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First Bank of Nigeria (FBN) v. Benlion (Nig) Ltd & Ors. (2021) – CA

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➥ CASE SUMMARY OF:
First Bank of Nigeria (FBN) v. Benlion (Nig) Ltd & Ors. (2021) – CA

by Branham Chima (SAL).

➥ COURT:
Court of Appeal – CA/C/31/2016

➥ JUDGEMENT DELIVERED ON:
Wednesday, May 05, 2021

➥ AREA(S) OF LAW
Mortgage sale;
Invalid transaction.

➥ PRINCIPLES OF LAW
⦿ DEFINITION OF MORTGAGE
A mortgage is defined as creation of an interest in a property defeasible, that is, annullable upon performing the condition of paying a given sum of money with interest at a certain time.  Thus, the legal consequence of the above 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. — M.L. Shuaibu, JCA.

⦿ IN LEGAL MORTGAGE PROPERTY IS TRANSFERRED TO THE MORTGAGEE SUBJECT TO REDEMPTION
In a legal mortgage, title to the property is therefore transferred to the mortgagee subject to the proviso that the mortgage property would be reconveyed by the mortgagee to the mortgagor upon the performance of the conditions stipulated in the mortgage deed and upon payment of the debt at the time stipulated therein.  In other words, the mortgagor is liable to repay the loan as stipulated; otherwise the mortgaged property is foreclosed.  See BANK OF NORTH V. BELLO (2000) 7 NWLR (prt 664) 244, ADETONA V. ZENITH INTERNATIONAL BANK PLC (2011) 18 NWLR (prt 1278) 627 and ATIBA IYALAMU SAVINGS & LOANS LTD V. SUBERU (2018) 13 NWLR (prt 1637) 387 at 414. — M.L. Shuaibu, JCA.

⦿ MORTGAGE DEBT HAS TO BE OUTSTANDING FOR MORTGAGEE TO TAKE POSSESSION
A deed of legal mortgage is said to have been created once an agreement exists between the parties, and the instrument signed by the parties which is described as a legal mortgage, provided it is under a seal.  Therefore, the legal effect of a deed of legal mortgage is that it allows the mortgagee exercise its possessory rights over the mortgage property.  It is to be noted however, that caveat in the position of a mortgagee remains that the mortgage debt has to be outstanding and unliquidated in order for the right of a mortgagee to immediate possession of the mortgaged property to become activated. See AFRIBANK V. ALADE (2000) LPELR – 10722 (CA) and S.W.V. (NIG) LTD V. AMCON (2020) 3 NWLR (prt 1710) 179. — M.L. Shuaibu, JCA.

⦿ DISTINCTION BETWEEN GRAMMATICAL & CRIMINAL FORGERY
The word forgery is defined as an act of fraudulent making a false document or altering a real one to be used as if genuine. However, in ATUCHUKWU V. ADINDU (2011) LPELR – 3821 (CA), OGUNWUMIJU, JCA (as he then was) drew a distinction between grammatical and criminal forgery and held that the mere speculative observation of the respondent and her witness given flesh by the reasoning of the trial Judge cannot be substituted for conclusive and hard evidence of criminal forgery which must be proved beyond reasonable doubt. Thus, the case put forward before the trial Court deserved to be meticulously and reflectively analyzed in order to determine whether such a party has set out to establish the commission of a crime by anybody as would impose on him the necessity to establish a case of forgery beyond reasonable doubt. Now, looking at the circumstances of this case, it was not the case of the 1st and 2nd respondents that any named person had forged Exhibit 1. An examination of paragraph 4 of the statement of defence of 1st and 2nd defendants as well as paragraph 4 of the statement of oath of Chief Elias Ezenagu who testified as DW2 vis-a-vis Section 138 of the Evidence Act shows that the allegation of forgery was not made specifically to a party or against a party.  Therefore, the case made by the 1st and 2nd respondents is not one of criminal forgery but that Exhibit 1 was a useless document on account that same was neither signed by the mortgagor nor the mortgagee. — M.L. Shuaibu, JCA.

Available:  Abdu Manya v. Alhaji Iliyasu Idris (2000) - CA

⦿ PURPOSE OF A SIGNATURE ON A DOCUMENT
It is pertinent to note that a signature on a document identifies the document as an act of a particular person and without a signature, the document cannot pass as the act of such unnamed person, and it is therefore totally useless.  See N.N.P.C. V. ROVEN SHIPING LTD (2019) 9 NWLR (prt.1676) 67 at 83 and TSALIBAWA V. HABIBA (1991)2 NWLR (prt 174) 461. — M.L. Shuaibu, JCA.

