Professor James O. Ogunlade V. Federal Mortgage Bank of Nigeria Limited & Ors. (2006)
LawGlobal-Hub Lead Judgment Report
JOHN AFOLABI FABIYI, J.C.A.
This is an appeal against the judgment of Kolade, J. delivered on 15th May, 1996 while sitting at the High Court of Justice, Ibadan, Oyo State of Nigeria.
The Appellant had axe to grind with the 1st Respondent over a mortgage loan procured by him. He was propelled to initiate his action at the trial court. In paragraph 54 of the statement of claim, he put up a host of nine (9) claims against the Respondents jointly and severally. The lone issue that was contested before the lower court relates to propriety or otherwise of variation in the rate of interest as charged by the 1st Respondent. The claim concerning same, as contained in paragraph 54(5) of the statement of claim, reads as follows:-
“Declaration that the 1st Defendant is not entitled to calculate interest at a rate over and above 9% agreed upon by the plaintiff and reflected in the Deed of Legal Mortgage.”
The appellant testified before the trial court that in 1980, he applied for a loan from the 1st Respondent to develop, his property along Osungbekun Avenue, Agodi GRA, Ibadan. The 1st Respondent granted him an initial loan of N65,000. The letter approving the loan is Exhibit B. As security, he deposited his Certificate of Occupancy over which a Mortgage Deed was executed. The same is Exhibit ’91C’91. He said according to Exhibits B & C, the rate of interest was 8 ‘bd%. He further testified that in 1981, he applied for an additional loan. He was further granted N15,000. The letter of offer is Exhibit D. A supplementary Deed of Legal Mortgage dated 1st June, 1982 was executed between him and the 1st Respondent. The same is Exhibit E. He said he later received some notices from the 1st Respondent in respect of variation of interest rates. The notices are Exhibits F’97F3.
Cross-examined, the appellant, as plaintiff at the trial court, agreed that the loan was repayable by monthly installments. He said at the time of the sale of his property, he was in serious arrears. He agreed that Exhibits F-F3 are notices for increase in rate of interest. Two letters written by him to the 1st Defendant/Respondent are Exhibits G & G1 respectively.
DW1, a mortgage manager with the 1st Defendant/Respondent identified Exhibits B & D – the offer forms in respect of the loans granted to the plaintiff. He tendered the acceptance forms signed by the plaintiff. They are Exhibits H & H1. He confirmed Exhibits C & E as the Deeds of Legal Mortgage on the loans advanced. He said Exhibits F-F3 are notices served on the plaintiff varying interest rates. Exhibits G & G1 are the letters written by the plaintiff to the 1st defendant bank in 1987 and 1988.
Learned counsel on both sides addressed the trial court on the claim touching solely on variation of interest rate. In his considered judgment, the learned trial Judge found that the 1st respondent had the power to dictate the rate of interest at different intervals as reserved in the acceptance of offer form and in paragraph 8 of the Principal Legal Mortgage – Exhibit C executed by the parties. He found that the right of the plaintiff as reserved in paragraph 8(e) of the said mortgage deed is to treat any such notice received as a call for the repayment of the principal sum then due with interest; the option to be notified to the 1st defendant bank within one month of the receipt of the notice. But since the plaintiff failed to exercise any of the options, he is deemed to abide by the rate of interest notified. He found that the 1st defendant bank was entitled to the amount as stated on its account due and payable.
The Appellant felt unhappy with the stance posed by the learned trial judge. He has appealed to this Court. The original notice of appeal which carries six grounds of appeal was filed on 10-7-96. On 26-3-03, the Court granted the appellant leave to substitute same with an amended Notice of Appeal which carries seven (7) grounds of appeal.
On 7-3-06, when the appeal fell due for hearing, learned counsel for the appellant adopted and relied on the appellant’s brief of argument and urged that the appeal be allowed. Three issues couched for the determination of the appeal read as follows:
“(1) Whether, having regard to the conditions set out in the deed of legal mortgage, it can be said that the defendant complied with those conditions in increasing the interest, and if not, what is the effect of such unlawful increment?
(2) Whether the learned trial judge was not in error in resorting to extrinsic evidence to interpret clear and unambiguous terms of the mortgage deed.
(3) Whether the trial court can rightly pronounce on a relief not claimed before it.”
Learned counsel for the respondents also relied on the brief of argument filed by him and urged that the appeal be dismissed. He adopted the issues formulated for determination by the Appellant.
