is employed in an appropriate situation, with a clear measure of intention, there can be no valid contract until formal contracts are exchanged. I think that was in essence what Lord Denning M.R. conveyed in Sherbrooke v. Dipple (1980) 41 P & CR 173 at 176 when he observed:
“Where parties started their negotiations under the umbrella of the ‘subject to contract’ formula, or some similar expression of intention, it was really hopeless for one side or the other to say that a contract came into existence because the parties became of one mind notwithstanding that no formal contracts had been exchanged. Where formal contracts were exchanged it was true that parties were inevitably of one mind at the moment before the exchange was made. But they were only of one mind on the footing that all the terms and conditions of the sale and purchase had been settled between them, and even then the original intention still remained intact that there should be no formal contract in existence until the written contracts had been exchanged.’
(Emphasis mine)
However, circumstances have sometimes made the effect of the words ‘subject to contract not inevitable even where that phrase has acquired a firm customary usage with practical justification. One such circumstance occurred in Michael Richards Properties v. St. Saviour’s Parish (1975) 3 All ER 416 where both parties proceeded on the basis that there was a contract. A deposit was made in accordance with the conditions of sale of the property in question. But the letter of acceptance by the plaintiff carried the words ‘subject to contract”. As a result of its failure to complete, the plaintiff, relying on those words to assert that there was no contract, brought action to recover the deposit paid. It was held that the letter of acceptance concluded the contract so that the words ‘subject to contract’ were to be expunged as meaningless. In Law v. Jones (1973) 2 All ER 437, it was decided by the Court of Appeal that the unilateral insertion of the words ‘subject to contract’ into correspondence between the solicitors acting for the parties did not negative the effect of any existing binding agreement, whether oral or written, made between the parties. It is true the correctness of the decision was not accepted later by the same court in Triverton Estates Ltd. V. Wearwell Ltd. (1974) 1 All ER 209. But the case illustrates that if there is any sense in which those words can be considered not to represent what the parties really intended as a result of what they did or said before or after the insertion of those words in any of the correspondence between them, then it would be justifiable to regard them as irrelevant. See also United Bank for Africa Ltd. V. Tejumola & Sons. Ltd. (1988) 2 NWLR (Pt.79) 662 at 701 per Nnaemeka-Agu. J.S.C. obiter
.
In the present case, although exhibits A-A2, C-C1, D-D 1 and E-E5 carry that phrase ‘subject to contract’, the unseriousness in the use of those words can be seen in exhibit F which finally confirmed the contract and exhibit G which is a receipt for the full 5-year rent. Neither of the two exhibits was marked ‘subject to contract’. That would seem to suggest that the landlords. at that stage, no longer intended to insist on whatever the phrase ‘subject to contract’ was intended by them. But more fundamental in regard to the use of those words in the circumstances of our established conveyancing procedure is the fact that it is clearly unwarranted, as I hope I have earlier demonstrated, to rely on them to frustrate or indeed sabotage by laying ambush with a purely sinister ‘subject to contract’ cudgel, a contract already fully concluded in all material particulars, the terms and validity of which the court can, or ought readily to, ascertain from documents available. The term ‘subject to contract’ has no settled effect – or shall I say no magic effect – yet, in my view, in our existing arrangement and procedure for conveyancing, whenever that phrase is used, it is my opinion that the merit and worth of it should always be open to the court to decide. That is one way of ensuring the integrity of concluded arrangements.
I think it ought to be said with due emphasis that it was not, in any event, open to the landlords to plead on the one hand that there was no valid contract in the circumstances of this case when on the other hand they were receiving benefits from it and committing the appellant to some expenditure arrangement. They had received in advance the full rent for five years. They had put the appellant into possession of the property and had encouraged and permitted it to spend money towards the redevelopment of it. Equity will not permit them to go back on that and get away with what would be regarded as a fraud practised on the appellant. That amounted, at any rate, even if there had been no valid written contract, to an act of part performance. In Caton v. Caton (1866) 1 L.R. Ch. App. 137 at 148, Lord Cranworth, L.C., observed:
“The ground on which the court holds that part performance takes a contract out of the Stature of Frauds is, that when one of two contracting parties has been induced, or allowed by the other, to alter his position on the faith of the contract, as for instance by taking possession of land, and expending money in building or other like acts, there would be a fraud in the other party to set up the legal invalidity of the contract on the faith of which he induced, or allowed, the person contracting with him to act and expend his money.”