⦿ MORTGAGEE OR RECEIVER EXERCISING A POWER OF SALE ONLY HAS A DUTY TO ACT BONA FIDE
There is an abundance of authorities describing the obligations of a mortgagee and by extension, a receiver, exercising a power of sale.  Thus, whether the mortgagee or receiver owes a duty of care in the conduct of the sale, the law seems sufficiently well settled that the mortgagee or receiver engaged in selling the mortgaged property has a duty to act bona fide. In EKA – ETEH V. NIGERIA HOUSING DEVELOPMENT SOCIETY LTD & ANOR (1973) NSCC 373, 380, at 381, the Supreme Court held that – “The only obligation incumbent on a mortgagee selling under and in pursuance of a power of sale in the mortgage deed is that he should act in good faith.” — M.L. Shuaibu, JCA.

⦿ IMPROPER SALE DOES NOT VITIATE TITLE OF SUBSEQUENT PURCHASER
I need to stress here that a mortgagee’s power of sale becomes exercisable if it has arisen and once it has so arisen, the title of the subsequent purchaser will not be affected by its improper or irregular exercise and the sale will be regarded valid. See MAJEKODUNMI & ORS V. CO-OP BANK LTD (1997) 10 NWLR (prt. 524) 198. But, in exercising the power of sale, a mortgagee is under duty to take reasonable care to obtain the true value of the property.  See TEMCO ENG. & CO LTD V. S.B.N. LTD (1995) 5 NWLR (prt. 397) 607. However, a mortgagee will not be restrained on the exercise of his power of sale merely because the mortgagor objects to the manner in which the sale is being arranged or because the mortgagor has commenced a redemption action in Court, but he (mortgagee) will be restrained if the mortgagor pays the amount claimed by the mortgagee into Court. — M.L. Shuaibu, JCA.

⦿ NON-COMPLIANCE WITH AUCTIONEERS LAW ONLY GIVES RISE TO DAMAGES
An auction sale of mortgaged property is however valid despite the non-compliance with auctioneers law.  Thus, any irregularity in the sale is remediable to the mortgagor in damages.  See OKONKWO V.  C.C.B. (NIG) PLC.  (Supra).  In ABDULKADIR V. MOHAMMED (2019)12 NWLR (prt. 1687) 450 at 496, it was held that except where the sale of a mortgaged property by auction is tainted with fraud and collusion, any irregularity in an auction sale in breach of the auctioneers Law and Land use Act cannot vitiate the sale. — M.L. Shuaibu, JCA.

Available:  Archibong Ekpanya v. Grace S. Akpan & Ors. (1988)

⦿ WHAT IS A CONSEQUENTIAL ORDER?
A consequential order is essentially one which would make the principal order effectual and effective. In other words, it is one which has a bearing with the main relief(s) claimed by a party.  It is thus granted usually to give meaning and effect to the main relief(s) as such a consequential order can only relates to the matters adjudicated upon. See INAKOJU V. ADELEKE (2007) 4 NWLR (prt. 1025) 423.  In LIMAN V. MOHAMMED (1999)9 NWLR (prt 617) 116, it was held that a consequential order is a necessary order flowing directly and naturally from and inevitably consequent from the judgment already given. It therefore need not be claimed. — M.L. Shuaibu, JCA.

➥ LEAD JUDGEMENT DELIVERED BY:
Muhammed Lawal Shuaibu, J.C.A.

➥ APPEARANCES
⦿ FOR THE APPELLANT
Paul E. Eko, Esq.

⦿ FOR THE RESPONDENT
Chief Onyebueke F.O.
S. A. Akpanke, Esq.

➥ CASE FACT/HISTORY
This is an appeal against the judgment of the High Court of Cross River State sitting in Ikom Coram, Hon. Justice M. J. Eneji delivered on 25/6/2014 wherein judgment was entered in favour of the 1st and 2nd respondents.

The 3rd respondent as claimant at the trial Court took out a writ of summons and statement of claim respectively filed on 19/5/2009 claiming inter alia, ownership of a parcel of land measuring 2978.716 square meters with the buildings and other structures thereon covered with a deed of assignment dated 11/7/1984 and registered as No.55/54 at the land Registry office Calabar and covered by a certificate of occupancy NO.M/196/184 dated 14/12/1994 by virtue of a Deed of Assignment dated 20/12/2007 and registered as No. 82 of page 82 in volume 92 at the Lands Registry, Calabar. 