Arguing issue 1, Senior Counsel for the appellant submitted that provisions of clause 8(b) of Exhibit C require that an increment in the rate of interest should not come into effect until after three months have lapsed after the notification. He felt that the only logical interpretation that can be placed on clause 8(b) of Exhibit C is that three months notice must be given to the borrower by the Bank before any interest payable on loan granted can be varied. He felt that notices in Exhibits F-F3 are grossly improper and insufficient and thereby defeat the purpose that the clause was meant to serve which was to afford the customer an opportunity to decide either to accept the proposed increase or payoff the balance of the loan. He referred to U.B.N. v. Ozigi (1994) 3 NWLR (pt. 333) 385; U.B.N. v. Sax (Nig.) Ltd. (1994) 8 NWLR (Pt. 361) 150; U.B.N. v. Nwaokolo (1995) 6 NWLR (Pt. 400) 127.
Senior counsel felt that Exhibits F-F3 were irregularly issued retrospectively and applied to the principal sum and such hampered the appellant’s right of option as contemplated by clause 8(3) of Exhibit C. He felt that the notices are incompetent, null and void and cannot validate any action taken by the 1st Respondent on account of those notices. He opined that as the notices are void, any interest charged on such notices is also void as one cannot put something upon nothing and expect it to stand. He cited Mcfoy v. U.A.C. Ltd. (1961) 3 All E.R. 1169.
Senior counsel felt that the indebtedness of the appellant was not ascertained having regard to the ‘contamination’ of the principal sum and the ‘illegal’ interest charged. He cited Olatunde v. O.A.U. (1998) 5 NWLR (Pt. 549) 178; Artra Industries Nig. Ltd. v. NBCI (1998) 4 NWLR (Pt. 546) 357; UBA Ltd. v. Umeh & Sons Ltd. (1996) 3 NWLR (Pt. 426) 565. He felt that the 1st Respondent cannot calculate interest on a rate over and above 9% agreed upon as reflected in clause 8(b) of Exhibit C.
Learned counsel for the respondents submitted that Exhibits F-F3 which are notices served as provided by clause 8(b) of Exhibit C were at all material times’ effective. He cited the cases of U.B.N. v. Sax (Nig.) Ltd. (supra) and UBA Ltd. v. Professor Albert Ojo Ozigi (supra). He referred to section 14(1)(c) of the Federal Mortgage Bank Decree No.7 of 1977 which granted the 1st Respondent the liberty to grant credit facilities at such interest rates and upon terms as may be determined by the Board.
Learned counsel submitted that the appellant did not produce or tender any statement of account showing at what point in time the new rates were charged into his account. He felt that the 1st Respondent was at liberty to vary interest rate and that Exhibits F-F3 are valid acts issued in accordance with clause 8(b) of Exhibit C. He opined that the dates indicated in the said exhibits, being dates requiring the payment of the increased rate of interest, are not void but irregular. He referred to Mcfoy v. UAC (supra) at P. 1173.
Learned counsel maintained that the appellant who admitted that he was in ‘serious arrears’ of non-repayment of monthly installment cannot complain of irregular notices. He cited Nigerian Housing Development Society & Anr. v. Mumuni (1977) 1 NSCC 65 at P. 72. He submitted that equity will not allow the appellant to benefit on the terms of contract that he was constantly breaching. Equity will not aid an indolent party to an agreement; he submitted.
Learned counsel submitted that the appellant waived the irregularities in the notices served on him when he failed to exercise the option provided in clause 8(e) of Exhibit C. He referred to the cases of Kudu v. Aliyu (1992) 3 NWLR (Pt. 231) 615 at 635; Bakare v. L.S.C.C. (1992) 8 NWLR (Pt. 262) 641 at page 701. Learned counsel felt that by the provision of clause 8(b), the 1st Respondent has the liberty to increase or reduce the rate of interest and same does not envisage that Exhibits F-F3 should be given as a condition precedent to the liberty on power of fixing a higher or lower rate of interest. He opined that what clause 8(b) of exhibit C envisages is that the application of higher rate of interest will be used in calculating interest chargeable into the account of the customer until the expiration of not less than three months from the date of the notice served on the customer requiring payment of interest at increased or reduced rate.
