Simm Computer Resources Limited & Anor V. First Inland Bank Plc (2016)
LawGlobal-Hub Lead Judgment Report
YARGATA BYENCHIT NIMPAR, J.C.A.
This appeal is against the judgment of HON. JUSTICE A. M. LIMAN sitting at the Federal High Court, Lagos delivered on the 1st July, 2013 wherein the trial Court entered judgment for the Respondent and dissatisfied with the said judgment, the Appellants filed an Amended Notice of Appeal dated 11th June, 2015 on the 15th June, 2015 setting out 2 grounds of Appeal.
Brief facts leading to this Appeal are that the Appellants a customer of the Respondent was offered a loan facility which they accepted on behalf of the 1st Appellant. The facility was to be secured by a Deed of Legal Mortgage over the 1st Appellant’s property at No. 40, Old Ota Road, Orile Agege, Lagos. The legal mortgage was only perfected and registered at the Land Registry, Lagos two years after the draw down by the Appellants. An attempt to recover the loan made the Appellants to initiate an action against the Respondent by way of a Writ of Summons seeking the following:
a. A declaration that their Customer-Banker
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relationship is governed by the Offer of Credit Facility Agreement dated the 15th December, 2003 and that any alteration to it, in the form of unilateral decision by either party is null, void and of no effect.
b. A declaration that the Defendant unilateral decision raising interest rate from 20.5% per annum to above 40% without or negotiation with the Plaintiff is incompetent, null, void and must be reversed immediately.
c. An interlocutory injunction restraining the Defendant and her agents, servants and otherwise from sending prospective buyers, estate agents and valuers to invade the 2nd Plaintiff home, the purported security for the facility as the loan/facility sought to be recovered by this “purported power to sell does not exist”.
d. An order of perpetual injunction restraining the Defendant, her agents, servants and or privies from selling, alienating or disposing the 2nd Plaintiff aforesaid property in any manner whatsoever, and or dealing adversely with the proprietary rights of the plaintiffs in the aforesaid property.”
The matter proceeded to trial and the claim of the Appellants was dismissed thus this appeal.
The Appellants’ brief settled by Akhigbe
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Negbenose is dated 26th January, 2016 filed on the 28th January, 2016 and deemed on the 2/2/16. It distilled 2 issues for determination as follows:
1. Whether the failure to obtain the required prior consent of the Governor under Section 22 of the Land Use Act 1978 before the creation of the deed of legal Mortgage Exhibit “B” rendered the deed null and void ab initio thereby disenabling the defendant’s power of sale under the Mortgage un-exercisable.
2. Whether the trial Court was right when it struck out the claim concerning the unilateral raising of interest rate from 20.5% to 405 after it pleading and of evidence held that the claimant had abandon it.
The Respondent’s Brief was settled by Anunka Otoghagwa dated 29th February, 2016 filed on the same date and it adopted the two issues distilled by the Appellant for determination in this appeal. The Court shall also resolve this appeal on the two issues presented by the Appellant.
ISSUE ONE
Counsel to the Appellant contended that based on S. 22 of the Land Use Act, the consent of the Governor ought to have been first obtained before the mortgage deed was created. He submitted that prior consent of the
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governor is a pre-condition for a valid mortgage, that failure to obtain same renders the Deed of mortgage null and void and the mortgage illegal which consequently implies that there is no more power of sale left for the Respondent to exercise and referred to K. AKPENE V. BARCLAYS 1987 1. SC 30, SAVANNAH BANK OF NIGERIA LTD V. AMMEL O. AJILO (1989) 1 NWLR (PT 97) 254, ALHAJI NAKYAUTA V. MACKIMA (1977) 6 SC 34, CCC THRIFT AND CREDIT SOCIETY LTD V. EKPO SUIT NO SC/262/2002 DELIVERED ON FEBRUARY, 2008. He therefore submitted that all the Respondent has is an equitable interest which only gives a right to payment out of the property but not a right to sell or appoint a receiver by order of Court, cited ADARAN OGUNDIAMI v. ARABA S.C. 470/1975.
On the other hand, the Respondent was of the view that there is nothing in the Land Use Act that prevents prior execution of an instrument before an approach is made to the governor. That by the provision of S.22 of the Land Use Act, an executed mortgage deed merely remains inchoate until the governor’s consent thereon is sought and obtained, relied on FIRST BANK OF NIGERIA PLC V OLUFEMI SONGONUGA (2007) 3 NWLR (pt. 1021)
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230 CA, AWOJUGBAGBE LIGHT INDUSTRIES LTD V. CHINUKWE (1995) 11 NWLR (PT 390) SC 379. The Respondent further submitted that S. 22 (1) must be read together with S. 22 (2) of the Land Use Act which has been interpreted in the above cases to mean that it is after the mortgage had been executed that obtaining the governor’s consent falls due. Hence, since the deed of legal mortgage was prepared and executed by the parties in fulfilment of the terms and conditions of the offer, the consent of the governor obtained and the mortgage was subsequently registered at the Lagos State Land registry, then, the mortgage is valid. That the Appellants benefited from the Respondent’s credit facility and cannot stop the Respondent from exercising its power of sale or foreclosure. The Respondent therefore urged this Court to hold that the mortgage deed is a valid instrument enforceable against the Appellants.
