Mr. P. K. Ojo V. Engineer Felix Ogbe & Anor. (2007)
LawGlobal-Hub Lead Judgment Report
MUKHTAR, J.C.A.
This is an appeal from the decision of the High Court of Lagos State in the ruling delivered by S.B.A. Candide-Johnson, J., on the 11th day of October, 2002 whereby the court below held that the appellant is a necessary party to the suit filed by the 1st respondent against the appellant and the 2nd respondent jointly and severally.
The appellant is a Chartered Estate Surveyor and Valuer carrying on his professional practice under the name and style of P.K. OJO & CO. Sometime in October 1996 the appellant, on the instructions of the 2nd respondent, published an advertisement in the “The Guardian” Newspaper whereby he offered for sale the 2nd respondent’s parcel of land at Opebi-Ikeja in Lagos.
The 1st respondent showed interest in the property with a view to purchasing the same and commenced negotiations with the appellant as the, agent of the 2nd respondent. The appellant eventually arranged a meeting between the 1st respondent and the 2nd respondent to enable them finalize the terms and conditions for the sale of the property.
The 1st respondent issued two Chartered Bank Cheques in the total sum of N3,500,000.00 made payable to the appellant on behalf of the 2nd respondent as part payment of the agreed purchase price in the sum of N4,500,000.00. The 2nd respondent as the beneficial owner of the property executed in favour of the 1st respondent a deed of assignment whereby she assigned the parcel of land to the 1st respondent. The 2nd respondent also issued a purchase receipt dated the 9th day of December, 1996 whereby she acknowledged receipt of the sum of N4,500,000.00 from the 1st respondent as full and final payment for the parcel of land.
The 1st respondent took possession of the parcel of land and began to erect a fence on the same. He was however challenged by some people who claimed to be the agents of the owners of the parcel of land. The claimants made it difficult for the 1st respondent to remain in possession or carry out any activity on the land.
The 1st respondent lodged a complaint against the appellant with the Nigerian Institution of Estate Surveyors and Valuers in respect of the involvement of the appellant in the transaction as agent of the 2nd respondent. The appellant, sequel to the directive of the Nigeria Institution of Estate Surveyors and Valuers, made a refund of the sum of N175,000.00 to the 1st respondent vide a Citizen Bank draft No. 00976262 of June 11, 2001 being the agency fee received by the appellant.
The 1st respondent, by a writ of summons and statement of claim filed at the Lagos High Court on the 26th day of March, 2001 instituted an action against the appellant and the 2nd respondent whereby he made a claim inter alia for the sum of N3,500,000.00 as purchase price paid for the land for a consideration that has totally failed.
The appellant entered a conditional appearance to the suit on the 8th day of November, 2001. By a motion on notice dated 7th day of June, 2002 the appellant prayed the lower court for an order striking out his name from the suit on the ground that he only acted as agent to a disclosed principal, i.e. the 2nd respondent and is neither liable nor can he be sued in respect of the transaction.
The learned trial Judge delivered his ruling on the appellant’s application on the 11th day of October, 2002 dismissing the application and holding that the appellant is a necessary party to the suit.
The appellant having been granted leave by the lower court on the 22nd day of October, 2002 lodged an appeal against the ruling of the lower court by a notice of appeal dated the 23rd day of October, 2002.
The learned counsel to the appellant Olatunde Adejuyigbe formulated one issue for determination and that is whether the appellant being an agent of the 2nd respondent his disclosed principal is a necessary party to the suit having regard to the documentary evidence placed before the lower court.
He submitted that where the principal of an agent is known or disclosed, the correct party to sue, for anything done by the agent, is the principal.
In Allied Trading Co. Ltd. v. G.B.N Line (1985) 2 NWLR (Pt.5) 74 at 81 Oputa, JSC said:-
“But I will hasten to add that no rule of law is better ascertained, or stands on a stronger foundation than this, that where an agent names his principal, the principal is responsible not the agent.”
The principle was amplified by Nnamani, JSC in Niger Progress Ltd. v. N.E.L. Corp. (1989) 3 NWLR (Pt. 107) 68 at 92 when he declared:-
“It is not disputed that a disclosed principal may sue or be sued on any contract made on his behalf and in respect of any money paid or received on his behalf by his agent acting within the scope of his actual authority.”
The same principle was re-echoed by Oguntade, JCA (as he then was) in Pwol v. Union Bank Plc (1999) 1 NWLR (Pt. 588) 631 at 636 when he said:
“It is settled law that a defendant acting on behalf of a known and disclosed principal incurs no liability.”
