➥ CASE SUMMARY OF:
Best (Nigeria) Ltd. v. Blackwood Hodge (Nigeria) Ltd. & Ors. (2011) – SC
by “PipAr” Branham-Paul C. Chima, SAL.
Supreme Court – SC.31/1999
➥ JUDGEMENT DELIVERED ON:
Friday, the 28th day of January, 2011
➥ AREA(S) OF LAW
Breach of contract;
➥ PRINCIPLES OF LAW
⦿ PARTICULARS NOT NECESSARY WHERE COMPLAINT OF GROUND IS CLEAR
Where the complaint on a ground of law is clear and succinct, particulars may equate to repetition which is undesirable. Substantial justice must now have pre-eminence over technicality. See: Odoniyi v. Oyeleke (2001) SC 194 at 198; Nwosu v. Imo State Environmental Sanitation Authority (1990) 2 NWLR (pt. 688) 717. — Fabiyi, JSC.
⦿ NATURE OF A BREACH OF CONTRACT
It is clear to me that a contract between parties may be discharged by breach of a fundamental term by any of the parties. There is no gain-saying the point that a breach of contract is committed when a party to the contract without lawful excuse fails, neglects or refuses to perform an obligation he undertook in the contract or incapacitates himself from performing same or in a way back down from carrying out a material term. See: Adeoti & Anr. v. Ayofinde & Anr. (2001) 6 NWLR (Pt.709) 336 … Where a party to a contract is in breach of a material term of same, the breach gives the aggrieved party a lee-way or an excuse for non-performance of its own side of the bargain. Such a party is at liberty to treat the contract as extinguished or at an end. See: Yadis (Nig.) Ltd. v. G.N.I.C. Ltd. (2007) 14 NWLR (Pt.1055) 584 at 609. — Fabiyi, JSC.
⦿ NATURE IF SPECIFIC PERFORMANCE AND WHEN IT WILL BE GRANTED
The appellant, with the above position as depicted, desires to have specific performance of the agreement between it and the 1st respondent ordered by the court in its favour. Specific performance has been defined in Black’s Law Dictionary Ninth Edition at page 1529 as ‘the rendering, as nearly as practicable, of a promised performance through a judgment or decree; a court ordered remedy that requires precise fulfilment of a legal or contractual obligation when monetary damages are inappropriate or inadequate, as when sale of real estate or a rare article is involved. Specific performance is an equitable remedy that lies within the court’s discretion to award whenever the common law remedy is insufficient.’ In making an order for specific performance, the court must exercise its discretion judicially and judiciously as well. The Judge has to be discreet and balance the interest of both sides properly in his bid to do justice to the contending parties. See: (University of Lagos v. Olaniyan (1985) 16 NSCC (Pt. 1) 98, 113; Eronini v. Iheuko (1989) 2 NSCC (Pt.1) 503, 513; (1980) 3 SC (Pt.1) 30. — Fabiyi, JSC.
⦿ WHERE CONTRACT IS MADE SUBJECT TO CONDITION PRECEDENT
It is noteworthy that a contract of sale of the nature is guided by the basic rules of contract. Where a contract is made subject to the fulfillment of certain specific terms and conditions the contract is not formed and not binding unless and until those terms and conditions are complied with or fulfilled. Tsokwa Oil Marketing Co. v. B. O. N. Limited (2002) 11 NWLR Pt.777 pg.163. — Adekeye, JSC.
⦿ MEANING OF THE TERM ‘CONTRACT’
A contract may be defined as a legally binding agreement between two or more persons by which rights are acquired by one party in return for acts or forbearances on the part of the other. In effect a contract is a bilateral affair which needs the ad idem of the parties, therefore where the parties are not ad idem, the court will find as a matter of law that an agreement or contract was not duly made between the parties. Odutola v. Papersack (Nigeria) Limited (2006) 18 NWLR Pt. 1012 pg.470. Olowofoyeku v. A-G. Oyo State (1990) 2 NWLR Pt. 132 pg. 369 Oreint Bank (Nigeria) Plc. v. Bilante International Limited (1997) 8 NWLR Pt. 515 pg. 37 Societe General Bank (Nigeria) v. Safa Steel and Chemical Manufacturing Limited (1998) 5 NWLR Pt. 548 pg. 168. — Adekeye, JSC.
