Prince Abdul Rasheed A. Adetono & Anor V. Zenith International Bank (2011)

LAWGLOBAL HUB Lead Judgment Report

C. M. CHUKWUMA-ENEH, JSC

This interlocutory appeal is from the decision of the Court of Appeal Ibadan (i.e. lower court) which dismissed the appeal of the appellants against the decision of the trial court (i.e. Ota High Court) in this matter essentially on the ground of want of locus standi to maintain the action and the lack of the State High Courts jurisdiction to entertain the matter as per Section 251(1) (e) of the 1999 Constitution as amended. The instant appellants are the appellants in the lower court, being dissatisfied with the decision of the lower court they have by a Notice of Appeal filed on 11/4/2002 raised two grounds of appeal against the lower courts decision. Parties have filed and exchanged their respective briefs of argument in accordance with the rules of this court. The appellants in their brief of argument filed on 5/7/2007 have in it identified a sole issue for determination as follows: ‘Whether the respondent has the locus standi to main an action in trespass against the appellants.’ The respondent is also the respondent in the lower court. In its respondents brief of argument filed on 8/4/2008, it has also raised for determination one issue as follows: ‘Whether the respondents, the legal mortgagee of the subject-matter of this appeal has sufficient right and/or interest to maintain an action against the appellants for acts of trespass to the said property.’ The facts and circumstances central to the transaction in this matter are not disputed. Upon a credit facility granted by the 2nd appellant to Henley Industries Limited as security for the said credit facility, a Deed of Legal Mortgage has been executed in favour of the 2nd appellant over its property situated at Plot C.21/6 Agbara Estate, Ogun State. This arrangement covers the mortgagors plants and machinery affixed thereto. The respondent, a banker has also granted credit facility to Henley Industries Limited which has been secured by a tripartite Mortgage Debenture over the property of John Edge & Co. Limited also situated at the Eastern Part of Plot C.21/6 Agbara Estate, Ogun State and particularly adjacent to the land over which the aforesaid legal Mortgage has been created in favour of the 2nd appellant. Henley Industries Limited on failing to repay the loan arising from the said credit facility granted to it, the 2nd appellant in accordance with its right pursuant to the aforesaid Deed of Legal Mortgage moved in and appointed the 1st Appellant as its Receiver over the mortgaged property. The 1st appellant has in the result taken actual possession of the property covered under the said Deed of Legal Mortgage. It is the respondents case that the 1st appellant severally and unlawfully has encroached into the land and property that secured the loan granted under the mortgage Debenture to the respondent. Consequently the respondent in the instant claim as plaintiff has sought the following reliefs in brevi manu. 1. An order of perpetual injunction. 2. An order for Account 3. Damages in Trespass. It is on these facts that the parties herein have predicated their respective arguments in this appeal. It is to be noted that the crucial question in the preliminary objection contending that the trial court lacks the jurisdiction under Section 251(1) (e) of the 1999 Constitution as amended to entertain the instant case has been dropped in the appeal now before this court. The only issue now before this court revolves on the sole question of the locus standi of the plaintiff/respondent to maintain this action for trespass when as alleged by the defendants/appellants it is not in exclusive possession of the mortgaged property. The appellants have argued that in the circumstances the court must have regard to the reliefs as claimed as per the writ of summons and the statement of claim in considering the plaintiffs locus standi to sue in this matter; and particularly so in an action for trespass where the person suing must be in exclusive possession or have a right to immediate possession. For so contending they rely on Amakar v. Obiefuna (1974) ANLR 109 per Fatai-William JSC (as he then was) and Olagbemiro v. Ajagungbade III (1990) 3 NWLR (Pt.136) 37 AT 55 PER Bello C.J.N. They also contend that by the finding of the trial court not otherwise challenged by the respondent that the person in possession at the time of the alleged trespass is not the mortgagee, upon which ground they have submitted that the interest of themortgagee in the property qua mortgagee cannot suffice to give such a respondent the locus standi to sue for trespass when in actual fact he is not in exclusive possession of the mortgaged property. They also have even then alleged that the respondents interest as a mortgagee vis-a-vis the mortgaged property being a contingent right has not ripened as to constitute a vested interest to enable and so entitle the respondent to sue. They refer to the case of Wilson v. Oshin (2000) 9 NWLR (Pt.672) 442 at 461 in expatiation of the contingent state of the mortgagees (i.e. the respondent) interest at the time of the trespass. In the premises, they have urged the court to allow the appeal. The respondents case however, turns on the assertion that the respondent having by the legal mortgage a right to exclusive possession can sue in this matter for trespass. See Ekretsu v. Oyogbebere (1992) 9 NWLR (Pt.266) 438 at 455, Afunrase v. Sunmola (1985) 1 NWLR (Pt.l) 105 at 110. The respondent even also has maintained that upon the above decided authorities it has sufficient interest in the subject matter of the action particularly so as the acts of trespass have been adverse and will otherwise affect his interest in the mortgaged property and that the principle of locus standi as considered and expounded in PAGE| 5 Adesanya v. President, Federal Republic of Nigeria (1981) 12 NCLR 