See also Okafor v. Ezenwa (2002) 13 NWLR (Pt. 784) 319 at 340; U.B.N Ltd. v. Edet (1993) 4 NWLR (Pt.287) 288 at 302; Leventis Tech. Ltd. v. Petrojessica Ent. Ltd. (1992) 6 NWLR (Pt. 224) 459 at 468.
It is not in dispute that the appellant acted as agent to the 2nd respondent in respect of the contract for sale of land between the 1st and 2nd respondents.
The suit instituted by the 1st respondent against the appellant and the 2nd respondent is an action for money had and received on his behalf and for a consideration that has totally failed.
In Makwe v. Nwukor (2001) 14 NWLR (Pt. 733) 356 at 372 Iguh, JSC made a restatement of the law when he said:-
“It is trite law that as a general rule, a contract affects only the parties thereto and cannot be enforced by or against a person who is not a party to it. In order words, only the parties to a contract can sue or be sued on the contract and, generally, a stranger to a contract can neither sue nor be sued on the contract even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it. In the same vein, the fact that a person who is a stranger to the consideration of a contract stands in such near relationship to the party from whom the consideration proceeds that he may be considered a party to the consideration does not entitle him to sue or to be sued upon the contract.”
See also Negbenebor v. Negbenebor (1971) 1 All NLR 213; A.-G., Federation v. A.I.C. Ltd. (2000) 10 NWLR (Pt. 675) 293.
The appellant though an agent of the 2nd respondent is to all intents and purposes a stranger to the contract for the sale of land made between the 1st respondent and the 2nd respondent and can neither be sued nor incur any liability where there is a failure of consideration.
It was also observed by the learned counsel to the appellant that reliance was placed by the trial Judge on a letter from the 1st appellant as agent to the 2nd respondent his principal exhibit D02. In that document the appellant urged the 2nd respondent to “Kindly confirm your acceptance of the above terms of the duplicate of this letter hereby attached.” There was no evidence before the lower court that the 2nd respondent accepted the terms contained in exhibit 002.
It is a cardinal principle of adjudication that a court of law is not permitted to base its decision on speculations. In Ivienagbor v. Bazuaye (1999) 9 NWLR (Pt. 620) 552 at 561 Uwaifo, JSC said” “A court cannot decide issues on speculation no matter how close what it relies on may seem to be on the facts. Speculation is not an aspect of inference that may be drawn from facts that are laid before the court. Inference is a reasonable deduction from facts whereas speculation is a mere valiant of imagination guess which, even when it appears plausible should never be allowed by a court of law …”
The claim of the 1st respondent is for money had and received for failure of consideration. The action is not predicated on a trust relationship between the appellant and the 1st respondent or breach of trust by the appellant as trustee of the 2nd respondent. In Temco Eng. & Co. v. S.B.N. Ltd. (1995) 5 NWLR (Pt. 397) 607 at 617 Uwaifo, JCA (as he then was) re-emphasized a trite principle of law:-
“It is a well established principle that parties are bound by their pleadings. On that principle it has been held by the Supreme Court…. That a plaintiff must be held to the case put forward in his writ of summons and statement of claim. It is not only the parties but also the court.”
See All: Cont. Seaways Ltd. v. Nig. Dredging Road & Gen. Works Ltd. (1977) 5 SC 235 at 250. The decision of the Supreme Court in Green v. Green (1987) 3 NWLR (Pt. 61) 480 is the locus classicus as to who is a necessary party to an action. In that case Oputa, JSC at page 493 said: “Necessary parties are those who are not only interested in the subject matter of the proceedings but also who in their absence, the proceedings could not be fairly dealt with. In other words, the question to be settled in the action between the existing parties must be a question which cannot be properly settled unless they are parties to the action instituted by the plaintiff.”
See also Ige v. Farinde (1994) 7 NWLR (Pt. 354) 42; Iyimoga v. Gov. of Plateau (1994) 8 NWLR (Pt. 360) 73.
It was submitted for the appellant that there is no question in this suit which cannot be adjudicated upon by the lower court in his (appellant’s) absence more so when the 2nd respondent has not denied that she received the sum of N3,500,000.00 from the 1st respondent as part payment of the purchase price of the parcel of land.
The claim for the sum of N250,000.00 as the cost of erecting a fence fails within the purview of the 2nd respondent’s indemnity to the 1st respondent in clause 2 of the Deed of Assignment. The 1st respondent’s claim for the sum of N175,000.00 as agency fee is the only claim that has a direct link with the appellant. The appellant has however paid the sum of N175,000.00 to the 1st respondent by a Citizen Bank draft No. 00976262 of June 11, 2001. The 1st respondent, in paragraph 5 of his counter affidavit, did admit that the sum of N175,000.00 was paid to him by the appellant.