RESOLUTION:
The alienation of a right in a certificate of occupancy under the Land Use Act is clearly covered by Section 22 of the Act. It provides as follows:
“It shall not be lawful for the holder of a statutory right of occupancy granted by the Governor to alienate his right
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of occupancy or any part thereof by assignment, mortgage, transfer of possession, sublease or otherwise without the consent of the Governor first had and obtained.”
Another relevant provision is Section 26 of the Land Use Act which says:
“Any transaction or any instrument which purports to confer on or rest in any person any interest or right over land other than in accordance with the provision of this Act shall be null and void.”
These provisions are clear and straight forward and therefore ought to be given their literal interpretation or meaning. The Section has received judicial attention in a plethora of cases and the locus classicus is the case of SAVANNAH BANK OF NIGERIA LTD V. AMMEL. O. AJILO (1989) 1 NWLR (pt. 97) 254 wherein the Court held that where a holder desires to alienate his interest in a certificate of occupancy, he must first obtain the Governor’s consent to make such transfer valid according to Section 22 of the Land Use Act. See also UNION BANK v. AYODARE & SONS (2007) 4-5 SCNJ 181. The Supreme Court in the case of I. T. I. V. ADEREMI (1999) 6 SCNJ 1 held that there are two stages to alienation of interest in land and they
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are:
i. The holder may enter into a contract of sale of his right, at that stage he does not need the Governor’s consent.
ii. The second stage is that of alienating the right that is the stage when he assigns his right by a deed of assignment, to now vest the legal estate in the purchaser, and he needs the Governor’s consent to make the transaction valid.
The contention of the Appellants herein is that no consent was obtained before the creation and signing of the agreement for offer of credit which was to be secured by the legal mortgage of his property. There is a consensus between the parties that consent was secured after the Appellants had enjoyed the facility and the deed of Legal Mortgage was duly registered at the Land Registry upon the Governor’s consent.
Now, it is trite that before the consent of the Governor was obtained, the facility was unsecured and the depositing of the title document merely created an equitable relationship. The deed was inchoate until the grant of consent and subsequent registration. See the case of F. B. N. PLC V. SONGONUGA (2007) 3 NWLR (PT. 1021) 230 @ 264 – 265. Before the consent was secured the facility was unsecured but
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upon consent and registration the facility became secured and a deed of Legal Mortgage validly created.
The Appellants should also be reminded that it is legally the duty of the Appellants as owners of the Certificate of occupancy to apply for consent to mortgage his title, see the cases of UGOCHUKWU v. COOPERATIVE AND COMMERCE BANK LTD (1996) 6 NWLR (PT. 456) 524; OWONIBOYS TECHNICAL SERVICES LTD V. UNION BANK OF NIGERIA PLC (2003) 15 NWLR (PT 844) 545.
Clearly from the evidence before the Court, the governor’s consent was obtained before the attempt by the Respondent to recover its money. To contend therefore that there was no consent at all is therefore wrong and misleading.
The argument of the Appellants is that securing consent of the Governor after he had enjoyed the facility nullifies the agreement. This is far from the settled position of law. The trial judge summarized the law on the subject beautifully and in his words held thus:
“The consent of the Government (sic) is required before the legal mortgage can be become valid, and neither does the tenor of the agreement is relevant (sic), once it is shown that parties have not yet discharged themselves, or
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that in the instant case, the Plaintiff has not fully paid the debt.”
Does the law envisage parties to enter into some form of agreement pending the consent to mortgage? The apex Court in the case of AWOJUGBAGBE LIGHT INDUSTRIES LIMITED V. CHINUKWE & ANOR (1995) LPELR – 650 (SC) held thus:
A close study of Section 22(2) of the Land Use Act clearly confirms that it does recognize cases where some form of written agreement or instrument executed in the evidence of the relevant transaction is submitted to the Governor in order that the necessary consent under Section 22(1) may be signified by endorsement thereon. This being so, I do not conceive that it can be argued with any degree of seriousness that there is anything unlawful in the entering into or execution of Exhibit E before the Governor’s consent was obtained as this procedure is expressly covered by Section 22(2) of the Land Use Act. The legal consequences that arises in such a situation is that no interest in land passes under the agreement until the necessary consent is obtained such an agreement as executed becomes inchoate until the consent of the Governor is obtained after which it can be
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said to be complete and fully effective. I am therefore of the view that Section 22(1) of the Land Use Act prohibits the alienation of a right of occupancy without the consent of the governor first had and obtained but does not prohibit agreement to alienate or in respect of terms and conditions for the purpose of effecting such alienation if and when the Governor gives his consent to the transaction in issue. Per IGUH, JSC.