The 3rd respondent also claimed an order of vacant possession of the said property lying and situate at No. 55 Obudu Road, Ikom which was a mortgage property registered as No.72/72/72 at the Lands Registry, Calabar acquired by virtue of a Deed of Assignment dated 20/12/2007 as well as perpetual injunction together general damages against the defendants thereat.

➥ ISSUE(S) & RESOLUTION(S)
[APPEAL DISMISSED]

I. Whether the trial Judge was right in law to have held that the mortgage transaction entered between the appellant and the 1st and 2nd respondents is incompetent, null and void?

RULING: IN RESPONDENT’S FAVOUR.
A. THE MORTGAGE DEED IS INCOMPETENT AS IT WAS NOT SIGNED
“A deed must be in writing and any instrument under seal is a deed if made between private persons. Thus, it must be signed, sealed and delivered. Exhibit 1 having not been signed is a useless piece of paper and cannot qualify as a deed and the learned trial judge was therefore right in my view when he held that:- ‘The mortgage transaction predicated on the execution of exhibit 1 failed ab initio as in the first place, it never secured the 1st defendant’s property as a collateral for the over-draft facility allowanced by the 3rd defendant to the 1st defendant – Secondly, on account of the defect and incompetence of Exhibit 1, the subsequent legal mortgage dated 20/10/2000 registered as NO 72/72/27, as well as the consequent Deed of Assignment dated 20/12/2007 between the 3rd Defendant and the claimant, in respect of the 1st – 2nd defendants’ property described as NO 55 Obudu Road, Four Corners Ikom is null and void.  The claimant cannot in the circumstances of this case rely on any of the above instruments to lay claim to the 1st – 2nd defendants’ property in law, as no title passed from the 1st – 2nd defendant by virtue of the incompetence of Exhibit 1. Thirdly, I agree as rightly maintained and submitted by counsel to the 1st – 2nd defendants that due to the incompetence of Exhibit 1, which is the said mortgage deed, relied on by the claimant and the 3rd defendant, to contest the 1st – 2nd defendants’ property in this case, smacks of fraud.’”
.
.
II. Whether the trial Judge was right in law to have held that the auction sale of the 1st respondent’s property lying and situate at No. 55 Ikom – Obudu Road, Four Corners Ikom to the 3rd respondent is invalid null and void, having not been done in compliance with due process?

Available:  Luck Guard Ltd. v. Adariku & Ors (2022) - CA

RULING: IN RESPONDENT’S FAVOUR.
A. THE FOUNDATION OF THE AUCTION SALE IS TAINTED WITH FRAUD
“I have earlier in this judgment held the view that the absence of the signature on the Deed of Legal Mortgage Exhibit 1 has rendered same incompetent and likewise reliance on the defective Deed of Legal Mortgage to contest the property of the 1st and 2nd respondents smacks of fraud. Thus, in the present case there is evidence that the foundation of the auction sale is tainted with fraud, which invariably vitiates the sale. The second issue is also resolved against the appellant.”
.
.
.
✓ DECISION:
“In the result, the appeal is moribund and is accordingly dismissed.  I however make no order as to costs.”

➥ MISCELLANEOUS POINTS

➥ REFERENCED (LEGISLATION)

➥ REFERENCED (CASE)

➥ REFERENCED (OTHERS)
⦿ HALBURY’S LAWS OF ENGLAND IN RESPECT TO MEASURE OF DAMAGES
The learned authors of volume 12 of the Halbury’s Laws of England, 4th Edition dealt with the rules regarding measure of damages in regard to trespass to land in paragraph 1170 and therein at page 460 commented as follows:- “A plaintiff is entitled to nominal damages for trespass even if no damage or loss is caused.  If damage or loss is caused, he is entitled to recover in respect of his loss according to general principles. Whereby the trespass, the plaintiff has been wholly deprived of his land he is to be compensated according to the value of his interest and if he is a freeholder entitled to possession, the damages will be the value of the produce of the land during the period of deprivation subject to the proper expense of management or in case of permanent deprivation, its selling value.  Where the defendant has by the trespass made use of plaintiff’s land, the plaintiff is entitled to receive by way of damages such sum as should reasonably be paid for the use.  It is immaterial that the plaintiff was not in fact thereby impeded or prevented from himself using his own land either because he did not wish to do so or for any other reason.”

End

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