Without a doubt this act of part performance must have a telling effect on the landlords’ reliance on the so-called defence of ‘subject to contract’ formula.
I may here answer briefly an aspect of the argument of the 5th Respondent that it was a breach of s. 22 of the Act for the appellant to have gone into possession to do some reconstruction of the property and that therefore it cannot rely on it to insist on a contract. I think this is a clear misconception. To permit an act of part performance is simply one modality of contract formation. It does not transfer possession under s. 22 of the Act in the sense of alienation. It merely creates a cause for the specific performance of the contract. It must not be presumed that s. 22 can operate to do away with the doctrine of part performance. It cannot, lest it be used as an instrument of fraud which it certainly is not meant for.
The transaction under the first stage, i.e. the agreement or contract stage does not require the consent of the Governor under s. 22 of the Act. This is because when parties enter into a contract for the sale of land, no alienation has taken place as envisaged by the said s. 22 which provides: “22(1) It shall not be lawful for the holder of a statutory right of occupancy granted by the Governor to alienate his right of occupancy or any part thereof by assignment, mortgage, transfer of possession, sublease or otherwise howsoever, without the consent of the Governor first had and obtained.
(2) The Governor when giving his consent to an assignment, mortgage or sublease may require the holder of a statutory right of occupancy to submit an instrument executed in evidence of the assignment, mortgage or sublease and the holder shall when so required deliver the said instrument to the Governor in order that the consent given by the Governor under sub-section (1) of this section may be signified by endorsement thereon.”
The position of s. 22 of the Act is clearly this: A holder of a right of occupancy may enter into an agreement or contract, with a view to alienating his said right of occupancy. To enter into such an agreement or contract, he does not need the consent of the Governor. He merely operates within the first stage or a “transfer on sale of all estate in land’ which stage ends with the formation of a binding contract for a sale constituting an estate contract at best. But when he comes to embark on the next stage of alienating or transferring his right of occupancy which is done by a conveyance or deed, culminating in vesting the said right in the ‘purchaser’, he must obtain the consent of the Governor to make the transaction valid. If he fails to, then the transaction is null and void under s. 26 of the Act. In my view, it is necessary to have these two stages clearly in mind.
I think the distinction between an agreement to alienate land and the instrument by which the alienation lakes place was sufficiently drawn by this court in Awojugbagbe Light Industries Ltd. V. Chinukwe (1995) 4 NWLR (pt.390) 379 in which the Privy Council case of Denning v. Edwardes (1961) A.C. 245 on a similar point was approved. Directing his mind to the issue, Iguh, J.S.C. observed at rages 435-436:
“I think it ought to be stressed that the holder of a statutory right of occupancy is certainly not prohibited by section 22(1) of the Act from entering into some form of negotiations which may end with a written agreement for presentation to the Governor for his necessary consent or approval. This is because the Land Use Act does not prohibit a written agreement to transfer or alienate land. So long as such a written agreement is understood and entered into subject to the consent of the Governor, there will be no contravention of section 22(1) of the Land Use Act by the mere fact that such a written agreement is executed before it is forwarded to the Governor for his consent. I agree entirely with Chief Williams, SAN that section 22(1) prohibits transactions or instruments whereby the holder of statutory right of occupancy purports to alienate as a complete action, his right of occupancy by assignment, mortgage, transfer of possession, sublease or otherwise, the absence of the relevant consent of the Governor first and obtained notwithstanding.” (Emphasis mine).