The main consideration in the principle enunciated in Green v. Green (supra) is that there must be a question to be settled in the action based on the writ of summons and statement of claim before the court.
The learned trial Judge was unable to identify any question to be settled in the action and which cannot be properly settled in the absence of the appellant. The decision of the learned trial Judge that the appellant is a necessary party was based on a consideration of matters, which were not before him. The failure of the learned trial Judge to give proper consideration to the unchallenged documentary evidence placed before him by the appellant resulted in his perverse decision that the appellant is a necessary party.
In U.B.A. v. GMBH (1989) 3 NWLR (Pt. 110) 374 at 388 Obaseki, JSC said:
“If a Judge considers matters which are not before him and makes them the basis of the exercise of his discretion, he is exercising his discretion on wrong considerations. If there are facts by affidavit evidence before the Judge and he fails to evaluate and assess the facts before exercising his discretion, he has failed to exercise his discretion judicially.”
In the instant case, the learned trial Judge failed to exercise his discretion judicially as he gave no consideration to the Deed of Assignment and the purchase receipt attached as exhibits A & B to the appellant’s application but focused his attention on extraneous matters.
An appellate court has a duty to interfere with the exercise of the discretion of the lower court as the appellant has shown that the discretion was not exercised judicially and judiciously but arbitrarily, in a manner contrary to law and inconsistent with the ends of justice. The dictum of Bello, JSC (as he then was) in University of Lagos v. Aigoro (1985) 1 NWLR (Pt. 1) 143 at 148 is apposite:-
‘Thus an appeal court may interfere with the exercise of judicial discretion if it is shown that there has been a wrongful exercise of the discretion such as where the tribunal acted under misconception of law or under misapprehension of fact in that it either gave weight to irrelevant or unproved matters or it omitted to take into account matters that are relevant or where it exercised or failed to exercise the discretion on wrong or inadequate materials and in all other cases where it is in the interest of justice to interfere.”
See Echaka Cattle Ranch Ltd. v. N.A.C.S. Ltd. (1998) 4 NWLR (Pt. 547) 526 at 544; Hart v. T.S.K.J. (1997) 8 NWLR (Pt. 517) 424.
The learned counsel to the appellant urged the court to answer the sole issue for determination in the negative and resolve the same in favour of the appellant, and to allow the appeal and set aside the decision of the lower court contained in the ruling delivered by the Candide-Johnson, J., on the 11th day of October, 2002 that the appellant is a necessary party to this suit and substitute in its place an order striking out the name of the appellant from this suit.
The learned counsel to the 1st respondent Lanre Oyetunji and that of the 2nd respondent Chief Akinyele both formulated one and the same issue for determination, and that is “whether or not the appellant was properly joined as a defendant in the suit pending at the Lagos High Court.”
Arguing the issue the learned counsel to the 1st respondent concentrated on issues bordering on principal and agent relationship. He also argued on the additional role of trusteeship, which he opined made the appellant a necessary party.
The learned counsel to the 1st respondent submitted that the appellant misconceives the basis of an action for money had and received. He further submitted that it is just and equitable for the appellant to be a party in the interest of justice to answer questions pertaining to his role in the entire transaction. This, he added, cannot be done in the absence of a full trial where evidence of parties would be appraised and subjected to rigors of cross-examination.
The learned counsel to the 1st respondent further submitted whatever agreement reached between the 1st respondent and 2nd respondent is derived from exhibit D02 and can therefore not be washed away or deemed to be extrinsic evidence as purportedly claimed by the appellant.
The decision of the Supreme Court in Green v. Green (1987) 3 NWLR (Pt. 61) 480 is indeed relevant to this case as to who a necessary party is. It was held that:-
“Necessary parties are those who are not only interested in the subject matter of the proceedings but also who in their absence, the proceedings could not be fairly dealt with.”
The law is that a person should not be joined as a defendant against whom there is no claim by the plaintiff. In this case there are several claims made against the appellant by the plaintiff/1st respondent, which makes his joinder necessary. See the case of Olujitan v. Oshatoba (1992) 5 NWLR (Pt.241) pg. 326.
The learned counsel to the 1st respondent submitted that the appellant is a necessary party for the just determination of this suit taking into cognizance the content of exhibit D02 that constitutes a special relationship between the appellant and the respondents.