In a bid to consider issue 1, it is apt to reproduce clause 8(b) and (e) of exhibit C which is the Deed of Legal Mortgage executed by the appellant and the 1st respondent. It provides as follows:
“8. The rate of interest payable on all money hereby secured shall be determined as follows:
(a) …
(b) The Mortgage Bank may from time to time serve on the borrower not less than three months notice requiring payment of interest at an increased or reduced rate which shall be the rate of interest chargeable by the Mortgage Bank at the date of the said notice on advances on new securities which the Directors of the Mortgage Bank consider to be of the same type or as falling under the same category as this security and the decision of the Mortgage Bank’s Board of Directors in this connection shall not be questioned on any account whatsoever.
(c) …
(d) …
(e) The borrower may at his option treat any such notice as is referred to in this clause as a notice requiring repayment of the principal money secured, but in that event he shall give notice in writing of such election to the Mortgage Bank with (sic) one month of the service of the notice upon him.”
From the provision of clause 8(b) of exhibit C reproduced above, the power of the 1st Respondent to serve notice requiring payment of interest at an increased or reduced rate is not in doubt. The 1st respondent is at liberty to so act. In real substance, exhibits F-F3 are notices served on the appellant as provided by clause 8(b) of Exhibit C. Their effect remains undoubted. The Bank Board was at liberty to fix its interest rate from time to time. This view is supported by the Supreme Court decisions in UBA Ltd. v. Ozigi (supra) and UBA Ltd. v. Sax (Nig.) Ltd. (supra) at p. 173.
Both counsel for the parties agree that the dates indicated in Exhibits F-F1 make notices therein improper. The exhibits appear irregular. I agree that the exhibits are irregular but they are not void. They are not nullities. They are good until avoided. Refer to Mcfoy v. UAC Ltd. (supra), 1962 A.C. IS2. If an act is only voidable, then it is not automatically void. It is only an irregularity which may be waived. It is not to be avoided unless something is done to avoid it.
Having been served with irregular notices, the appellant had the option to treat same as requiring the repayment of the principal money secured. But he reneged in that direction. It occurs to me that the appellant waived his right to protest the irregular notices served on him.
Waiver is defined in Black’s Law Dictionary, 5th Ed. P. 1417 as – ‘the intentional or voluntary relinquishment of a known right or such conduct as warrants an inference of the relinquishment of such right; the renunciation, repudiation, abandonment or surrender of some claim, right, privilege or of the opportunity to take advantage of some defect, irregularity or wrong. Atlas Life Ins. Co. v. Schrimsher 179 OKL. 643, 66 p. 2d 944, 948. Refer also to Ariori v. Elemo (1983) 1 SC 13; (1983) 1 SCNLR 1.
Irregularity can be waived. If the beneficiary fails to object, he is deemed to have waived his right. See Katsina Local Authority v. Makudama (1971) NSCC 119 at 124; (1971) 1 NMLR 100; Nnonye v. Anyichie (2005) 2 NWLR (Pt. 910) 623 at 647. Undoubtedly, the Appellant waived the irregularities in notices served on him. See Kudu v. Aliyu (supra) at page 635; Bakare v. L.S.C.C. (supra).
Apart from the above, the appellant admitted that he was in serious arrears of non-repayment of monthly installment. He can hardly be heard to complain of irregular notices of late. I agree with the respondents’ counsel that equity will not allow the appellant to benefit on the terms of contract which he was constantly breaching. As an indolent party in the agreement, equity will not come to his assistance. Equity means equality. See N.H.D.S. & Anr. V. Mumuni (supra) which is in point.
In short, issue I is hereby resolved against the Appellant without any equivocation.
On issue 2, senior counsel for the appellant submitted that exhibits H and H1 -letters of acceptance do not form part of the terms of exhibit C-Mortgage Deed which is the only legally cognizable document governing the relationship between the appellant and the 1st respondent. As preliminary correspondence, they do not form part of exhibit C executed as representing the terms and conditions governing the relationship of the Appellant and the 1st Respondent Bank. He referred to UBN v. Ozigi (supra) at p. 400; Macaulay v. NAL Merchant Bank (1990) 4 NWLR (Pt. 144) 283 and section 131 (1) of the Evidence Act. Senior counsel felt that the conclusion of the learned trial judge that ‘the power of the 1st defendant bank to dictate the rate of interest at different intervals has been reserved both in the acceptance of offer forms and in paragraph 8 of the principal legal mortgage – Exhibit C executed by the parties’ is wrong. He contended that Exhibits H & H1 cannot be used as extrinsic evidence to vary or add to the terms contained in Exhibit C.
