Union Bank of Nigeria Ltd. v. Professor Albert Ojo Ozigi (1994) – SC


Union Bank of Nigeria Ltd. v. Professor Albert Ojo Ozigi (1994) – SC

by PipAr Chima

Supreme Court – SC.159/1991

On Friday, the 25th day of March, 1994

Mortgage interest.
Extrinsic evidence.


A counsel has to take a definite stand. He cannot sit on the fence as the law does not permit such a thing. He must make his view known before the case is fixed for judgment. What is open to a counsel when a document is tendered by the other party is to raise an objection if he opposes the admissibility of the document and if he has no objection he should say so. It will then be for the court, if there is an objection to the admissibility of the document, to give a ruling. If the objection is upheld the document should be rejected and marked, ”rejected”. It should not be marked as an exhibit, and, while it remains rejected, the document is irrelevant and its contents cannot be used for the determination of any issue in the case by either the trial court or by an appellate court. – Adio, JSC. UBN v. Ozigi (1994)

The general rule is that where the parties have embodied the terms of their contract in a written document, extrinsic evidence is not admissible to add to, vary, subtract from or contradict the terms of the written instrument. – Adio, JSC. UBN v. Ozigi (1994)

It is wrong for an appellate court to raise an issue suo motu and determine the issue without giving the parties or their counsel the opportunity to argue the point. – Adio, JSC. UBN v. Ozigi (1994)

A decision of a lower court on any point will be reversed by the appellate court where error of law committed by the lower court is fatal because it has occasioned a substantial miscarriage of justice. – Adio, JSC. UBN v. Ozigi (1994)

If the error of law is the wrongful admission of evidence, the appellant must show that, without the admission of the evidence, the decision would have been otherwise. – Adio, JSC. UBN v. Ozigi (1994)

The burden of proving a particular fact is on the party who asserts it. See Okubule v. Oyagbola, (1990) 4 N.W.L.R. (Pt.147) 723; and Ike v. Ugboaja (1993) 6 N.W.L.R. (Pt.301) 539. That is the position in civil cases but the onus does not remain static. It shifts from side to side, where necessary, and the onus of adducing further evidence is on the person who will fail if such evidence was not adduced. – Adio, JSC. UBN v. Ozigi (1994)

Union Bank of Nigeria Ltd.


Professor Albert Ojo Ozigi

Adio, J.S.C.


– S.A Bello, Esq.

– Chief W. Olanipekun SAN (with him, B. Enrinmaiye).

The respondent, a customer of the appellant, in 1982, obtained a loan of N250,000.00 from the appellant to enable the respondent complete a restaurant in Ilorin. The terms under or subject to which the loan was granted were set out in two deeds of mortagage, Exhibits 5 and 6. He was making payment to the appellant until 1988 when there was a disagreement between the appellant and the respondent on the question of the rate of the interest chargeable on the loan.

The respondent was of the view that the rate was 11% throughout the period of repayment and, for that reason, the balance of the loan-outstanding was N116,076,10.

The appellant maintained that the rate of the interest chargeable was not fixed. It was empowered by the mortgage agreements to stipulate the rate of interest from time to time and pursuant to the exercise of that power, the appellant had from time to time, after the granting of the loan, stipulated rates of interest higher than 11% as a result of credit guidelines issued by the Central Bank of Nigeria to commercial banks. Consequently, the balance outstanding on the loan granted to the respondent was N353,632.09.

Available:  Edokpolo & Co. Ltd. v. Samson Ohenhen & Anor (1994)

The disagreement could not be resolved. So, the respondent instituted an action against the appellant in the High Court, Kwara State, Okene Judicial Division.

The Trial Court & Court of Appeal held for the respondent.

he Court of Appeal held that the mortgage deeds (Exhibits ‘5’ and ‘6’) did not contain terms specifying the rate of interest chargeable on the loan. It upheld the finding of the learned trial Judge based on the oral evidence of the respondent that the rate agreed upon during the negotiation between him and the Assistant General Manager of the Union Bank in Lagos was 11% per annum throughout the period of the repayment of the loan. The court was of the view that the appellant could not unilaterally increase the interest rate, thus affirming the view of the learned trial Judge that the appellant could not increase the rate of interest without the consent of or notice to the respondent.