When a statute requires ministerial approval for the sale of property, approval to enter into a contract for the sale of that property is not required but approval to complete the sale must be obtained otherwise the sale is invalid: see Awojugbagbe Light Ind. V. Chinukwe (supra) at 426 per Onu, J .S,C. It was therefore a misconception on the part of the 5th Respondent when in its brief of argument it submitted.
…..even if the negotiations between the parties could be said to have resulted in some sort of contract … such contract cannot be said to be lawful or valid given the absence of the Governor’s consent to the transaction.”
In the same way, the court below, having failed to draw a distinction between the contract stage and the conveyance stage in land transactions, was not able to avoid making the following observation:
“It is clear in the circumstances of the appeal that the cardinal issue to the validity of the lease is the consent of the Governor first had and obtained. There is therefore good reason for saying that the issue of consent is a condition precedent in the sublease and so there is no binding contract without such consent. There is no consent of the Governor in this case up till the time the parties came to court. This means, in my judgment, that there is no binding and enforceable contract or lease between the 1st to the 4th Appellants and the Respondent despite the presence of the 4 certainties i.e the parties, the property, the length of term, the rent and the commencement date..”
In exhibits A-A2, C-C1 and E-E5, the landlords were already anticipating the drawing up of a sublease to be approved by the parties. It is true one was prepared by the appellant’s solicitors and sent to the landlords. They failed to execute it and gave no reason for so doing. It turned out that the landlords in the meantime had sold the property to the 5th respondent. It is important to explain that the sublease was not a necessary document for concluding or denoting the contract of sale. It was indeed the document for the conveyance stage, that is, the second stage of the transaction after the first stage, namely, the contract stage, which would have been acquired to alienate the property after the Governor’s consent. The phrase ‘subject to contract’ is not referable to the said sublease and the sublease that was prepared, did not conclude, and was not what could conclude, the contract: see Lockett v. Norman-Wright (1924) All ER Rep. 216 at 219. The real implication of calling for the preparation of a sublease is that an agreement to sell (or the contract of sale) had been concluded. That was the first stage. I wonder if the landlords realise that holding on to ‘subject to contract’ provision is inconsistent with drawing up a sublease. As I did show earlier in this judgment, the second issue culminates in the right of occupancy (formerly known as the legal title) vesting in the sublessee by a conveyance (or deed) subject to the requirement of s. 22 of the Act. I have no hesitation in holding, with utmost respect, that the lower court was in error when it found that there was no binding contract between the landlords and the appellant.
Before reaching a conclusion as to what the ultimate result of this appeal ought to be particularly as regards the appropriate orders to make. it is necessary at this stage to advert to and consider the reliefs in the main claim and counterclaim.
I now set out the reliefs claimed by the appellant as follows:
“A. As against the 1st to 4th defendants
(1 ) A declaration that the plaintiff is a sub-lessee of the premises known as 2 Abudu Smith Street, Victoria Island, Lagos and registered as Plot LO5166 from the 1st to 4th defendants with effect from 1st of July 1986 on the terms and conditions set out in the exchange of letters pleaded in paragraph 8 hereof.
(2) An order of specific performance of the agreement between the plaintiff and the 1st to 4th defendants in respect of the sublease of the premises known as 2 Abudu Smith Street, Victoria Island (Plot L05166).
(3) An order directing the 1st to 4th defendants to execute a formal lease in favour of the plaintiff in the form and manner as set out in the draft lease attached to this statement of claim.
(4) An order directing the 1st to 4th defendants to make available to the plaintiff the documents listed in paragraph 25 of the statement of claim and other documents that might be called for to process the application for the consent of the Military Governor now pending as LU/GC/11045.
(5) Damages as may be assessed – being the extra cost to the plaintiff in redeveloping the demised premises – which damages as at the date of the filing of this action is N2.4 million naira,
B. In the alternative to A above.
(I) The plaintiff claims from the 1st to 4th defendants the sum of N3,842.899.70 being special and general damages for breach of contract.
[Particulars of damages were stated)
(2) Interest on the above sale at the rate of 25% per annum from June 1988 to date of judgment and thereafter at 6% to date of payment thereof.
