➥ CASE SUMMARY OF:
George Akande (Nig) Ltd & Anor V. Enterprise Bank & Anor. (CA/AK/77/2014, 23 MAR 2017)
by Branham Chima (LL.B.)
➥ SUBJECT MATTER(S)
Sale of equitable Mortgage.
➥ CASE FACT/HISTORY
The 1st Appellant is a customer to the 1st Respondent Bank with accounts No. 511 and No. 1317. The 1st Appellant obtained an overdraft facility from the 1st Respondent to which the 2nd Appellant mortgaged his two houses at No. 131 Osukoti Adugbolu Family layout, Ita Olobirin Road, Akure as security for the loan. It was the case of the Appellants that the mortgage was an equitable mortgage while the Respondents say it was legal mortgage. Due to the inability of the Appellants to liquidated the debt, the 1st Appellant commenced an action with suit No. HAD /74 /1987 against the 1st Defendant/Respondent at the Ado-Ekiti High Court wherein the trial Court entered judgment against the Appellants and in favour of the Respondents with the judgment sum of ₦105,790.55k. See Exhibit P1. Consequent upon the judgment, the Appellants brought an application for installmental payment which was granted by the trial judge. See Exhibit P2. Upon the Appellants’ default in the installmental payment, the Appellants and the Respondents entered into another subsequent agreement [Exhibit D2) but still the Appellants failed to liquidate their debt, hence the Respondents sold the 2nd Appellant’s properties used as collateral.
Thus the Appellants by way of Writ of Summons and Statement of Claim dated 15th February, 1994 commenced this present action against the Respondent herein they claimed as follows, inter alia: ‘1. A declaration that the 1st Defendant is not empowered to sell off any or all of the two houses and landed property of the 2nd plaintiff situate, lying and being along 131, Osukoti Adugbolu family layout, Ita Olobinrin Road, Akure, Ondo State of Nigeria more particularly described in the plans attached to the Certificate of Statutory Right of Occupancy dated 1st September, 1980, registered on 17th January, 1981 as No. 32 at page 22 in volume 175 of the Lands Registry in the office at Akure, and certificate of Statutory Right of Occupancy dated 1st September 1980, registered on 2nd March 1981 as No. 46 at page 46 in volume 179 of the Lands Registry in the Office at Akure respectively’.
At the trial the Appellants called two witnesses while the Respondents called one. After hearing the evidence on both sides, the trial judge in delivering his judgment dismissed the claims of the Appellants. The Appellants being dissatisfied with the decision has brought this appeal.
➥ ISSUE(S)
I. Whether Exhibit D2 dated 17th day of February, 1993 is a binding agreement between the Appellants and the 1st Respondent and whether Exhibits P7, P8, tendered have evidential values?
II. Whether the learned trial judge was right in holding that the Valuation Report tendered by the Appellants has no evidential value in determining the value of the property in issue?
III. Whether the learned trial Judge was right when he held that the Appellants did not successfully prove the Respondents fraudulently sold the mortgaged property?
IV. Whether the learned trial Judge was right in refusing to grant the special and general damages sought by the Appellants?
➥ RESOLUTION(S) OF ISSUES
[APPEAL DISMISSED]
↪️ ISSUE 1: IN RESPONDENT’S FAVOUR.