I may also ask, if no agreement is entered before consent, what will be the particulars or materials upon which the consent would be given? will it be at large? When registering a deed for grant of governor’s consent particulars are required. This informs the accommodation of an agreement before consent is secured. There must be an agreement upon which a governor’s consent can stand. Consent is not given at large. In the case of MRS IRIAGBONSE ORUMWENSE V. DR. DANIEL AMU & ANOR (2008) LPELR 8573 (CA) this Court per NWOSU – IHEME, JCA of the Benin Division held as follows:
“It follows therefore that the determining date is the date the agreement takes effect, that is, the date the Governor signed. It is the date that enable
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the agreement to be registered as a deed of assignment.
This is particularly relevant here in terms of when the Respondent can take any step with regards to the deed executed. The agreement can only enure right of a mortgagee to sell after consent. Before consent there was nothing more than an equitable charge which cannot give the Respondent any right to sell the property. See also FBN PLC V. SONGONUGA (2007) LPELR – 7495 (CA) where OGUNBIYI, JCA (as he then was) held that a deed executed pending consent is merely inchoate pending the requisite consent in accordance with the intention of the parties. To further reinforce this position, Section 22(2) provides thus:
“The Governor when giving his consent to an assignment, mortgage or sub-lease 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.
What document then would the title holder present when so
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demanded by the Governor if no agreement is executed prior to consent in compliance of the above provision?
Another angle to this issue is when was the deed delivered? The signing of an agreement or a deed without delivery amounts to nothing. Unless the deed is delivered, it cannot be said that it has taken effect, see the case of AWOJUGBABE LIGHT INDUSTRIES (SUPRA) where the Court held as follows:
?A deed takes effect from the time of its delivery and not from the day on which it is therein stated to have been made or executed. Any other instrument takes effect from the date of execution.”
Thus the argument of the Appellants is flawed because since the deed only takes effect from the date it is delivered and since the Appellants did not show that the deed was delivered before consent was granted, the deed cannot be said to be illegal.
?Furthermore, there is no time limit within which the title holder can apply for consent under the said Act. It is crystal clear that before alienation can be valid and to confer title on or benefit from the defaulting party, consent of the governor must be obtained. This does not actually mean or make any transaction invalid
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until consent. It only limits the rights that can be derived from the said agreement without consent.
Flowing from above therefore, this issue is resolved against the Appellants. The governor’s consent was obtained with respect to the mortgage and the Deed of Legal mortgage is valid and enforceable.
ISSUE TWO:
The Appellants counsel submitted that the Court refused to evaluate the evidence before it to show that the Appellants never abandoned the issue of the increase of interest from 20.5% to 40% but keenly contested the issue. Counsel therefore submitted that the appellate Court can interfere by making the proper findings of facts, cited HIGHGRADE MARITIME SERVICES v. FBN LTD (1991) 1 NWLR (PT 167) 290.
It was however the contention of the Respondent that the lower Court was right to hold that the Appellants abandoned their claim concerning the unilateral raising of the interest rate. This is because the Appellants did not formulate any issue on it nor was any address canvassed thereon in support of the claim at the lower Court. Furthermore, the Respondent contended that even if the lower Court had considered the issue of the unilateral raising of interest the
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conclusion of the lower Court will have remained the same as the Court cannot restrain an unpaid mortgagee from exercising its power of sale and relied on YARO V. AREWA CONSTRUCTION LTD (SUPRA) and INTERCITY BANK PLC V. FEEDS & FOOD FARMS NIG LTD (2001) 17 NWLR (pt. 742) 347.
RESOLUTION:
This second issue questions the basis upon which the trial Court struck out the aspect of the claim concerning increase in interest rate from 20.5% to 40% after the Appellants led evidence on it. The Appellants in their statement of claim on the issue of interest claimed thus;
A declaration that the defendant unilateral decision raising the interest rate from 20.05% per annum to above 40% per annum without notice or negotiation with the Plaintiff is incompetent, null void and must be reversed immediately.
