Nigerian Supplies Manufacturing Co. Ltd V Nigerian Broadcasting Corporation (1967)
LawGlobal-Hub Lead Judgment Report
LEWIS, J.S.C
This is an appeal by the plaintiffs from the decision of lambo, J., in the Lagos High Court on the 24th of October, 1966, dismissing their claims for a declaration and an injunction with 75 guineas costs.
The plaintiffs in their writ of summons claimed-
“(1) a declaration that the defendant has duly exercised its option to renew the lease of the building at the junction of Fred McEwen Street, Lagos, for a further term of five years commencing after the expiration of the existing term of years granted to the said defendants under the deed dated 15th January, 1962; and
(2) an injunction restraining the defendants, their servants and/or agents from committing a breach of contract binding between the plaintiffs and the defendants by failing to comply with the terms and conditions of the aforesaid deed.”
The plaintiff’s case was that the defendants, the Nigerian Broadcasting Corporation, took from one Diab Naar a sub-lease of property at the junction of Palm Church Street and Martin Street, Ereko, Lagos, which was more particularly described and delineated in a deed of lease dated the 18th day of February 1960, and registered as No. LO 3625 in the Register of Titles at the Lands Registry Office, Lagos, for a term of 5 years from the 15th of January, 1962, at a rent of £26,000 per annum with an option to renew for a further term of 5 years, which right of option was to be exercised by notice in writing 2 years before the determination of the term of the sub-lease. Diab Nasr on the 14th of November, 1962, by deed of assignment assigned all his interest in the property concerned to the plaintiffs and due notice was given to the defendants. The plaintiffs on the lath of June 1964, asked the defendants in a letter if they intended to exercise their option, to renew the sublease and on the 30th of October, 1964, the defendants answered as in Ex. D. as follows-
“Mr. Diab Nasr,
Chairman & Managing Director of the
Nigerian Supplies Manufacturing Co. Ltd.,
2 Upper Offin Lane,
Lagos.
30th October, 1964
Dear Sir,
Building at Junction of Fred McEwen Street and
Martin Street, Lagos.
With reference to your letter of 18th June, 1964, we hereby give you notice of intention to renew the lease in pursuance of paragraph 5 (iii) of the Indenture of Lease dated 15th January, 1962.
The renewal will be for a further term of 5 years with effect from 15th January, 1967 on the same terms and conditions as in the current lease subject to yearly payment of the rent, as agreed and without prejudice to our right to purchase the building.
(Sgd.) E.V. BADEJO,
PAGE| 3
(E.V. BADEJO),
Director-General”
On the 31st December, 1964, however, the defendants wrote as in Ex. E. as follows:-
“Mr. Diab Nasr,
Chairman AND Managing Director of the
Nigerian Supplies Manufacturing Co. Ltd.
2, Upper Offin Lane,
Lagos.
31st December, 1964
Dear Sir
Building at Junction of Fred McEwen Street and
Martin Street, Lagos.
I refer to my letter of 30th October, 1964, I regret to have to inform you that at its last meeting the Board did not ratify our decision to renew the lease of your property, neither was it prepared to consider purchasing it outright.
You will appreciate that our decision in this matter is subject to ratification by the Board of Governors of the Corporation, and it is this ratification that was unfortunately not forthcoming. Any inconvenience to you is regretted, but you will appreciate that our letter of 30th October, 1964 is being withdrawn before 15th January, 1965, which is the last day on which we are to indicate decision whether or not [to] renew the lease.
(Sgd.) E.V. BADEJO,
(E.V. BADEJO),
Director-General”
The plaintiffs wrote to the defendants refusing to accept this attempted withdrawal by the defendants and the defendants then replied as in Ex. G.-
“Mr. Diab Nasr,
Chairman.AND Managing Director of the
Nigerian Supplies Manufacturing Company Ltd.,
2, Upper Offin Lane,
Lagos.
8th January, 1965
Dear Sir,
Building at Junction of Fred McEwen Street and Martin Street, Lagos.
Thank you for your letter of 6th January, 1965.
I could well imagine your disappointment at receiving my last letter and so I can understand your feeling expressed in your letter under reference above. However, I would like you to view the matter from another angle. The idea of giving two years notice to renew or not to renew the lease is for mutual advantage. It gives the tenant ample time to find alternative accommodation if he is not renewing the lease and the landlord ample time to get other tenants in the event of non-renewal by the present tenant. A building such as yours at 45 Martin Street, so spacious and so well situated in the commercial centre of Lagos will always be in demand and there will be a queue of prospective tenants before the expiry of the Corporation’s lease. So for this and other reasons, even [of] a legal nature, I would not like you to think of disregarding our letter or of going to law. What will happen to your above property should not make this necessary. Although not legally expected to do so we shall even help you to look for tenants.
You will recall that when you asked us if we wanted to exercise the option of renewal it took us some time to answer you. This was because of the financial stringency facing the Corporation at this time and borne out by our insistence on making payment yearly instead of five yearly as in the original lease. Even the search we conducted for funds to purchase the building outright proved unsuccessful all because of the Corporation’s financial position. And we have only recently been told that the Federal Government has ruled out the practice of buying already built houses.
The decision conveyed to you in my letter BG/7A of 30th October, 1964 was one arrived at after long discussions with other senior officers concerned with such a matter. The original agreement was signed with you before my time and as it Is usual for officials to act for the Corporation in such renewals I naturally took the Corporation’s ratification for granted and especially as they had left open the possibility of renewal.
The inability of the Corporation to ratify the renewal was due to no reason other than the financial stringency now facing the Corporation and I should like you to see it in that light and not as a decision to spite you or make you lose financially and I hope time will show that you will not lose.