Clause 3 of the mortgage deeds stipulates as follows: “All interest payable on the money hereby secured shall accrue due from day to day at the rate from time to time stipulated by the bank and may be capitalised at such intervals as the bank may from time to time prescribe but not more often than monthly and added to the moneys hereby secured and shall thereupon bear interest accordingly at the rate aforesaid.”

This is a further appeal.



I. Whether the plaintiff in the court below, discharged his burden to prove his case by credible evidence to justify the affirmation by the Court of Appeal of the first, second, third and fourth reliefs granted to the plaintiff/respondent by the trial court.

I.A. In the present case, the relevant agreements were the mortgage deeds, Exhibits ‘5’ and ‘6’, which contained, inter alia, provisions concerning the amount of the loan, its period of repayment and made provision for the determination of the rate of interest payable on the loan. I have pointed out that the memorandum, Exhibit ‘1’, irregularly found its way to the Court of Appeal as an exhibit and that it was, in any case, wrong, in law, for the Court of Appeal to hold that the document was relevant and admissible. Further, the law is that the operation of the parol evidence rule is not limited to oral evidence. It extends to extrinsic evidence in writing, such as drafts of agreement, preliminary agreements and letters relating to previous negotiations. Generally, evidence is not admitted as to what passed between the parties before the execution of a written agreement or during its preparation. Exhibit ’1′ constituted an extrinsic evidence intended to be used to contradict the mortgage deeds and was, for that reason, not admissible.
I.B. The Court of Appeal erred in endorsing the 11% per annum flat rate of interest chargeable on the loan, granted by the appellant to the respondent, implied by the learned trial Judge into the written agreements, Exhibits ‘5’ and ‘6’. The Court of Appeal also erred in affirming the modification, by the learned trial Judge, of the terms of the deeds of mortgage, Exhibits ‘5’ and ‘6’, by the oral evidence of the respondent on the alleged negotiation between the respondent and Assistant General Manager, Operations, of the Union Bank in Lagos. The same reason given by the learned trial Judge for rejecting the memorandum also applied to the oral evidence of its contents.
I.C. The error of law committed by the Court of Appeal, in the circumstance, was fatal in the sense that it occasioned a substantial miscarriage of justice in that without the admission of the memorandum (Exhibit ‘1’) and/or of the oral evidence of the contents thereof on the alleged negotiation, the bottom would have been knocked off the respondent’s case. On that ground alone, he could not have been able to succeed in his claim, as he had done, as there would have been no other evidence to support his contention that the rate of interest was 11% per annum and that the balance that he claimed to be outstanding was, in fact, the amount outstanding. The amount which, according to the calculation made by the respondent, was outstanding was about one third of the amount which the appellant said was outstanding.
II. Whether, on a proper construction of Clause 3 of Exhibits 5 and 6 (Deeds of legal mortgage) the mortgagee (the appellant herein) had an obligation to notify the mortgagor (respondent herein) of the change in interest rates from time to time, and whether the failure of the appellant to give such notice justified the nullification by the Court of Appeal of the variation of interest rate in Clause 3.

Available:  Tasiu Rabiu V. Aishatu Amadu (SC.147/2003, 13 Jan 2012)