⦿ OFFER & A COUNTEROFFER
An offer must be unconditionally and unqualified by accepted. Any addition to or subtraction from the terms of the offer is an alteration to the terms and amounts to a total rejection of the offer by the offeree. The terms embedded in the rejection may form the basis for the formation of a new agreement. This is what amounts to a counter-offer. An offer is impliedly rejected if the offeree instead of accepting the original offer makes a counter-offer which varies the terms proposed by the offeror. Hyde v. Wrench (1840) 3 Kear. 334. — Adekeye, JSC.
⦿ SUCCEEDING IN A BREACH OF CONTRACT
For a claimant to succeed in an action for breach of contract, he must establish not only that there was a breach but also that there was in existence an enforceable contract which was breached. — Adekeye, JSC.
⦿ AWARD OF DAMAGES FOLLOWS BREACH OF CONTRACT
An award of damages usually follows a breach of contract so as to compensate the injured party for loss following naturally and within the contemplation of the parties. Damages is attached to a breach following an enforceable contract. Where there was no such contract an award of damages by any Court is not only a misconception but a contradiction in terms as such award is based on a wrong principle of law. This court has a duty not to allow such an award to stand. — Adekeye, JSC.
➥ LEAD JUDGEMENT DELIVERED BY:
⦿ FOR THE APPELLANT
F.R.A Willams (Jnr).
⦿ FOR THE RESPONDENT
➥ CASE FACT/HISTORY
The 1st respondent was the owner of the property situate at No. 15 Burma Road, Apapa, Lagos otherwise known as 11/15 Burma Road, Apapa, Lagos. In March 1986, the appellant commenced negotiation with the 1st respondent for the purchase of the stated property and offered the sum of N3 million as purchase price. The appellant also agreed to pay the sum of N450,000:00 to the 1st respondent as consent fee which the 1st respondent will eventually pay to the Lagos State Government.
The appellant, by its letter dated 27th March, 1986 – exhibit B requested the 1st respondent to grant it an interest free loan in the sum of N450,000:00 to enable it pay the cohsent fee. This was rejected by the 1st respondent. The 1st respondent intimated the appellant that other prospective purchasers have made offers for the purchase of the property. The appellant was informed about an offer of N3.5 million received by the 1st respondent and that the property would be sold to the person who satisfied the desired conditions of sale.
On 3rd June, 1986, the appellant and the 1st respondent agreed for the sale of the property in the sum of N3 million on the further term that the appellant would pay same together with the sum of N450,000:00 consent fee which the 1st respondent would pay to the Lagos State Government. The appellant issued a cheque in the sum of N3 million drawn on the account of one Clix Glow Nigeria Limited but failed to pay the sum of N450,000:00 for the consent fee in accordance with the agreed terms and conditions for the sale of the property.
The 1st respondent was desirous to have a purchaser who would fulfil the conditions of sale instantly. The 3rd respondent had made moves through the 2nd respondent in 1985 to purchase the property and deposited the sum of N1 million. The 3rd respondent agreed to pay the sum of N3.5 million. Sequel to payment of same in full June, 1986, the 1st respondent put the 3rd respondent possession of the property.
The 1st respondent then refunded the sum of N3 million to the appellant together with the sum of N50,000:00 as extant in Exhibit ‘C’. The appellant was not put in possession of the property by the 1st respondent.
The learned trial Judge, in his considered judgment, found that the appellant’s failure to pay the consent fee was in breach of a material condition of the contract to assign the property. The trial court dismissed the appellant’s claims but awarded the sum of N75,000:00 to the appellant as general damages for breach of contract. The stance posed by the learned trial judge precipitated an appeal as well as a cross-appeal at the court below.