Learned counsel for the respondents submitted that Exhibits H & H1 were not tendered to control or vary the provision of clause 8(b) of Exhibit C but in support of the said clause. He felt that reference to Exhibits H and H1 did not produce any injustice to the appellant.
To my mind, there is no big deal in this issue. Exhibits H & H1 were not used to vary or contradict clause 8(b) of Exhibit C. Exhibits H & H1 serve as reminders to the appellant that from the inception of his relationship with the respondent he was aware that the 1st respondent reserved the power to dictate rate of interest from time to time. Exhibits H & H1 were not used in interpreting the terms contained in exhibit C. They were employed to support the terms of agreement expressed in clause 8(b) of Exhibit C. The contents of both are similar and any imagined distinction may be likened to a difference between six and half a dozen.
I accordingly resolve issue 2 against the appellant without much ado.
Issue No.3 is whether the trial court can rightly pronounce on a relief not claimed before it.
Senior counsel submitted that the state of pleadings and evidence adduced does not suggest a legally cognizable relief entitled to by the 1st defendant bank and same cannot depend on the appellant’s claim before the lower court. He cited UBN Plc v. Jeric (Nig) Ltd. (1998) 2 NWLR (Pt. 536) 63. Senior counsel observed that the 1st defendant did not file any counter-claim. He felt that the relief granted to the 1st defendant bank is incompetent and that the learned trial judge lacked jurisdiction to grant same. He cited Western Steel Works Ltd. v. Iron and Steel Workers Union (1986) 3 NWLR (Pt. 30) 617 at 625.
Learned counsel for the respondents submitted that a court has no power to award to a party that which he did not claim. He cited Edebiri v. Edebiri (1997) 4 NWLR (Pt. 498) 165 at 176; Ekpenyong v. Nyong (1975) 2 SC 71. Senior counsel further pointed it out that although a court must not grant to a party a relief not claimed by him, it has the power to grant a relief which is incidental and necessary even if such has not been expressly claimed. He cited Palmer A. Eravadodoke v. University of Benin Teaching Hospital Management Board (1993) 2 NWLR (Pt. 277) 590 at page 599. He also referred to section 16 of the High Court Law (Cap 46) Laws of Oyo State of Nigeria.
Learned counsel maintained that the conclusion of the trial judge that ‘the 1st defendant is entitled to the amount as stated on its account as due and payable’ did not amount to a grant of relief that was not claimed. He cited F.A.T.B. v. Ezegbu (1993) 6 NWLR (Pt. 297) 1 at 15.
It is clear that a court should not award that which was not claimed by a party. This is because a court is not a charitable organization. Refer to Egonu v. Egonu (1978) 11-12 SC 111 at 113; Babatunde Ajayi v. Texaco (Nig.) Ltd. (1978) 9-10 SC 1 at 27; Etim Ekpenyong v. Inyang Nyong (supra) at page 80; Chief R. A. Okoya v. Santilli & ors (1990) 2 NWLR (Pt. 131) 172 at 205.
However, an order which appears incidental’ and necessary for a proper and just determination of a cause could be made though not claimed by a party. Refer to Nneji v. Chukwu (1988) 3 NWLR (Pt. 78) 184 at 208; F.A.T.B. v. Ezegbu (supra). The court in such a situation must not grant more than what the party claims.
The 1st respondent herein, as 1st defendant at the lower court, did not counter-claim for a declaration that it is entitled to a specified sum stated in the Appellant’s account. There is no iota of evidence on any sum outstanding. The conclusion of the trial court ‘that the 1st defendant is entitled to the amount as stated on its account as due and payable’ was made in the air and at large. If a consequential order must be made, it must be precise and capable of being executed without acrimony. The declaration appears incompetent. The learned trial judge lacked jurisdiction to grant same. The case of Western Steel Works Ltd. v. Iron & Steel Workers Union (1986) (supra) is of moment. The issue is resolved in favour of the Appellant. The trial judge’s order that ‘the 1st defendant is entitled to the amount as stated on its account as due and payable’ is hereby set aside.
In conclusion the appeal savours of merit in respect of issue No.3. The main decision of the learned trial judge that the 1st Respondent has power to vary interest rate at different intervals as reserved in clause 8(b) of Exhibit C executed by the parties remain inviolate. I affirm same. In the prevailing circumstance of this appeal, I make no order on costs.
Other Citations: (2006)LCN/1978(CA)