[THE BINDING AGREEMENT GAVE THE RESPONDENT THE POWER TO SELL
‘The overdraft facility extended to the Appellants had been overstretched by the inability of the Appellants to pay back. The Respondents had called incessant meetings with the Appellants on how best to pay. The Appellants had even sued the Respondent and lost. The Court gave judgment against the Appellant. After a period of time, the Appellant filed for variation in the mode of payment. It was granted and the Appellants still reneged on it. The tenants in the property were after sometime arranged for their rents to be paid into the 1st Appellant’s account to reduce the indebtedness. All these failed. The 1st Respondent was left with no other choice than to exercise his Rights. It appears from, the letters exchanged by the parties that the Appellants along the line executed a Power of Attorney with which the property was sold. See Exhibit P6 which states as follows: “We attach herewith photocopies of Certificate of Occupancy and Power of Attorney signed by MR. GEORGE IYIOLA AKANDE the landlord of the property Ita Olobirin Road, Akure”. See also Exhibit P7 which also referred to the Power of Attorney as follows: “The owner of the property, MR. GEORGE ISHOLA (sic) AKANDE has authorized us to sell the six flats on his behalf. Accordingly he has given to us a Letter of Authority/Power of Attorney in this matter and the photocopy of the said letter is attached herewith.” The 1st Respondent in his letter Exhibit D2 stated thus inter alia: “We should therefore appreciate if you could please deposit ₦10,000 into your account as the first installment for February 1993 and any default in this new payment arrangement may force to cancel the agreement now reached and proceed to auction your property pledged for the advance to recover the debt.” This was the final notice given by the 1st Respondent to the Appellants but he still reneged on this arrangement. More so, in an equitable mortgage, the mortgagee requires an order of Court to foreclose and sell the mortgaged property. The Appellant had sued the respondent in the Court below and lost. The Respondent got judgment thereafter another case was filed to vary terms of repayment. All these were aborted by the Appellants. In all honesty, the Appellants had frustrated all entreaties for repayment by the Respondents. The two Court cases were all in favour of the Appellants paying the Respondents knowing fully well that there is an existing mortgage. Letters, Exhibit P5, P6 and P7 show that there is in existence a Power of Attorney donated by the Appellants which was not denied at all in all the correspondence. Having sold the property mortgaged, the purchaser has to be indemnified against any other person claiming through the Appellant.’
‘This letter not only gave the last avenue of repayment plan but also did warn that failure on the part of the Appellant will lead to the auction of the mortgaged property. The Appellants of course reneged on this, hence the auction of the property as per Exhibit D2. This letter removed the transaction from a mere equitable mortgage, into a transaction which culminated in an auction if there was any default. The Appellants defaulted and therefore the 1st Respondent exercised the option of auctioning the property.’]
.
.
↪️ ISSUE 2: IN RESPONDENT’S FAVOUR.
[‘Exhibit P8 is a Valuation Report of the property sold in 1993. There is nothing wrong with this Report. However, the Report talks about the market value taking in all the circumstances of the building and the market. The valuation of ₦25 Million is for the year 2008. The relevant time frame is 1993. The Valuation Report made no reference to the relevant time frame. Therefore the valuation cannot be juxtaposed to the time frame of 1993. This Valuation Report does not help the case of the Appellant in any way whatsoever.’]
.
.
↪️ ISSUE 3: IN RESPONDENT’S FAVOUR.
[THE APPELLANT FAILED TO PROVE FRAUD
‘The Appellants alleged that the mortgaged property was fraudulently sold. Was this assertion proved? Fraud is a criminal offence and the burden of proof is proof beyond reasonable doubt. It is the duty of the Appellants to place before the Court all available relevant evidence. THEOPHILUS v. STATE (1996) 6 NWLR (Pt. 463) 686. The letters Exhibits P5, P6 and P7, are not relevant in proving that the sale was fraudulent. Exhibits P6 and P7 are best offer letters to the prospective buyers. There was no acceptance from any indicating how much he wished to buy. Exhibit P5 was a letter from the Bank requesting for information as regards any prospective buyer. The Valuation Report – Exhibit P8 was not also relevant to the Appellant in proving any fraud on the part of the 1st Respondent; Exhibit P8 being a Valuation Report on the property as of 2008. How can this valuation be used as to state the cost of the property as at 1993. Exhibit P8 does not help the Appellants. If a party alleges fraud, he is duty bound to prove it beyond reasonable doubt. Failure to do that, the allegation of fraud must fail. It would be recalled that the property was sold and the excess money paid into the Appellants’ bank account. The Appellants had therefore failed to prove the element of fraud in the sale of the property. AGBO v. STATE (2006) 6 NWLR [Pt. 977) PG. 545, UWAGBOE v. STATE (2007) 2 NWLR (Pt. 1031) PG. 606.’]