358 and Imade v. Military Administrator, Edo State are the relevant authorities and applicable. The respondent furthermore, has submitted that from the statement of claim that the said loan not having been repaid its proprietary right in the subject matter that is the mortgaged property as a mortgagee has been infringed upon by the wrongful acts of the appellants hence the instant action for trespass to preserve the respondents security as per the mortgaged property. It has urged the court to dismiss the appeal as unmeritorious and misconceived and uphold the judgment of the lower court. Before going into the merits of this matter, the issues raised by both parties to the appeal seemly make it clear on the point that the challenge of the trial courts jurisdiction pursuant to Section 251(i) (e) to the effect that the State High Court as against the Federal High Court cannot entertain the instant action because of want of the jurisdiction to deal with this matter, rightly in my view, has been dropped as conceded. That leaves as the sole issue as raised for determinations by both sides in the appeal as to the question of locus standi of the plaintiff/respondent to institute the instant action for trespass. The appellants, again and again have contended in this case that the mortgagee as the instant respondent is not in exclusive possession of the mortgaged property in dispute and so cannot sue for trespass; even moreso the trial court has so found. To raise the issue of locus standi or as is often commonly denoted, standing or title to sue, that is, simply put the term means the plaintiff’s capacity to sue, goes to the competence of plaintiff to institute an action to be adjudicated upon before the court. See Gamioba & Ors. V. Esezi & Ors. (1961) 1 ANLR 584 at 588 – this case has decided the point that once the locus standi of the plaintiff cannot be established from his pleadings that is to say, where it is not so disclosed, then the action is liable to be dismissed; meaning that the court is not obliged to go into the merits of the case. This is the position both in our public and private law. It is strongly contended that it would otherwise open the floodgate for unwarranted cases where this principle is either relaxed or ruled out more so in the area of our public law. I have expressed my view on this proposition anon in this matter. I find myself in agreement with the appellants on the point that as a general principle the averments in the statement of claim and the writ of summons are mainly the materials required at this stage to ascertain the locus standi of a plaintiff, that is to say, they are the materials relevant in the consideration of the instant question. See an analogous situation in the decision of this court in the case of Seismograph Services v. Oshie (2009) 16 NWLR (Pt.l 168) 158 at 160 E-F. Besides, the respondent in this case as the plaintiff has contended that it has established even more strongly a sufficient interest in the subject matter of this case namely its proprietary interest in the mortgaged property in dispute to enable it sue for trespass. The appellants in answer say that the respondent herein not being a mortgagee in possession lacks the capacity to so institute the present action against the appellants for trespass nor on the peculiar facts of this matter has the respondent the right to possession either and that the instant claim having no legs on which to stand should be dismissed. The respondent has countered this submission as arising from a misapprehension of the case to the contrary on this point. It is necessary here to start with examining firstly the meaning of mortgage as I accept its definition as per Bank of the North v. Bello (2000) 7 NWLR (Pt.664) 224 to the effect that: ‘A mortgage is the creation of an interest in a property defeasible (i.e. annullable) upon performing the condition of paying a given sum of money with interest at a certain time. The legal consequences of the definition is that the owner of the mortgaged property becomes divested of the right to dispose of it until he has secured a release of the property from the mortgagee.’ In other words in a proper mortgage the title to the property must have been transferred to the mortgagee subject to the proviso of the mortgaged property being reconveyed by the mortgagee to mortgagor upon performing the condition stipulated in the mortgage deed and invariably upon payment of the debt at the time so stipulated in the Deed of Mortgage. The mortgagor is liable to repay the loan as stipulated otherwise the mortgaged property is foreclosed. It is settled that by a legal mortgage the mortgagee becomes the legal owner of the property although the mortgagor may be left in actual possession/occupation of the mortgaged property but because the mortgagee is entitled to enter into possession immediately upon the execution of the mortgage he has a right to immediate possession. In this position the mortgagee wields enormous rights over the mortgaged property. In the instant case the mortgagor has mortgaged its property situate at plot C.21/6 (6 Agbara Estate, Ogun State to its bankers the 2nd appellant to secure credit facilities granted to it. The mortgagee although not in exclusive possession as found by the trial court, nonetheless has a right to immediate possession and in my view sufficient interest to ground this suit as I will show anon. What is deducible from the essence of the instant legal mortgage is that the mortgagees interests or rights in the mortgaged property are both contractual and proprietary; contractual in the sense that that fact has arisen from the Deed of Legal Mortgage executed between it and the 2nd appellant, that is, in which the mortgagor and mortgagee are parties: See Alhaji Nabu Akibiya v. Alhaji Sambo (1975) 11/12 SC.139. On the other hand his proprietary rights also derive from his property rights to the mortgaged property transferred