The learned counsel to the 2nd respondent, Chief Akinyele also adopted the same issue formulated by the 1st respondent’s counsel for determination by putting it thus: –
“Was the learned trial Judge right by dismissing the appellant’s application to strike-out his name as 1st defendant from Suit No. LD/862/2001 pending at the Lagos State High Court on the ground that the appellant is a necessary party to the suit.”
In the case of Fawehinmi v. N.B.A. (No.1) & Ors. (1989) 2 NWLR (Pt.105) 494 at page 550 the Supreme Court dealt with issue relating to proper parties to a case or suit. His lordship, the Honourable Justice Oputa, JSC in his judgment quoted Black’s Law Dictionary. 5th Edition at page 1010 and stated thus:-
“A party to an action is a person whose name is designated on record as plaintiff or defendant, the terms party refers to that person(s) by or against whom a legal suit is brought. Whether in law or in equity” and went further to elaborate that a party is either a plaintiff or defendant and whether natural or legal persons but all others who may be affected by the suit indirectly or consequently are persons interested and not parties.”
In the case of Green v. Green (1987) 2 NSCC 115 at page 1121.
Line 50 His lordship Oputa, JSC observed as follows:
“in legal proceedings, the parties, generally speaking are the persons whose names appear on the record as plaintiff or defendants. Again, plaintiff who conceives that he has a cause of action against a particular defendant is entitled to pursue his remedy against that defendant only and should not be compelled to proceed against other persons who have no desire and no intention to sue.”
The learned Justice of the Supreme Court went ahead to say at page 1122 thus:
“But when the suit has been filed, the trial Judge becomes dominus litis and he assume under Order IV rule 5(1) of the High Court Rules, Cap. 61, of the Laws of Eastern Nigeria, 1963 still operative in the Rivers State, the duty and responsibility to ensure that the proceedings accord with the justice of the case by joining either as plaintiffs or defendants all the persons who may be entitled to or who claim some share or interest in the subject matter of the suit or who may be likely to be affected by the result if these have not been made parties.”
The 2nd respondent’s counsel similarly urged court to dismiss the appeal and to remit the case back to the Lagos State High Court for the trial of the case on its merit after the appellant would have filed his statement of defence (if any) before the said court.
Replying to the 1st respondent’s brief dated 23rd December 2003, the appellant’s counsel observed that the 1st respondent in his brief stated that the appellant was not acting as an agent of the 2nd respondent but rather he was contracting personally, and submitted that this was inconsistent with the case put forward by him in his statement of claim. The averments in paragraph 13 of the statement of claim are as follows:
“13. The plaintiff states that the consideration offered had wholly failed since the 2nd defendant had no title to the land offered for sale on her behalf by the 1st defendant.”
The learned counsel to the appellant then submitted that it was inconceivable that the 1st respondent would abandon the factual basis of the suit, which gave rise to the instant appeal and set up an entirely new case against the appellant. In Adesola v. Abidoye (1999) 14 NWLR (Pt. 637) 28 at 68 Ayoola, JSC flashed a red light when he said:
Where the parties expressly or by implication agree on the factual issues and the case has been fought on the basis of those agreed factual issues, none of them should be permitted on appeal to build his case on a different factual basis or as if the factual aspect remains at large.”
It is submitted by the appellant’s counsel that the court must not allow the 1st respondent to build his case on a different platform other than the factual basis contained in his statement of claim. In Adegoke Motors Ltd. v. Adesanya (1989) 3 NWLR (Pt. 109) 250 at 266 – 267 Oputa, JSC clarified the position when he said:
“An appeal, being a judicial examination by a higher court of the decision of an inferior court, it follows that such examination should normally and more appropriately be confined to the facts and issues that came before the inferior court for decision.”
It is now trite law that a party will not be allowed to raise on appeal a fresh point which was not raised or tried or considered by the lower court unless leave is granted by the Court of Appeal. See Okenwa v. Mil. Gov. Imo State (1996) 6 NWLR (Pt. 455) 394; Koya v. U.B.A. (1997) 1 NWLR (Pt. 481) 251.
The 1st respondent neither sought for nor obtained the leave of this Honourable Court to raise the allegation of fraud as a fresh point. The appellant’s counsel, therefore, urged the court to discountenance all the submissions made by the 1st respondent in his brief regarding the issue of fraud.
