PRIMEVIEW HOTELS LTD & ANOR v. HOTEL PRESIDENTIAL LTD & ORS
(2020)LCN/15204(CA)
In The Court Of Appeal
(ENUGU JUDICIAL DIVISION)
On Thursday, March 12, 2020
CA/E/754/2018
Before Our Lordships:
Misitura Omodere Bolaji-Yusuff Justice of the Court of Appeal
Joseph Olubunmi Kayode Oyewole Justice of the Court of Appeal
Abubakar Sadiq Umar Justice of the Court of Appeal
Between
1. PRIMEVIEW HOTELS LIMITED 2. E. HOSPITALITY SERVICES LIMITED APPELANT(S)
And
- HOTEL PRESIDENTIAL LIMITED 2. THE ATTORNEY-GENERAL OF ENUGU STATE 3. THE GOVERNOR OF ENUGU STATE 4. THE COMMISSIONER FOR CULTURE AND TOURISM, ENUGU STATE RESPONDENT(S)
RATIO
THE POSITION OF LAW ON PRIVITY OF CONTRACTS
The position of the law as regards privity of contracts is abundantly clear. A person who was not named as a party to a contract and who accordingly did not furnish consideration therein, cannot claim rights neither can he be held to obligations under the said contract. The principle was expounded by IGHU, JSC thus:
“It is trite law that as a general rule, a contract affects only the parties thereto and cannot be enforced by or against a person who is not a party to it. In other words, only the parties to a contract can sue or be sued on the contract and, generally, a stranger to a contract can neither sue nor be sued on the contract even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it. In the same vein, the fact that a person who is a stranger to the consideration of a contract stands in such near relationship to the party from whom the consideration proceeds that he may be considered a party to the consideration does not entitle him to sue or to be sued upon the contract. See Malone v. Laskey (1907) 2 K.B. 141 C.A., Cameron v. Young (1908) A.C. 176 H.L., Beswick v. Beswick (1967) 2 All E.R. 1197, Frederick Oboye Negbenebor v. Eudora Omowunmi Negbenebor (1971) 1 All N.L.R. 210. See too Ikpeazu v. African Continental Bank Ltd. (1965) 1 N.M.L.R. 374 at 379 where this Court per Ademola, C.J.N., put the matter as follows:-
“What advantages, if any, can the bank gain from the deed, Exhibit D. Can the bank sue on it as a guarantee? Not being a party to it we are of the view that the bank cannot acquire any rights under the deed. Generally, a contract cannot be enforced by a person who is not a party, even if the contract is made for his benefit and purports to give him the right to sue upon it”. See too Tweddle v. Atkinson 30 L.J.Q.B. 265 and the decision of the House of Lords in Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd (1915) A.C. 847.” PER OYEWOLE, J.C.A.
WHETHER OR NOT ILLEGALITY RENDERS A CONTRACT UNENFORCEABLE
It is trite that illegality renders a contract unenforceable no matter the obligations incurred by the parties in pursuance thereof. Basically, a contract is illegal if the consideration or the promise involves doing something illegal or contrary to public policy or the intention of the parties in making the contract is to promote something which is illegal or contrary to public policy. See ONYIUKE III VS. OKEKE (1976) LPELR-8039(SC), SODIPO VS. LEMMINKAINEN OY (1986) 1 NWLR (PT 15) 220, EKWUNIFE VS. WAYNE (W.A.) LTD. (1989) 5 NWLR (PT.122) 422 at 450 and AYO SOLANKE VS. ABED & 2 ORS (1962) 1 SCNLR 371.
The position of the law in this regard was abundantly elucidated by ALEXANDER, JSC thus:
“It is the law that a contract is illegal if the consideration or the promise involves doing something illegal or contrary to public policy or if the intention of the parties in making the contract is thereby to promote something which is illegal or contrary to public policy; and an illegal contract is void and cannot be the foundation of any legal right. This proposition of law was clearly enunciated by Brett, M.R., in Herman v. Jeuchner (1885), 15 Q.B.D. 561, at page 563 as follows:
“When the object of either the promise or the consideration is to promote the committal of an illegal act, the contract itself is illegal and cannot be enforced.”PER OYEWOLE, J.C.A.