II.A. If the prevailing interest rates (prime rates) fixed by the Central Bank vary from time to time, then the interest rates stipulated by the appellant, that was under obligation as a bank to comply with the Central Bank guidelines, in the matter, could not be fixed: it had to vary from time to time in response to the Central Bank guide-lines. That was the process provided for in Clause 3 of the mortgage agreements, Exhibits ‘5’ and ‘6’. The provision of clause 3 of the mortgage agreements can be relied upon to stipulate rates of interest in response to the C.B.N.’s guidelines on the matter. There can be no question of fixing arbitrary rates of interest or rates of interest contrary to the C.B.N.’s guidelines. The necessary guidelines on the rate of interest on loans are given by the Central Bank from time to time generally and not to a particular bank or in relation to a particular loan transaction. The general rule is that where the words of any instrument are free from ambiguity in themselves, and where the circumstances of the case have not created any doubt or difficulty as to the proper application of the words to claimants under the instrument or the subject matter to which the instrument relates, such an instrument is always to be construed according to its strict, plain and the common meaning of the words themselves. In the circumstance, it was therefore, wrong to import into the provision of clause 3 of the mortgage deeds (Exhibits ‘5’ and ‘6’) extraneous matters such as the requirement that the appellant must obtain the prior consent of or given prior notice of increase in the rate of interest on the loan to the respondent. This is because, generally, if the conditions necessary for the formation of a contract are fulfilled by the parties thereto, they will be bound by it. It is not the function of a court to make a contract for the parties or to rewrite the one which they have made.
II.B. The provision of clause 3 of the mortgage agreements is clear and unambiguous. It is possible to understand and apply it as it stands. There was, therefore, no necessity to import new or additional words into it to require prior consultation with, or the giving of prior notice of increase in rates of interest on the loan in question to the respondent. Therefore, failure of the appellant to hold prior consultation with or to give prior notice to the respondent about increase in rates of interest on the loan could not, as the Court of Appeal held, result in the nullification of the interest rates stipulated under the provision of clause 3 of the mortgage agreements.




See SOLICITOR-GENERAL, WESTERN NIGERIA v. ADEBONOJO (1971) 1 All NLR 1978 – what happened in the case was that the 1st respondent was granted a scholarship by the Government of Western State of Nigeria. As a result he and his guarantors executed a bond in which he undertook that upon passing the relevant examinations he would serve the Government for a period of five years in any capacity considered appropriate by the Government. The respondent passed the relevant examination and returned to Nigeria but he was not given the necessary certificate because he had not spent the stipulated period on the course. The Government gave him an appointment which, having regard to all the circumstances of the case, was considered appropriate. He was not satisfied. He resigned the appointment before the expiration of five years. The Government consequently sued him and his guarantors for the refund of the amount spent on him pursuant to the grant of the scholarship. The learned trial Judge found that the 1st respondent committed a breach of the bond by resigning his appointment before the expiration of the period stipulated in the agreement and entered judgment for the Government. On appeal to the then Western State Court of Appeal by the respondents, the court allowed the appeal and set aside the judgment of the learned trial Judge. The Western State Court of Appeal held, inter alia, that to be appropriate, any capacity in which the 1st respondent was called upon to serve by virtue of the relevant clause of the agreement must be reasonable. Dissatisfied with the judgment, the Government appealed to the Supreme Court. The Supreme Court allowed the appeal, set aside the judgment of the Western State Court of Appeal, and restored the judgment of the learned trial Judge. In allowing the appeal, the Supreme Court stated, inter alia, as follows: ”Now we have already set out the provisions of clause 4(a) of exhibit C and in the events which had happened it is easy to see why a consideration of that clause has become a matter of paramount relevance. To us, this clause clearly stipulates that after qualification the first defendant could be offered employment by the Permanent Secretary, Ministry of Education, Western State in a capacity considered suitable by the regional government. In his consideration of that clause and his application of it to the facts of this case, Delumo, J. had held that according to the provision of the clause it is the regional government that would decide the capacity which is appropriate. On the other hand, the Western State Court of Appeal took the view that the word ”reasonable” and (the ”concept of reasonableness”) should be imported into the contracts of the parties for the purpose of construction. Neither of the parties to Exhibit C (and Exhibit H) contemplated that the word should be included in their agreement and throughout Exhibit C (and Exhibit H) that word was not even breathed. It is obvious from the confusion that arose in the Western State Court of Appeal itself that the court was in difficulty to ascertain the real position into which the word ‘reasonable’ could or should be fixed. It is the alphabet of his study to any lawyer that in the construction of documents the words must first be given their simple and ordinary meaning and that under no circumstances may new or additional words be imported into the text unless the documents would be by the absence of that which is imported impossible to understand.”





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