The main appeal thereat, had to do with the refusal of the trial court to make an order for specific performance of the contract of purchase of the stated property. The cross-appeal thereat had to do with the award of the sum of N75,000:00 as damages for breach of contract by the 1st respondent which the court below found, difficult to explain since there was no such claim’. The court below dismissed the main appeal before it filed by the appellant. It found that the trial court was right when it found that a decree for an order of specific performance could not be made.
The main appeal was dismissed and the judgment of the trial court was affirmed. The court below kept mute in respect of the cross-appeal by the 1st respondent thereat as no pronouncement was made with respect to the sum of N75,000:00 awarded as damages by the learned trial Judge for an alleged breach of contract by the 1st respondent.
In a similar fashion, both sides of the divide felt dissatisfied with the stance of the court below. The plaintiff/appellant again filed an appeal in this court.
➥ ISSUE(S) & RESOLUTION(S)
I. Whether the court below was correct in holding that there was no enforceable contract between the appellant and the 1st respondent?
RULING: IN RESPONDENT’S FAVOUR.
♎ A. THE APPELLANT FAILED TO PAY THE CONSENT FEE A CONDITION PRECEDENT FOR THE CONTRACT TO TAKE EFFECT
“A party as the appellant in this appeal who wants the court to order specific performance of the contract between it and the 1st respondent must depict evidence of compliance with its terms. No court of law should give an order that will enable a party to a contract to breach a material and salient term bf same. See: L.S.D.P.C. v. N.L.S.S.F Ltd. (1992) 5 NWLR (Pt. 244) 653 at 671.
In this matter, it is not in contention that the agreement between the appellant and the 1st respondent in respect of the property in dispute was that in consideration of the appellant paying the sum of N3 million together with consent fee (withholding tax) in the sum of N450,000:00 to be paid simultaneously with the purchase price, the 1st respondent would assign the property to the appellant.
The above was confirmed by the appellant’s witness – P.W.1 on page 47 lines 18-21 of the record where he testified as follows: “I met their Managing Director Mr. Fraser-Allen. He confirmed to me that the property was for sale and quoted the price at N3.5 million. He told me that whoever buys the property would be responsible for the withholding tax.” Under cross-examination at page 51 lines 31-32 of the record, he admitted that – ‘The question of withholding tax is a material part of the contract.’
It is clear that after failing to pay the consent fee, a material term of the contract, a vital consideration was not met by the appellant which breached an essential term of the agreement. The appellant reneged on its promise to pay consent fee as same was not supported by consideration. It committed a breach as a fundamental term was not complied with by it. For, without lawful excuse the appellant failed, neglected or refused to perform its obligation as undertaken by it. The 1st respondent is given a lee-way or an excuse for non-performance of its own side of the bargain. The 1st respondent was at liberty to treat the contract as at an end or extinguished. See: Yadis Nig Ltd. v. GNIC (supra). This must be so since it is not the court’s function to make a contract for the parties or to rewrite the one made by them. See: UBN v. Ozigi (supra).
♎ B. SPECIFIC PERFORMANCE CLAIMED BY THE APPELLANT IS NOT WARRANTED
“Both the trial court and the court below in their wisdom refused to make an order for specific performance in appellant’s favour of the botched contract precipitated by it. There was no conclusive and valid contract upon which an order for specific performance could hang. The two courts below exercised their discretion judicially and judiciously as well. No reasonable court, in my considered opinion, would act otherwise. I cannot fault them. I support their stance and affirm it. Order for specific performance in the prevailing circumstance of the matter is most unwarranted.”
II. Whether the lower court was correct when it found as a fact that the 3rd respondent was a valid purchaser of the property in dispute without notice of the appellant’s interest?
RULING: IN RESPONDENT’S FAVOUR.