The trial Court concerning the issue held thus:
“Both the defendant’s and the Plaintiffs counsel not only formulated the question for determination within the theme of validity of the Legal mortgage but also limited their respective submissions to it. My take on this is that where in final addresses to Court, parties formulated issues which they urge the Court
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to resolve, if those issues directly arise from the pleadings and the evidence, although they are narrower or leave out other points (even if those points are important), the Court is entitled to assume that the parties have decided to redefine or reformulate the issue they believe are relevant for the determination of the controversy before the Court. Consequently, I hereby hold that the Plaintiff having decided not to address the Court on relief nos. (a) and (b), he is deemed to have abandoned them ab silensio. They are accordingly struck out.”
The Appellants before the trial Court formulated issues for determination for the trial Court but none touched on the issue of unilateral increase of interest, see page 421 – 427 of the Record of Appeal. Furthermore, no arguments were canvassed on the said issue of unilateral increase in interest rate. Hence, the complaint on failure of the trial Court to evaluate evidence cannot stand because the Appellant himself did not refer the Court to the relevant pieces of evidence that will lead the trial Court to a finding. There were no arguments on the issue of interest and no issue formulated. The choice to limit his
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arguments to the validity of the legal mortgage was purely the choice of the party. What is an address of counsel? The apex Court in the case of AWOYALE V. OGUNBIYI (1985) NWLR (PT.10) 861 adopted the definition of address in the dictionary of English by Earl Jowitt as a petition by each counsel to the Court to accept his own conception of the law and the facts in a case. So when a counsel is not allowed to address the Court, it strikes at the root of fair hearing. see OYEKAN V. AKINRINWA (1996) 7 NWLR (Pt. 459) 128 where ONU, JSC held as follows:
“The denial of a party’s counsel (where established and proven) of the opportunity of addressing the Court is not a mere irregularity but a defect in proceedings which strikes at the right of the party to fair hearing thereby rendering the proceedings a nullity vide OBODO V. OLOMU (1987) 3 NWLR (PT. 59) 111.”
That is not to say that cases are decided on addresses of counsel but on the evidence before the Court, see OLOBO V. OLOMU (SUPRA) and ARCHIBONG V. EDAK (2006) 7 NWLR (PT. 980) 455 AT 502. However, the purpose of the address is to assist the Court to be specific in its evaluation and assessment thus leading to
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correct findings. This Court in the case of NWAKODO V. OHAJURUKA (2008) LPELR – 4640 (CA) said that address of counsel are handmaids of justice and assist to narrow the scope of judicial labour and research. More so, BADA, JCA in the case of UKWUEZE V ANI (2007) LPELR 8633 (CA) said thus:
“In my humble view, the hearing of addresses before judgment is delivered as provided for by Section 294(1) of the 1999 Constitution of the Federal Republic of Nigeria is beneficial and its impact on the mind of the Judge is enormous and unquantifiable. A good address may provide a Judge a clear mental opinion to see through the veneer and discover the hard core of a partys case.”
From the various quotations rehashed above, addresses of counsel are important and are in compliance with constitutional provisions. A counsel must be allowed to address the Court, the object for which is to narrow down issues it wants the Court to focus on. In this case, the Appellants in their written address at the lower Court (pages 421 – 427 of the record) formulated 2 issues for determination as follows:
1. Whether failure by the defendant to obtain the required prior consent of the
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Governor under Section 22 of the Land Use Act 1978 before the creation of the Deed of legal Mortgage Exhibits “B” rendered the deed null and void ab initio thereby disenabling the defendants power of sale under the Mortgage un-exercisable.
2. Whether the purported transaction contained in Exhibit ‘B’ is clear violation of Section 22 and 26 of the Land Use Act 1978 confers any interest on the Defendant.”
It is clear that in the issues put forward, none touched on the area of complaint here, i.e. the complaint on arbitrary increase in interest rate. Did the Appellants say something on the arbitrary increase in the arguments put forward in support of the two issues highlighted above?
I have gone through the 7 page address and there is nowhere therein where the Appellants mentioned anything on interest rate, all the address focused on was the issue of Section 22 and the Deed of Legal Mortgage that the Appellants contended was a nullity. How then did the Appellants expect the Court to formulate the issue and resolve same suomotu? I agree with the trial judge that the Appellants had abandoned that part of its claim. The Appellants by their deliberate act, chose
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the issues they wanted the Court to resolve and the Court did that dutifully. They set out the boundaries for the Court and the Court stayed within the set lines, hence, they cannot therefore be heard to complain. I find no fault in the decision of the trial judge. Consequently, this issue is resolved against the Appellants.
Having resolved the two issues against the Appellants, the appeal lacks merit and is hereby dismissed. The judgement of the trial judge, HON. JUSTICE A. M. LIMAN delivered on the 1st July, 2013 is hereby affirmed.
Each party to bear its cost.
Other Citations: (2016)LCN/8660(CA)