The appellant’s counsel submitted that in an action for money had and received upon consideration, which has totally failed, the obligation to refund or repay is imposed by law on the person to whom consideration has passed and who acknowledged receipt of the same. The learned counsel to the appellant finally submitted that the suit at the lower court could certainly be adjudicated upon effectually as between the 1st and 2nd respondent and that appellant is not a necessary party.
The issue for determination as raised by learned counsel to the appellant and the 1st and 2nd respondents in different style and scope is simply whether the appellant is a necessary party to the suit filed by the 1st respondent at the court below.
The learned counsel has strenuously argued on the issue of the appellant’s is not a liability in respect of what he did on behalf of a disclosed principal. However, the issue here does not concern the appellant’s or even his principal’s liability, as that is a substitute issue for the main trial. The on 1st issue to be considered and determined in respect of this appeal is whether the appellant is a necessary party to the case.
The learned trial Judge was entitled, as he lightly did, to consider the processes properly placed before him especially the writ of summons and the statement of claim in order to determine whether the appellant is a necessary party. The 1st respondent sued the appellant jointly and severally with his principal the 2nd respondent. Reference must be made to the writ of summons and especially the statement of claim to determine whether or not there exists a cause of action against the appellant, which can not fully and properly be adjudicated upon in the absence of the appellant. The relevant question is whether the trial court can, in the absence of the appellant, effectually and completely adjudicate upon and settle all questions in the cause or matter in controversy.
The Supreme Court in Green v. Green (supra) has defined who necessary parties are as follows:-
“Necessary parties are those who are not only interested in the subject matter of the proceedings but also who, in their absence, the proceedings could not be fairly dealt with.”
Learned counsel have, in their respective briefs, made much ado about whether the appellant is liable as an agent of a disclosed principal in view of the role he played in the transaction in question especially as the author of exhibit D02. These, with respect to all the learned counsel, are non-issues for the purpose of determining this appeal, which relates to the question whether or not the appellant is a necessary party. It is therefore pertinent to consider the plaintiffs i.e. 1st respondent’s writ of summons and statement of claim and see if it discloses some controversy capable of affecting the appellant.
The claim in both the writ and paragraph 15 of the statement of claim states:-
“15, The plaintiff avers that he has been kept out of his money to which he is legitimately entitled to and the said sum has continued to depreciate in value owing to inflationary trend and therefore entitled to compensatory interest.
(i) The sum of N3,925,000.00 (three million nine hundred and twenty five thousand Naira) being the amount paid by the plaintiff and related expenses thereto to the defendants for money had and received on his behalf and for a consideration that has totally failed and the defendants have refused or and failed/neglected to pay back to the plaintiff despite repeated demands made up as follows:-
(a) N3,500,000.00 purchase price paid for the land.
(b) N175,000.00 agency fees.
(c) N250,000.00 the cost of erecting a fence.
(ii) Interest in the sum of 21% on the total sum payable from the 27th day of November, 1996 until judgment is delivered and thereafter at 7.5% until final liquidation.
(iii) Cost.”
This clearly shows that the claim was made principally against the 2nd respondent, who is not only a party to the contract for sale of the land the subject matter of the pending suit at the court below but is also undeniably the appellant’s principal. The 2nd respondent as a principal worth her salt ought to face the 1st respondent’s action premised on the contractual agreement which binds only the parties thereto and which the appellant is, admittedly, not. The mere use of the words “jointly and severally” does not per se make the appellant a necessary party to the action. The relevant question is whether the appellant will, at the end of the day be bound by the result of the action. In other words, the trial court must consider whether there is any question in the action, which cannot be effectually and completely settled unless the appellant is made a party. In the case of Babayeju v. Ashamu (1998) 9 NWLR (Pt.567) 546; (1998) 7 SC (Pt. 1) 156 at 163 the Supreme Court per Ogwuegbu, JSC in the lead judgment observed thus:-
“The necessary parties were before the trial court and a necessary party is someone whose presence is necessary as a party. The only reason which makes it necessary to make a person a party to an action is that he should be bound by the result of the action, and the question to be settled therefore must be a question in the action which cannot be effectually and completely settled unless he is a party. ”
There is nothing on the face of the 1st respondent’s statement of claim, which cannot be completely and effectually adjudicated upon in the absence of the appellant. The appellant is therefore not a necessary party to the proceedings initiated at the court below by the 1st respondent.
It follows therefore that the appellant’s singular ground of appeal succeeds and consequently the appeal shall be is accordingly allowed. The ruling of the lower court delivered on the 11th day of October, 2002 is accordingly set aside.
The appellant is entitled to cost assessed at N10,000.00 against the respondents.
Other Citations: (2007)LCN/2335(CA)