As against the 5th defendant
(1) N100,000.00 being general damages for trespass.
(2) An injunction restraining the 5th defendant, its agents, servants and privies from trespassing on the plaintiff’s property at 2 Abudu Smith Street, Victoria Island, and/or from taking possession by force.
(3) An inquiry into the damages occasioned by the act of the 5th defendant in stopping the plaintiff’s contractor from continuing work on the land in dispute and paying over to the plaintiff of any sum found due.”
The 5th defendant (5th respondent) made a counterclaim as follows:
“Declaration that it is entitled to the statutory right of occupancy (Certificate of Occupancy) to the land in dispute or in the alternative a declaration that it is entitled to be registered as the proprietor of the transfer of the leasehold in Title Certificate No. L05166 having obtained the Military Governor’s consent to the said transfer.
- N1,000.000.00 (one million naira) as damages for the plaintiff’s trespass on the land in dispute.
- A declaration that the plaintiff’s letter of objection to the Registrar of Title dated 9th January, 1990 based on a purported lease for a period of 10 years in respect of the land in dispute is null and void as the purported lease is without the prior consent of the Military Governor and furthermore the 1st-4th defendants have never executed any deed of lease in favour of the plaintiff and plaintiff’s possession of the land in dispute is illegal and null and void.
- An order of perpetual injunction restraining the plaintiff by itself, its servants or agents or otherwise from encroaching on the said property in dispute.”
I have already said in this judgment that the learned trial judge dismissed the counterclaim. As regards the main claim, he granted reliefs A(1), (2), (3), (4), as well as (5) in respect of which he awarded N85,509.70. He was completely silent on the damages claimed in the alternative relief B; he made no attempt to assess them. This is against what has been established as the usual practice that in order to avoid undue prolongation of litigation and to prevent unnecessary expenses, the trial judge should always, as a matter of duty, assess damages he would have awarded even if this decision was against the party claiming damages: see Yakassai v. Messrs Incar Motors Ltd. (1975) 5 SC 107 at 115-116. When the trial judge has failed to fulfill this duty an appellate court, in an appropriate situation, will assume that duty and award damages it considers the claimant is entitled to rather than remit the case for the purpose of assessment to the trial judge. There is a long line of decisions on this. The Court of Appeal acts under s. 16 of the Court of Appeal Act, 1976 and the Supreme Court under s. 22 of the Supreme Court Act, 1960: see Dumbo v. Idugboe (1983) 1 SCNLR 29: Obot v. Central Bank of Nigeria (1993) 8 NWLR (Pt.310) 140; Broadline Enterprises Ltd. v, Moneterey Maritime Corp. (1995) 9 NWLR (pt.417) 1.
It follows that when an appellate court finds it impossible from the record before it to make any justifiable assessment of damages, I am afraid that the question of the assessment of damages will, painfully, have to be remitted to the trial judge. Professor Kasunmu probably anticipates this in the issue 4 set down on behalf of the appellant for determination. In the present case, the record of appeal compiled by the 5th respondent for the purpose of this appeal does not show enough on the aspect of the evidence led, oral and documentary, in support of the damages claimed. I do not think this is a clear case in which this court can properly embark on assessing the damages claimed.
The lower court set aside all the reliefs granted to the appellant by the trial judge. For reasons I shall give shortly, there is no doubt it was right in doing so. The lower court further allowed the counterclaim partially by (a) declaring that the 5th respondent was entitled to apply for the statutory right of occupancy in respect of the property in dispute and (b) ordering perpetual injunction against the appellant from remaining on the property. Order (a) above was hardly necessary and was indeed not asked for by the 5th respondent. It pleaded as far back as May, 1990 that it had got the Governor’s consent. So there was no purpose served by an order that it is entitled to apply for a statutory right of occupancy. Order (b) was proper in the circumstances since it would be a contradiction of the 5th respondent to allow the continued presence of the appellant on the property.