JOSEPH OLUBUNMI KAYODE OYEWOLE, J.C.A. (Delivering the Leading Judgment): This is an appeal against the decision of the High Court of Enugu State, Enugu Judicial Division, holden at Enugu, Enugu State, delivered on the 16th July, 2018 by ANI J.
By a writ of summons dated the 7th day of November, 2017, the Appellants sought the following reliefs against the Respondents, to wit:
A. A declaration that the defendants wrongfully terminated their contract with the plaintiffs.
B. An order by the Honourable Court that the defendants pay the plaintiffs forthwith, a consequential damages of N2,150,000,000. 00 (Two Billion, One Hundred and Fifty Million Naira only) as “restitution in integrum”, covering the expected percentage net profit the plaintiffs could have earned within 27 years profit earning period of the contract, if the breach occasioned by the defendants had not occurred.
C. An order of Court that the defendants pay to the plaintiffs 25% post judgment interest on the judgment sum.
D. An order of injunction restraining the defendants from leasing or alienating to any third party, Hotel Presidential Enugu, situate at Presidential Road, off Rangers Avenue, Independence Layout, Enugu or carrying on any business activity in the hotel pending when the plaintiffs have been compensated with the consequential damages for the wrongful termination of their contract.
On being served, the Respondents as Defendants filed a motion on notice dated 11th April, 2018 wherein they challenged the jurisdiction of the trial Court to entertain the action and prayed that it be struck out on the following grounds:
a. The 1st Defendant is not a person known to law.
b. The Plaintiffs’ suit does not disclose a reasonable cause of action against the 2nd to 4th Defendants.
c. The Joint Venture Agreement cannot be enforced by this Honourable Court.
The two sides joined issues on the application and after hearing the contending arguments, the learned Trial Judge delivered a considered ruling wherein his lordship found that the said action failed to disclose any reasonable cause of action against the 2nd to 4th Respondents and that the stated Joint venture Agreement was unenforceable having been made in contravention of an existing law. Consequently, the said action was struck out.
Peeved at this turn of events, the Appellants invoked the appellate jurisdiction of this Court via a Notice of Appeal filed on the 27th July, 2018 containing 4 grounds.
At the hearing of the appeal, Mr. Ozor, the learned lead counsel for the Appellants adopted the Appellants’ brief filed on the 6th November, 2018 and the Appellants’ Reply brief filed on the 20th December, 2019 both deemed properly filed and served on the 21st January, 2020 as the arguments of the Appellants in furtherance of the appeal.
For the Respondents, Mr. Falana, SAN, the learned Senior Counsel for the Respondents adopted their Respondents’ brief filed on the 10th December, 2019 and equally deemed properly filed and served on the 21st January, 2020 as the arguments of the Respondents in contesting the appeal.
The Appellants distilled two issues for determination as follows:
a. Having regards to the parties and clauses in the Memorandum of Understanding, the Joint Venture Agreement and the Deed of Assignment frontloaded along with this suit, whether the 2nd to 4th respondents are privies to the subject matter of the agreement leading to this suit.
b. Whether the object of the contract entered into between the Appellants and the Respondents in both the Memorandum of Understanding and the Joint Venture Agreement is an illegal one not enforceable under the law.
On the part of the Respondents, two issues were equally formulated but in different words thus:
1. Whether the 2nd to 4th Respondents are privies to the purported contract between the Appellants and the 1st Respondent.
2. Having regards to the provisions of the Enugu State Privitization and Commercialization of Government Enterprises Law No. 15 of 2010, whether the purported joint venture agreement entered into between the Appellants and the 1st Respondent is not illegal and unenforceable.