to him by the very act of the mortgage. See Bridges v. Mees (1957) Ch.475. Arguably these interests or rights so created are subject to be protected and indeed preserved by actions for injunctive reliefs at law in the courts notwithstanding the mortgagor being in actual occupation of the mortgaged property. PAGE| 8 Having put the issues in this matter in their perspective, the point has to be reiterated that it is not easy to define, based on decided cases, the true relation between mortgagor and mortgagee. This is because the mortgagors relation vis-a-vis the mortgagee has been described variously as a tenant to the mortgagee, even a trespasser in cases where he has refused to yield up possession to the mortgagee, etc. The mortgagor is also liable to be sued for any injury to the mortgagees reversion. However, it is certain that a mortgagor is not an agent as such of the mortgagee in the strict legal terms; he would have been so described as having functioned as per that capacity in decided authorities; and no authority in that regard has been given by the parties. From the above settled positions it is therefore difficult to analyse the relation (i.e. inter se) between the mortgagor to the mortgagee; it is even moreso in this case. And I do not intend to do so here between the instant mortgagor and mortgagee in the tripartite mortgage Debenture save to rationalize their relation through their actions in this case, as it is not directly in issue at this stage of the case but see Fishers v. Industry Cooperation & Co. Ltd. (1911) 2 Ch. 223, and Bagnall v. Villar (1879) 12 Ch.D.812. Again, having accepted as settled the foregoing, there is the danger in the instant action of one delving too deep into some aspects of the matter still very live issues to be resolved or settled at the trial of the substantive suit still pending at the lower court. In fact, this case has not yet opened at all since wherefore it has started its journey to this court on account of the instant preliminary objection. In such circumstances lives issues in the matter as here must be left for the substantive trial of the matter. As a matter of principle such live issues should not be pre-empted at the interlocutory stage of hearing an objection. See with approval Madubuike v. Madubuike (2001) 9 NWLR (Pt.719) 698 at 707. And so, whereas here in a claim as the instant one vis-a-vis an interlocutory matter as here that has arisen therefrom an issue questioning as here the plaintiff’s standing or title to sue and the question has gotten interwoven with factual and legal considerations not clearly PAGE| 9 determinable before the court as an appellate court as here without more which would otherwise assist it conclusively in resolving some of the questions arising for determination in the preliminary objection before the court, even then, the court has to walk the tightrope of resolving the matter without reference to or deciding those lives issues one way or the other as the court has no jurisdiction to decide at the interlocutory stage as here the substantive issues for the trial court to decide at the trial. However, it is settled law that the mortgagee whether in possession or not, is entitled to have the mortgaged property preserved from being wasted in the hands of the mortgagor or any other person who has an inferior interest to his. In the instant case, the acts of trespass by the 1st appellant as alleged have tended to diminish the quality of the respondents security for the loan it has granted to the mortgagor i.e. Henley Industries Limited. A mortgagee is not supposed in the circumstances to sit idly by watching, while his security is being wasted and so make it insufficient to satisfy the facility granted on the security. And furthermore, in order not to prejudice the plaintiff’s case by a plea of waiver or acquiescence at the trial court. And so the fact that the mortgagee is not in possession is of no moment in deciding him to protect his interest in the mortgaged property. In this case the plaintiff as a banker has the right in the circumstances of this case to take action against any attempt to damage or diminish its security. Even though some of the questions on the locus standi of the respondent to sue in this matter cannot conclusively be resolved here at this stage as they have become interwoven with some serious questions of factual and legal consideration that should be left for the trial court, all the same, the respondent in this case has established such clear and sufficient interest arising both from the instant contract between the mortgagor and the mortgagee as expressed in the tripartite mortgage Debenture and his proprietary rights to the mortgaged property as arising as per the fact of the conveyance of the mortgaged property itself to the respondent to sustain this suit. The question of the merits of the respondents case in this matter at this stage of considering the instant preliminary objection should not be the issue, that is as to whether the action will succeed or fail. PAGE| 10 One of the factors that has emerged after having scrutinized the implication of the term; ‘locus standi’ above vis-a-vis the instant case, if I may repeat, is that the plaintiff has also satisfied the requirement that he has established on undisputed facts substantial interest in the subject matter of this case and that the plaintiff’s interest in the mortgaged property will be adversely affected if not protected from the immediate alleged wrongful and trespassory acts of the appellants as enumerated as per paragraphs 10, 12, 14 and 15 of statement of claim; I will revert to them anon. See Imade v. Military Administrator, Edo State (2001) 6 NWLR (Pt.709) 478. And this is so as the appellants acts are as alleged clearly adverse as they are not referable to lawful rights. The paragraphs of the statement of claim that bear forth these facts I set them out as follows: ‘(10) The plaintiff