⦿ CASE SUMMARY OF:
Chief D.S. Yaro v. Arewa Construction Limited & Ors. (2007) – Sc
by PipAr Chima
⦿ NOTABLE DICTA
* ESSENCE OF PRELIMINARY OBJECTION
This is more so as the whole essence of preliminary objection is to foreclose hearing the appeal. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* MATTERS OF FACT IN APPEAL NEEDS LEAVE
Appeals to this court by leave which otherwise means permission, relate to matters of facts or mixed law and fact for which leave of the court below or this court must be obtained as a matter of condition precedent. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* NOT SEEKING LEAVE TO APPEAL FACTS IS FATAL
The consequence for not seeking leave where a ground of appeal is of mixed law and fact is fatal to the ground. However, one ground of appeal on law in a Notice of Appeal, I must observe, is capable of sustaining an appeal but not otherwise in which case the Notice of Appeal as well as the grounds of appeal is incompetent and liable to be struck out. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* REPLY BRIEF TO ATTACK NEW ISSUE(S)
The purpose of Reply Brief is to tackle new issues or argument raised in the respondents’ Brief of Argument and not dealt with in the appellant’s Brief of Argument otherwise a Reply Brief would be tantamount to a repetition of the appellant’s main Brief. In other words, it should not serve as a forum for reopening the appellant’s case over again. And where it is coterminous in every respect with the appellant’s main Brief, it should be discountenanced. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* EQUITABLE MORTGAGE HAS PART PERFORMANCE
“An equitable mortgage is an agreement that has arisen out of the deposit of the mortgagor’s title deeds with the mortgagee for loan as security. The essence of an equitable mortgage by deposit of title deeds is an agreement, between parties concerned, followed by an act of part performance. Where a party pursuant to an oral agreement deposits his title deeds with a bank as here, the act of depositing the title deeds is regarded as part performance of an agreement, which removes the transaction from the provisions of the Statute of Frauds 1677.” as per Barclays Bank of Nigeria Ltd. v. Alhaji Adamu B. Ashiru and Anor. (1978) 6-7 S.C. (Reprint) 70; (1978) 6-7 S.C. 70 – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* DEPOSIT OF TITLE DEED CREATES EQUITABLE MORTGAGE
It is settled that the deposit of title deeds with a bank as security for a loan, creates an equitable mortgage as against legal mortgage which is created by deed transferring the legal estate to the mortgagee. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* ONCE MORTGAGE ALWAYS MORTGAGE
An important feature of mortgages both legal or equitable is that once a mortgage always a mortgage and nothing but a mortgage. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* MORTGAGE DEBT SUPERSEDES EQUITABLE MORTGAGE
I have showed above that the only interest the 1st respondent in equity can deal with is the equity of redemption not the legal estate in the said property. The appellant from the very beginning of the deal with the 1st respondent over the said property has been aware i.e. acquainted with due notice of the bank loan and the mortgage of the said property to the 2nd respondent and the lodgement of the title deeds of the said property with the 2nd respondent to secure the bank loan. The appellant has had due notice that all he was negotiating was as regards the 1st respondent’s interests in the equity of redemption. And so, any purported attempt to transfer the legal estate by the mortgagor to the appellant as the 2nd relief in the claim is contending without getting rid of the mortgage debt and so, supersede the 2nd respondent’s equitable mortgage cannot be allowed in equity. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* APPEAL COURT CAN EVALUATE DOCUMENTARY EVIDENCE
Very much aware of the findings of facts by the two lower courts in this matter, I must state, all the same, that where the evidence to be evaluated is mainly documentary as here, this court is as in good a vintage position as the trial court. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* EQUITABLE MORTGAGE FIRST IN TIME TAKES PRIORITY
I have earlier set out the peculiar factors and circumstances not least being that the appellant has paid part of the purchase price of ₦2.3m to the tune of ₦1.8m leaving a balance of ₦500,000.00 and has been put in possession of the disputed property. There is a binding agreement of sale of the 1st respondent’s interest in the said property between the appellant and the 1st respondent. The appellant has thereby acquired an equitable interest to the extent of the 1st respondent’s interest in the equity of redemption and this is the interest which the mortgagor, the 1st respondent has had at all material times. The 1st respondent cannot give what it hasn’t got. And as I intimated earlier any attempt to pass the legal estate in the disputed property to the appellant will be of no effect and void not voidable because the 1st respondent as the mortgagor has bound itself to convey the legal estate to the mortgagee whenever it is called upon to do so until the principal, interest and costs are duly paid on the mortgage. See: Barclays Bank of Nigeria Ltd v. Ashiru and Anor. (supra) per ldigbe JSC, and Jared v. Clements (1903) 1 Ch. 428. Besides, the appellant is acquainted with notice of the mortgage and so cannot take priority to the 2nd respondent’s equitable mortgage which is first in time. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* NO CLAIM NO AWARD BY COURT
And no court has the power to award to a party what he has not claimed. – Chukwuma-Eneh JSC. Yaro v. Arewa CL (2007)
* WHEN AGREEMENT IS MADE
An agreement is made where there exists an offer, acceptance, consideration, capacity to contract and intention to create legal relationship. – Niki Tobi JSC. Yaro v. Arewa CL (2007)
* WHERE CONTRACTUAL NEW TERM CAN BE INTRODUCED
Where parties enter into an agreement and subsequently decide to introduce new terms, they can only do so by specific reference to the earlier agreement to the effect that the later agreement has introduced new terms thereof. – Niki Tobi JSC. Yaro v. Arewa CL (2007)
* MERE DEPOSIT OF TITLE DEEDS
It is now settled that a mere deposit of title deeds as security for a loan constitutes an equitable charge over the land or property. – Oguntade JSC. Yaro v. Arewa CL (2007)
Chief D.S. Yaro
Arewa Construction Limited & Ors.