Semantics apart, the issues formulated by the two sides are basically the same, as such I shall adopt the version put forward by the Appellants and proceed seriatim.
I must point out that the preliminary issue raised by Mr. Falana, SAN on the abandonment of some grounds of appeal had been taken care of by the Appellants’ motion granted without opposition by the said learned Senior Counsel. The said contention shall accordingly be discountenanced.
The first issue therefore is:
Having regards to the parties and clauses in the Memorandum of Understanding, the Joint Venture Agreement and the Deed of Assignment frontloaded along with this suit, whether the 2nd to 4th respondents are privies to the subject matter of the agreement leading to this suit.
Arguing this first issue, Mr. Ozor submitted that the learned trial Judge failed to consider other provisions of the Joint Venture Agreement (hereinafter referred to as JVA), as well as other documents capturing the transaction between the parties and showing the involvement of the 2nd to 4th Respondents in the transaction and therefore came to the erroneous conclusion that the action did not disclose any cause of action against them.
The learned counsel further submitted that the parties expressly incorporated the Memorandum of Understanding (hereinafter referred to as MOU) into the subsequent JVA and thereby made both the Enugu State Government and the 1st Respondent liable in damages to the Respondents. He submitted that the entire agreements between the parties ought to be construed by the Court and referred to BFI GROUP CORPORATION VS BUREAU OF PUBLIC ENTERPRISES (2012) LPELR-9339 (SC).
Mr. Uzor further contended that with the provisions of the JVA incorporating the MOU, the Respondents are necessary parties whose presence was necessary for the determination of issues arising from the agreements and referred to GREEN VS GREEN (1987) 3 NWLR (PT 61) 480, BIYU VS IBRAHIM (2006) 8 NWLR (PT 981) 1 and MOBIL OIL PLC VS D.E.N.R. LTD (2004) 1 NWLR (PT 853) 142.
Finally on this point, the learned counsel submitted in a somehow contradictory manner that in considering whether a reasonable cause of action was disclosed the Court will only consider the statement of claim without any recourse to the front loaded documents attached as was done herein by the learned Trial Judge. He referred to DIAMOND PETROLEUM INTERNATIONAL LTD VS GOVERNOR CENTRAL BANK OF NIGERIA & ORS (2014) LEGALPEDIA CA Q275 and SOCIETY BIC SA VS CHARZIN IND. LTD (2014) 4 NWLR (PT 1398) 497 at 535.
Contrariwise, Mr. Falana, SAN submitted that the 2nd to 4th Respondents were not privy to the JVA which the Appellants are relying on and that they cannot be held liable for the breach thereof. He referred to REICHIE VS NIGERIA BANK FOR COMMERCE AND INDUSTRY (2016) LPELR 40051 SC.
The learned Senior Counsel further submitted that the clauses of a contract cannot replace the parties thereto as obligations or rights cannot be placed on non-parties. He referred to B.B. APUGO & SONS LTD VS OHMB (2016) LPELR 40598 SC.
He outlined the legal principles guiding the determination of whether an action discloses a reasonable cause of action and submitted that in an action for breach of contract only parties to the said contract could be bound by the terms thereof which in the present circumstances exclude the 2nd to 4th Respondents. He referred to BAMGBADE VS BALOGUN (1994) 1 NWLR (PT 323) 718, RINCO CONSTRUCTION CO LTD VS VEEPEE IND. LTD (2005) ALL NWLR (PT 264) 816, DRUDMOND-KAKSON VS BRITISH MEDICAL ASSOCIATION (1970) 1 NWLR 688, RUTHLINZ INTER VEST LTD VS IHEBUZOR (2016) 11 NWLR (PT 1524) 409 at 430 andREBOLD IND. LTD VS MAGREOLA (2015) 8 NWLR (PT 1461) 210.