.
.
↪️ ISSUE 4: IN RESPONDENT’S FAVOUR.
[DAMAGES CANNOT ARISE WHEN THERE IS NO PROOF OF WRONG DOING
‘The Appellants were not able to prove that the sale of the property was fraudulent. The Appellants were not able also to prove that the property was sold below the market value or what it was worth. For the Court to consider special and general damages a wrong must have been identified of which compensation is necessary. The Appellants had alleged that the sale of his house was wrongful and therefore the Court ought to have granted him general damages for the wrong. In the foregoing issues, I have held that there was nothing fraudulent about the sale of the 2nd Appellants property. If there is no proof of wrong doing or fraudulent sale of property, then there can be no question of compensation or damages.’]
.
.
.
✓ DECISION:
‘The four issues articulated by the Appellants have all been resolved against them. This appeal is unmeritorious. It is dismissed. I affirm the judgment of the lower Court in dismissing the claims of the Appellants. I make no orders as to costs.’
➥ FURTHER DICTA:
⦿ DEFINITION OF MORTGAGE
A mortgage is a legal or equitable conveyance of title as security for the payment of debt or the discharge of some other obligations for which it is given, subject to a condition that the title shall be reconveyed if the mortgage debt is liquidated. ALL STATE TRUST BANK v. NSOFOR (2004) ALL FWLR (Pt. 201) 1719. — Ndukwe-Anyanwu JCA.
⦿ DISTINCTION BETWEEN LEGAL MORTGAGE AND EQUITABLE MORTGAGE
There is in fact a distinction between a legal mortgage and an equitable mortgage. A legal mortgage transfers title in the property to the mortgagee and the term of the mortgage may give a right of sale to the mortgagee without Court order. However, an equitable mortgage by way of deposit of title deed does not transfer title in the property to the mortgagee and the equitable mortgagee can only enforce his Right of sale upon an order of Court. OKUNEYE v. F.B.N. PLC (1996) 6 NWLR (Pt. 457) 749. — Ndukwe-Anyanwu JCA.
⦿ A MORTGAGEE IS NOT A TRUSTEE FOR THE MORTGAGOR
A mortgagee is not a trustee of a power of sale for the mortgagor. It is a power given to him for his own benefits enabling him to protect the mortgage debt. ALL STATE TRUST BANK v. NSOFOR (SUPRA), UBN LTD. v. OZIGI (1991) 2 NWLR (Pt. 176) 677. — Ndukwe-Anyanwu JCA.
⦿ DEFECT IN SALE OF MORTGAGE PROPERTY WILL NOT INVALIDATE THE SALE
In IBIYEYE v. FOJULE (2006) 3 NWLR (Pt. 968) 640 the Supreme Court per Oguntade JSC in resolving the issue of whether defect in the sale of mortgaged property will invalidate the principle of equity on such sale. It was held: “Where a conveyance is made, a professed exercise of the power of sale conferred by this Act, the title of the purchaser shall not be impeached on the ground that no case has arisen to authorize the sale or that due notice was not given or that the power was otherwise improperly or irregularly exercised, but any person damnified by all unauthorized or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power. This is obviously to protect the bonafide purchaser who merely purchased under irregular circumstances as no purchaser who is tainted with fraud or collusion cannot be expected to benefit from this provision.” — Ndukwe-Anyanwu JCA.
➥ LEAD JUDGEMENT DELIVERED BY:
Uzo I. Ndukwe-Anyanwu, JCA
➥ APPEARANCES
⦿ FOR THE APPELLANT(S)
⦿ FOR THE RESPONDENT(S)
➥ MISCELLANEOUS POINTS
➥ REFERENCED (LEGISLATION)
➥ REFERENCED (CASE)
➥ REFERENCED (OTHERS)