⦿ LEAD JUDGEMENT DELIVERED BY:
C. M. Chukwuma-Eneh, JSC
* FOR THE APPELLANT
– Kehinde Sofola, SAN.
* FOR THE RESPONDENT
⦿ CASE HISTORY
The 1st respondent owned a landed property known as Nos. 157/159, Club Road, Kano which it mortgaged to the 2nd respondent by depositing the Certificate of Occupancy with it in consideration for a loan granted to the 1st respondent. The 1st respondent was in financial difficulty and decided to sell the property to INCAR Nigeria Ltd. As per the Board resolution of the Company in Exhibit 30, INCAR Nigeria Ltd, declined the offer to buy the property and the appellant then entered into negotiation to buy the property for himself for the sum of ₦2.3 million to be paid in instalments sometime in 1983. He continued to pay the instalments until he had paid a total of ₦1.8 million leaving a balance of ₦500,000.00. Sometime in 1984, the appellant was put in possession of the property by officials of the 1st respondent. He improved the property and let it out to tenants and began to collect rents. Meantime, he had not paid the balance of ₦500,000.00. In July, 1985, the appellant and the 2nd respondent agreed that if the appellant paid the balance of ₦500,000.00 to the 2nd respondent, it would release the documents of title to the appellant as per Exhibit 32. The appellant was unable to make the payment throughout the year 1985 and the 2nd respondent then wrote Exhibit 49 cancelling the whole transaction on the ground that it could no longer wait indefinitely for the appellant to pay up. Following this, the appellant tried in vain to pay the money in 1986 but the 2nd respondent refused to accept the payment. The appellant then went to court to enforce specific performance of the contract of sale. The respondents counter-claimed as set out earlier in this judgment and the 2nd respondent called a witness to testify that it had lost a lot of money by the failure of the appellant to pay to it the sum of ₦500,000.00. The 1st respondent also requested the court to order the appellant to account for the rents collected by him. The learned trial Judge dismissed appellant’s claim and gave judgment in respect of some of the counter-claims of the respondents.
⦿ ISSUE(S) & RESOLUTION
1. WHETHER THE COURT OF APPEAL was right in coming to the conclusion that there was no complete agreement of sale of the disputed property proved before the trial court to enable it order specific performance thereof.
RULING: IN FAVOUR OF RESPONDENT.
i. There can be no doubt that an equitable interest is acquired when there is payment of money coupled with possession. This is the case of the appellant on the facts of this matter therefore he has acquired an equitable estate founded on the 1st respondent’s equity of redemption.
ii. I am of the firm view that the appellant and the 1st respondent concluded an agreement of sale of the equitable interest of the 1st respondent in the property situate at No 157/159, Club Road, Kano at the purchase price of ₦2.3 and that the appellant has paid as receipted in Exhibits 1, 2, 3, 4, 5 and 6 a total sum of ₦1.8m leaving a balance of ₦500,000.00. And sequel to that, the appellant entered into possession of the property, carried out substantial repairs and renovations and put in rent paying tenants; thus acquired an equitable interest, again, only to the extent of the equitable interest of the 1st respondent in the equity of redemption which as I have found, the 1st respondent can transfer to a third party. The appellant cannot on these conclusions be entitled to an order of specific performance.
2. WHETHER THE PLAINTIFF CAN succeed in his claim in the absence of the Governor’s consent, pursuant to the provisions of the Land Use Act?
i. The 3rd respondent has raised the question of Section 22 of Land Use Act, concisely, the section requires that Governor’s consent to the mortgage deal has to be first had and obtained otherwise the contract is void. I think with respect that the 3rd respondent’s objection is lame in that as decided in Awojugbagbe v. Chinukwe and Anor. (supra), it is after the mortgage has been executed that obtaining of the Governor’s consent falls due. It is normally after the parties have agreed that the Deed of Assignment is prepared and sent for Governor’s consent. The instant mortgage therefore has not fallen foul of Section 22 of the Land Use Decree.
⦿ ENDING NOTE BY LEAD JUSTICE – Per
⦿ REFERENCED (STATUTE)
⦿ REFERENCED (CASE)
* DEPOSIT OF TITLE DEED CREATES EQUITABLE MORTGAGE
Kadiri v. Olusaga (1956) 1 FSC at p. 178: “It is the case, as stated by the learned trial Judge, that the security given was not the form of a legal mortgage, that is to say by deed, transferring the legal estate to the respondent, but the deposit of title deeds as security for a loan is an equitable mortgage, and I am unable to agree that the loan was an unsecured one within the meaning of the legislation in question. As Lord Macnaghten said when delivering the judgment of the Board in Bank of New South Wales v. O’Connor (1889) 14 AC page 273. ‘It is a well established rule of equity that a deposit of a document of title without either writing or word of mouth will create in equity a charge upon the property to which the document relates to the extent of the interest of the person who makes the deposit. In the absence of consent that charge can only be displaced by actual payment of the amount secured.'”
⦿ REFERENCED (OTHERS)
⦿ SIMILAR JUDGEMENTS