In his Reply brief Mr. Ozor reiterated that the action disclosed a reasonable cause of action against the 2nd to 4th Respondents from the totality of the MOU and JVA and that the Respondents failed to adequately counter the arguments canvassed in the Appellants’ brief.
In contention here is whether indeed the Appellants’ action disclosed a reasonable cause of action against the 2nd to 4th Respondents.
Generally, a cause of action means a factual situation, the existence of which, entitles one person to obtain a remedy against another person. It is a fact or combination of facts which when proved would entitle a plaintiff to a remedy against a defendant. It consists of every fact, which would be necessary for the plaintiff to prove, if traversed, in order to support his right to judgment of the Court. That is, the fact or combination of facts which gave rise to a right to sue. It is a cause for action in the Courts to determine disputed matters. See EGBE VS ADEFARASIN (1985) 1 NWLR (PART 3) 549, THOMAS VS OLUFOSOYE (1986) 1 NWLR (PART 18) 689 and DANTATA VS MOHAMED (2000) 7 NWLR (PART 664) 176.
Furthermore, a reasonable cause of action is a cause of action which, when only the allegations in the statement of claim are considered, has some chance of success. See DANTATA VS MOHAMED (SUPRA) at 203.<br< p=”” style=”box-sizing: inherit; margin: 0px; padding: 0px;”>
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A perusal of the statement of claim of the Appellants discloses that their cause of action was founded on breach of contract. The said pleadings further disclose that prior to the JVA there was an MOU which culminated in the incorporation of the 1st Appellant herein. The gravamen of the JVA is captured in paragraph 11 of the Statement of Claim on page 6 of the record of appeal thus:
“That by a Joint Venture Agreement dated 17th September, 2013 executed by the 1st defendant and the plaintiffs, The Hotel Presidential Limited (1st defendant) granted to the 1st Plaintiff herein, a concession of the property known as Presidential Hotel, Enugu, situate at Presidential road, off Rangers Avenue, Independence Layout, Enugu State, measuring approximately 18 acres, for a period of thirty-five (35) years commencing from 1st October, 2013. Copy of the Joint Venture Agreement dated 17th September, 2013 is hereby pleaded and shall be relied on during trial.”
It is evidently clear that the JVA in issue was executed between the Appellants and the 1st Respondent. The 2nd-4th Respondents representing the Enugu State Government were not parties to the said JVA and could not be held to the performance thereof despite their relationship with the 1st Respondent. They had no rights and obligations with regards to the said JVA, not being privy to it.
The position of the law as regards privity of contracts is abundantly clear. A person who was not named as a party to a contract and who accordingly did not furnish consideration therein, cannot claim rights neither can he be held to obligations under the said contract. The principle was expounded by IGHU, JSC thus:
“It is trite law that as a general rule, a contract affects only the parties thereto and cannot be enforced by or against a person who is not a party to it. In other words, only the parties to a contract can sue or be sued on the contract and, generally, a stranger to a contract can neither sue nor be sued on the contract even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it. In the same vein, the fact that a person who is a stranger to the consideration of a contract stands in such near relationship to the party from whom the consideration proceeds that he may be considered a party to the consideration does not entitle him to sue or to be sued upon the contract. See Malone v. Laskey (1907) 2 K.B. 141 C.A., Cameron v. Young (1908) A.C. 176 H.L., Beswick v. Beswick (1967) 2 All E.R. 1197, Frederick Oboye Negbenebor v. Eudora Omowunmi Negbenebor (1971) 1 All N.L.R. 210. See too Ikpeazu v. African Continental Bank Ltd. (1965) 1 N.M.L.R. 374 at 379 where this Court per Ademola, C.J.N., put the matter as follows:-
“What advantages, if any, can the bank gain from the deed, Exhibit D. Can the bank sue on it as a guarantee? Not being a party to it we are of the view that the bank cannot acquire any rights under the deed. Generally, a contract cannot be enforced by a person who is not a party, even if the contract is made for his benefit and purports to give him the right to sue upon it”. See too Tweddle v. Atkinson 30 L.J.Q.B. 265 and the decision of the House of Lords in Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd (1915) A.C. 847.”