I will now indicate why the lower court was right in setting aside the relieefs granted to the appellant by the learned trail judge. Relief A(1) is a declaration that the appellant is a sublessee of the property in question. This is not correct. It never was a sublessee; it only entered into an agreement to take the sublease of the property. Until that was achieved by getting the Governor’s consent, no such declaration could be made in its favour. A declaratory relief is merely a confirmation of what is already the state of affairs or what is likely to be, in connection with the subject-matter of the declaration. In other words, a declaration claimed must relate to some legal right or to a legal interest of which the law will take cognizance. See Nixon v. Attorney-General (1930) 1 Ch. 566 at 674. A plaintiff who seeks a declaratory relief must show that he has an interest or right which forms a foundation for that declaration: see Olawoyin v. Attorney-General Northern Nigeria (1961) 2 NSCC 165 at 169. Reliefs (2), (3) and (4) are to the same end namely, specific performance. I shall treat them together later. Relief A(5) which is about damages representing the alleged cost of redevelopment of the property will better be placed under the alternative B relief regarding general and special damages for breach of contract once it becomes clear that none of the other reliefs under A is available to the appellant.
The learned trial Judge awarded N20.000.00 as general damages against the 5th respondent under relief C(1) and ordered injunction under relief C(2). I think that was an error. The 5th respondent relies on a statutory right of occupancy which prima facie gives it a be a better title to the land than the appellant as long as that subsists i.e. it has not been set aside. The 5th respondent cannot therefore be regarded a trespasser by the appellant on the well-known principle laid down in Aromire v. Awoyemi (1972) 2 S.C. 182: Amakor v. Obiefuna (1974) 1 All NLR 119 and such like cases that where both parties claim to be in possession, possession will be presumed in favour of the party who can show a better title. It is obvious that the appellant has no title it can rely on. The court below was therefore right in setting aside those orders of the learned trial judge.
But the court below was, with due respect, in error in holding that the appellant did not establish a contract between it and the landlords. It certainly did so upon a proper construction of the entirety of the documents before the court and even upon the equity arising from the part performance which the evidence has shown. The landlords have failed to perform their part of the contract, that is to say, they were in breach of that contract and must bear the consequences that arise from that breach; or, at any rate, looking at the part performance, equity must hold the landlords liable in regard to the changed position of the appellant to which they induced it: see Trenco (Nigeria) Ltd. v. African Real Estates & Investment Co. Ltd. & Anor (1978) 11 NSCC 110. The question (and this is now the only question on this appeal) is whether the appellant may still have an order of specific performance in its favour in the circumstances of this case as claimed by it in relief A(2), (3) and (4) It must not be forgotten that the appellant also asked for damages in the alternative. To sue for specific performance is to assume that a contract is still subsisting and therefore to insist that it should be performed. That would mean that the plaintiff would not want it repudiated unless for any reason the court was unable to aid him to enforce specific performance of it. He may then fall back on the remedy at common law for damages.The observation of O’Bryan, J., in the Supreme Court of Victoria case of Mckenna v. Richey (1950) VLR 360 at 372, which is quite apt in regard to the present appellant’s situation, was cited with approval by Lord Wilberforce in Johnson v. Agnew (1979) All ER 883 H.L. at P. 893 as follows:
“The apparent inconsistency of a plaintiff suing for specific performance and for common law damages in the alternative arises from the fact that. in order to avoid circuity of action, there is vested in one Court jurisdiction to grant either form of relief. The plaintiff, in effect, is saying. “I don’t accept your repudiation of the contract but am willing to perform my part of the contract and insist on your performing your part – but if I cannot successfully insist on your performing your part, I will accept the repudiation and ask for damages. Until the defendant’s repudiation is accepted the contract remains on foot, with all the possible consequences of that fact. But if, from first to last, the defendant continues unwilling to perform her part of the contract, then, if for any reason the contract cannot be specifically enforced, the plaintiff may, in my opinion, turn round and say: ‘Very well, I cannot have specific performance, I will now ask for my alternative remedy of damages at common law.’ This, in my opinion, is equally applicable both before and after decree whether the reason for the refusal or the failure of the decree of specific performance is due to inability of the defendant to give any title to the property sold, or to the conduct of the plaintiff which makes it inequitable for the contract to be specifically enforced. ”
There is no doubt in my mind that the above-stated passage correctly represents the law on the matter. He has, of course, in that event two alternatives open to him. He knows that if specific performance which is one option fails, then he can sue for damages which is the other. As the order for specific performance is an equitable remedy and therefore discretionary, it will, in my view, be a grave error of pleading to claim for specific performance without at the same time, in the alternative, claiming for damages. As has been said, even after a decree of specific performance has been granted, it can turn out that the defendant cannot give title to the property sold. In that case a plaintiff who failed to claim for damages in the alternative will be in a quagmire. The above passage from the judgment of O’Bryan, J, with which I agree, has made it plain why the two reliefs should be pleaded and sought. The appellant in the present case has, in my opinion, diligently so pleaded.