avers that in the course of his duty, the said 1st defendant has made several encroachments into the property mortgaged to the plaintiff and has begun selling the sodium silicate from the premises which is beyond his powers under the said instrument appointing him. (12) The plaintiff avers that the action of the defendant is wrongful as the powers of the 1st defendant which is clearly spelt out in the Deed appointing him as a Receiver covers only the Western Part of the said piece/parcel of land and does not extend to the plaintiff’s Eastern portion of the said plot of land. (14) The plaintiff also avers that the said 1st defendant also disrupted the operations of the said Henley Industries, turned off its industrial machinery and plant leading to wholesale damages to the said plants and machinery. (15) The plaintiff avers that not satisfied with the above action, the said 1st defendant summoned all the workers to an open air rally whereat he derided the management of the PAGE| 11 company and called them 419 managers and threatened to sell off the entire premises to prospective buyers with whom he claimed he had commenced negotiations.’ The above paragraphs of the statement of claim speak eloquently of how the respondents interests are threatened and have been threatened and will suffer irreparable damage if not stopped by injunctive reliefs. On the uncontested facts in this case it is my view that the mortgagee/respondent has established sufficient interest in the mortgaged property to justify its intervention to ask for injunctive reliefs to stop the acts of trespass whether or not the respondent eventually will succeed on its claim should not come into consideration at this stage. See again Imade v. Military Administrator, Edo State (2001) 6 NWLR (Pt.709) 478. In Imades case the court has considered the quantum of interest to warrant an action as the instant one in the circumstances in these terms: ‘A person is said to have an interest in a thing when he has rights, advantages, duties, liabilities, loses or the likes, connected with it whether present or future , ascertained or potential, provided that the connection, and in the case of potential rights and duties, the possibility is not too remote. The question of remoteness depends upon the purpose which the interest is to serve’. The foregoing cited case is most apt in considering the degree of the respondents interest or rights vis-a-vis the mortgaged property in this matter. It has been showed that the respondents interest is connected with the mortgaged property. The difficulty experienced in dealing with this matter has arisen from the background that the case in the trial court has not yet opened. Without deciding the point it would have been obviated if the question of standing or title to sue here has not been raised until after the exchange of pleadings or even on the completion of evidence and argument thereof to resolve the thorny factual and legal issues interwoven as in this dispute most of which borders on evidence. In Imades case cited herein it has arisen after exchange of pleadings and issues have been joined between the parties. Even although this approach would impugn on the general principle that ‘locus standi’ as a threshold matter should be dealt with first, such procedural approach should not stand in the way of doing justice in a matter as here. I have seen no reason that it is an inflexible principle of law. I make this observation because there are cases in which the question of locus standi could not be so resolved on the plaintiff’s statement of claim used alone. Even though the issue of jurisdiction in this case is settled, the Receivers involvement has introduced some complications in this matter as to his legal position vis-a-vis Section 393(1) of CAMA Cap.59 of LFN.1990 so also whether or not the mortgagee as found by the trial court and not otherwise challenged here or at the lower court can sue even if not in actual possession at the time of alleged the acts of trespass (a finding reached at the interlocutory stage of this matter) and whether the respondent/mortgagee has re-entered because of the alleged acts of trespass. In the case of Attorney-General of Eastern Nigeria v. Attorney-General of the Federation of Nigeria (1964) 1 ANLR 224, the issue of locus standi was not even raised at all nor pronounced upon as an issue in deciding the merits of the case. I find that the respondent has established its interest in the subject matter of this case that is, the proprietary interest to enable it institute this action for trespass to protect its security on the mortgaged property; and this is particularly so on the backdrop of no reaction to the acts of trespass by the mortgagor of the tripartite mortgage Debenture; it has not sued even though it may be in possession of the property. I have no difficulty in view of what I have said above in agreeing in toto with the decisions of the two lower courts which also constitute concurrent findings in the matter and have not been displaced howbeit by having showed them perverse. See Okulate v. Awosanya (2000) 1 SC. 107. Having found nothing preserve i.e. special circumstances in regard to the findings on the question whether the respondent has interest to be protected in the subject matter of this suit to warrant any interfering by this court, the respondent is entitled to my judgment in its favour; it has the locus standi to sue in this matter. In the result, I find no merit in the appeal. It is dismissed. The judgment of the lower court is hereby affirmed. The case is remitted back to the trial court i.e. for the suit to commence on the merits before the trial court; that is about 10 years since after its inception and starting its journey to this court from the trial court upon a notice of preliminary objection which otherwise has no basis and this delay is highly deprecated. I make no order as to costs. Appeal dismissed.

SC. 78/2007