♎ A. THE 3RD RESPONDENT IS A BONA FIDE PURCHASER FOR VALUE WITHOUT NOTICE
“It is extant in the record of appeal that the 3rd respondent paid a deposit of N1 million to the 1st respondent in 1985 for the same property in dispute while the appellant paid in March, 1986. The 3rd respondent’s transaction with the 1st respondent is earlier in time. The appellant admitted that it was informed by the 1st respondent that there were other negotiations going with prospective buyers. On 24th July, 1986 when the action was initiated, the 3rd respondent had completed negotiation with the 1st respondent and paid in full for the assignment of the property. The 3rd respondent, after the completion of purchase price, was put in possession before suit was initiated. I strongly feel that the two courts below were correct when they found that the 3rd respondent is a bona fide purchaser for value without notice of any body’s interest. A bona fide purchaser for value is one who has purchased property for valuable consideration without notice of any prior right or title which if upheld will derogate from the title which he has purported to acquire.”
I. Whether non consideration by the Court of Appeal of the cross appellant’s appeal and the argument to the cross-appellant’s brief urged on the Court of Appeal in respect of same is proper in the instant case after the Court of Appeal had unanimously found that there is no enforceable contract between the cross-appellant and the cross- respondent?
RULING: IN CROSS-APPELLANT’S FAVOUR.
♎ A. THE NON-CONSIDERATION OF THE CROSS-APPEAL IS IMPROPER AND PREJUDICIAL
“I should state it right away that the court below goofed by not considering the cross-appeal of the cross-appellant. Irrespective of the decision reached in the main appeal, the court below had an abiding duty to consider the cross-appeal and pronounce on the propriety or otherwise of the same. The court below erred when it failed to consider arguments urged upon it in respect of the cross-appellant’s appeal. See AMORC v. Awoniyi (supra). Such a goof as precipitated by the omission to pronounce on the cross-appeal led to a breach of the cross-appellant’s right to fair hearing as enshrined in section 36(1) of the 1999 Constitution. See: Tunbi v. Opawole (supra) at 288 where Ayoola, JSC pronounced as follows: “…When such argument has been presented and submissions made, the tribunal should not come to a decision without the consideration of the arguments and submissions. A party cannot be said to have been given his right of fair hearing when his arguments have been shut out from consideration, albeit by mistake.” In short, it must be stated in clear terms that the oversight of the court below in not considering the cross-appeal is improper and prejudicial to the cross-appellant.”
II. Whether the Court of Appeal was right when after finding that there is no enforceable contract between the cross-appellant and the cross-respondent it proceeded to affirm the decision of the trial court in full without setting aside the trial court’s award of damages to the cross-respondent?
RULING: IN CROSS-APPELLANT’S FAVOUR.
♎ A. THERE IS A BREACH OF CONTRACT SO THE N75,000 AWARDED BY THE TRIAL COURT CANNOT STAND
“The resolution of this issue is not far fetched. The learned trial judge found that there was no enforceable contract between the cross-appellant and the cross respondent. There can be no breach of a non existent contract. There can be no inducement of a breach that does not exist. One cannot put something upon nothing and expect it to stand. It will definitely collapse. This pronouncement by Lord Denning in Macfoy v. U.A.C. Ltd. (1962) AC 150 at page 160 still continues to rule the waves. It is apposite here. The sum of N75,000:00 which was awarded by the trial court based on an unenforceable contract naturally collapsed. It must be wiped out vide the full powers of this court vide section 22 of the Supreme Court Act. It is the duty of the Court of Appeal to consider issue properly raised in the grounds of appeal before it. Where this had not been done, as herein, this court can, notwithstanding the fact that the court below has not made any pronouncement, consider the ground of law or facts so raise. Refer to Ukwunnenyi v. The State (1989) 4 NWLR (Pt.114) 131 at 141.”
“In short, the main appeal is hereby dismissed for want of merit. The cross-appeal has merit and is hereby allowed. The appellant in the main appeal shall pay N50,000:00 costs to each respondent.”
➥ MISCELLANEOUS POINTS
➥ REFERENCED (CASE)
➥ REFERENCED (OTHERS)