Yours faithfully,
(Sgd.) E. BADEJO,
(E.V. BADEJO),
Director-General”
In December 1965, the plaintiffs issued the writ in this action.
Lambo, J., in his judgment found after hearing the evidence that the letter of the 30th of October, 1964, was a valid exercise of the option to renew by the defendants. He further held that once the option to renew had been exercised there was no right to withdraw from it and that by their letter of the 31st of December, 1964, the defendants “committed a breach of their option contract with the plaintiffs.” He then said-
“On the facts of this case, it seems to me that the defendants have already committed a breach of their option contract with the plaintiffs. It is impossible to grant the declaration sought by the plaintiffs, as that would involve ignoring the fact that the option has been withdrawn by the defendants ‘because of financial stringency facing the Corporation at this time’ – vide the letter Exhibit G. The power to make a declaratory judgment is purely discretionary and will not be exercised when it will be inequitable to do so. In this regard it seems to me that all the circumstances giving rise to the claim must be fully examined, e.g.:-
(a) That the lease was for 5 years at an annual rent of £26,000;
(b) That on the execution of the lease on the 15th January, 1962 the defendants paid to the plaintiffs £130,000 being 5 years rent in advance;
(c) That the defendants had an option to renew the lease 2 years before its expiration (i.e. on 15th January, 1965);
(d) That on the 30th October, 1964 the defendants exercised the option;
(e) That on the 31st December, 1964 the defendants realising [their] precarious financial position, withdrew the option;
(f) That the events in (d) and (e) supra occurred before the 15th January, 1965 when the option was due to be exercised;
(g) That that time, the lease had about 50 percent of its life to run;
(h) That in their letter of the 8th January, 1965 the defendants explained that they withdrew the option purely because of the financial stringency that then faced the Corporation.
I bear in mind that the court has a general power to make a declaration whether there is a cause of action or not at the instance of the party interested in the Area Of Law of the declaration.
Taking all these circumstances into consideration I am of the view that it will not be a judicial exercise of my discretion to grant the plaintiffs a declaration. And as the claim for an injunction in the present suit is merely ancillary to the claim for a declaration, 1 will dismiss both claims and enter judgment for defendants with costs.”
Chief Williams for the plaintiffs on this appeal has put his claim shortly and succinctly. He argues that all the findings were in his favour and that the learned trial judge was, therefore, wrong to refuse the declaration and injunction sought for the reasons that he gave when he referred to the circumstances to be taken into consideration in the passage of his judgment which we have cited.
Counsel claimed that this was a wrong exercise of the judge’s discretion as first, the financial stringency to which the defendants referred in their letter of the 31st December, 1964, was never proved by any witness called by the defendants as required by section 90 of the Evidence Act and so the learned judge should not have taken notice of it, and secondly, that in any case the defendants had not pleaded in their statement of defence or submitted by their counsel any argument at the hearing that there was any circumstance which would warrant depriving the plaintiffs of their right to a declaration or injunction.
Mr. Shyngle for the defendants did not dispute that the learned judge wrongly relied on the reference to financial stringency but he sought to argue before us that the defendants in their letter of 31st of December, 1964, had breached the contract made when they exercised their option to renew on the 30th of October, 1964, and that, therefore, the plaintiffs could only sue for damages as they had not commenced their action for an injunction before the 15th of January, 1965, when the time for exercising the option to renew expired.
We note, however, that the defendants never based their case either in their pleadings or in the argument of their counsel on the ground that an injunction was not appropriate in a case such as this but that only damages should have been claimed. In any case, however, we see no merit in this submission as though the option had to be exercised by the 15th of January, 1965, in fact the lease was not to take effect until 15th of January, 1967 and they in fact commenced their action on the 1st of December, 1965, though in any case even if they had begun their action after the 15th of January, 1967, this would in our view only have been one factor to be taken Into account when determining whether an injunction was an appropriate remedy to be granted.
Moreover, the action of the defendants by their letter of the 31st of December, 1964 after the contract had been completed was in our view an attempted repudiation or renunciation of the contract which could have been treated forthwith as an anticipatory breach of contract or alternatively the plaintiffs could have waited till the date of performance was passed and then sued, but Mr. Shyngle did not show to us that an injunction could not be given to enforce such a contract as the cases that he cited to us, namely, (i) Frost v. Knight (1872) L R. 7 Ex. 111 and (ii) The Dominion Coal Company Limited v. The Dominion Iron and Steel Company Limited and the National Trust Company Limited and Cross Appeal (1909) 25 T.L.R. 309 only went to establish, so far as their relevance to the appeal before us is concerned, that a claim for damages was an appropriate remedy and that a claim could not be made for both an injunction and damages at the same time though they could be made in the alternative.
We consider that the submissions by counsel for the appellant were correct and that the learned judge wrongly relied on financial stringency as being proved and as justifying him in refusing in his discretion to grant the declaration and injunction sought. Even if financial stringency had been proved, which it was not, this would in our judgment not have been any ground for his refusing the plaintiffs claims. Once a contract is completed one of the parties cannot resile from his contract because he claims he has not enough money to carry it out as he should have thought of that before entering into the contract in the first place.
We accordingly allow this appeal, set aside the judgment dismissing the plaintiffs’ claims and grant the plaintiffs the declaration and the injunction sought in their writ. The plaintiffs are entitled to the costs of this appeal which we assess at 50 guineas. The plaintiffs are further entitled to their costs in the High Court which we assess at 85 guineas and If the plaintiffs have paid the costs of 75 guineas awarded by the High Court to the defendants then these are to be refunded.
Other Citation: (1967) LCN/1533(SC)