Impossibility of performance of the contract by a defendant is a defence to a claim for specific performance, even though the contract is unconditional both in terms and in intention. See Ferguson v. Wilson (1866) 2 Ch. App. 77. One such impossibility is when the property, the subject-matter of the contract, has been sold to a third persons: see Denton v. Stewart (1786) 1 Cox Eq. Cas. 258, or where the necessary consent for concluding the transaction has not been, or is likely to be, obtained: see Winscombe Rail Co.v Donnington Hospital (1866) 1 L.R. Ch. App. 268. it has been held that impossibility of performance does not cease to be a defence to specific performance simply because the impossibility is due to the defendant’s act; see Seawell v. Webster (1859) 29 L.J. Ch. 71 at p. 73 per Kindersley V.C. In such a case, however, impossibility is no excuse for non-performance and the defendant is liable in damages. That is the position equity will take if at law the matter appears closed.
It follows that, in equity, the contract must be capable of being specifically performed before an order of specific performance may be made. This is because equity does nothing in vain. As O Bryan, J., further said in Mckenna v. Richey (supra) at P. 376, as reported in Johnson v. Agnew (supra) at p. 893, when the matter goes outside the pale of law; “It is an appropriate case for a Court of Equity to say; ‘As a matter of discretion, this contract should not now be enforced specifically, but, in lieu of the decree for specific performance, the court will award the plaintiff such damages as have been suffered by her in consequence of the defendant’s breach. This is the best justice that can be done in this case.”
There is evidence that the 5th respondent has got the consent of the Governor to have a statutory right of occupancy to the property in respect of the residue of the lease. The court cannot compel the Governor to give consent to the appellant to have a statutory right of occupancy to the same property in respect of a sublease. The process by which that course might have been set in motion, even if that relief was available, is absent since the Governor was not made a party to this case. The best justice that can be done in this case therefore is to assess and award damages properly due to the appellant in the circumstances.
The issues raised by the parties can now be answered in a nutshell. First, the appellant’s issues.
Issue 1: The court below was right in reversing the trial court’s decision which granted releifs 2, 3 and 4 – and indeed relief 1.
Issue 2: The court below was in error to have held that the plaintiff’s claim for damages was not maintainable. Issue 3: The 5th respondent was not a trespasser.
Issue 4: This is answered in the affirmative.
Now, the 5th respondent’s issues.
Issue (i): This is answered in the affirmative.
Issue (ii): The plaintiff is not entitled to the declaratory relief sought.
Issue iii): The plaintiff is only entitled to damages in the circumstances. I will allow the appeal to the extent of those answers given to the issues raised. Having regard to what I have earlier indicated about the nature of the evidence on record. I think it will be in the interest of the parties that the learned trial judge be directed to assess the damages. I accordingly order that this case be remitted to the Lagos State High Court for the learned trial judge. Ope-Agbe, J., to assess by way of a rehearsing and as a matter of urgency, the damages arising from the breach of contract in this case and to make the necessary order of compensation in damages. The appellant is awarded costs of N10,000.00 against the landlords, i.e. 1st-4th respondent.
SC. 200/1994