Without doubt, the above general principle of law admits of a number of exceptions. These include the case of a contract made by an agent on behalf of an undisclosed principal, who again as a general rule, is entitled to sue and liable to be sued on such a contract etc. See MAKWE V. NWUKOR & ANOR (2001) LPELR-1830 (SC) at 16-17.”
The 2nd-4th Respondents were not named in the JVA as parties thereto, they did not furnish any consideration in respect thereof and cannot maintain an action to enforce any rights in the said JVA. They are accordingly not privy to the said JVA.
I cannot fault the position of the learned trial Judge that the action of the Appellants failed to disclose a reasonable cause of action against the 2nd to 4th Respondents and I therefore resolve this issue against the Appellants and in favour of the Respondents.
The second and remaining issue is:
Whether the object of the contract entered into between the Appellants and the Respondents in both the Memorandum of Understanding and the Joint Venture Agreement is an illegal one not enforceable under the law.
Arguing the said issue, Mr. Ozor submitted that the JVA was not prohibited by the Enugu State Privatization and Commercialization of Government Enterprises Law (supra), hereinafter referred to as “the said law”, as there was nothing in the said law which was contravened by the said JVA.
He submitted that the powers given to the council on privatization under Section 13 of the said law to list companies to be privatized was duly exercised with the listing of the 1st Respondent as No. 3 in the list of the State Government Enterprises to be privatized and that there was nothing in the said law which made it mandatory for the council to be the body to enter into agreement with any intending investor on privatization of listed companies.
He therefore urged the Court to give the words their natural meaning and apply the rule that where specific functions are named in a statute, there is a presumption that other functions not mentioned are not included. He referred to EGBE VS ALHAJI (1990) 1 NWLR (PT 128) 446, MATARI VS DANGALADIMA (1993) 2 SCNJ 122, SCHROEDER VS MAJOR (1989) 2 NWLR (PT 98) 1 andINEC & ORS VS PDP & ANOR (1999) 11 NWLR (PT 626) 174.
The learned counsel further argued that the 2nd and 4th Respondents were members of the privatization council while the 3rd Respondent had nominees on the said council and could not after the State Government had taken benefit of the JVA, evade liability on the ground that the said contract ought not to have been created. He referred to JEGEDE VS CITILON NIG. LTD (2001) 4 NWLR (PT 702) 113, ADEDEJI VS NATIONAL BANK OF NIGERIA LTD (1989) 1 NWLR (PT 96) 212 and BARCLAYS BANK D.C.O. & ANOR VS ONASHILE (1962) 2 ALL NLR (PT 1) 58.
It was further submitted that Enugu State Government as the principal of the Enugu State Council on Privatization and Commercialization (hereinafter referred to as the Privatization Council) could enter into contracts directly on functions already assigned to the said Privatization Council as a principal could validly exercise powers given to an agent for as long as the agent is yet to exercise such powers. He referred to GREGORY UDE VS CLEMENT NWARA & ANOR (1993) NWLR (PT 278) 638 at 664 & 665, AJUWON VS ADEOTI (1990) 2 NWLR (PT 132) 271 at 294 and OSHOLA VS FINNIH (1991) NWLR (PT 178) 192 at 197.
The learned counsel further submitted that the MOU and JVA privatizing the 1st Respondent were official acts of the Enugu State Government which carry a presumption of regularity that all requisites for their validity had been complied with. He referred to Section 168 of the Evidence Act, 2011 and MAKERI S. CO. LTD VS ACCESS BANK NIG. LTD PLC (2002) 7 NWLR (PT 66) 447-475.
The learned counsel then submitted that having represented to the Appellants by giving various warranties and assurances in the MOU and JVA which made the Appellants incur various expenses, the Respondents were estopped from canvassing that they did not follow the provisions of the Privatization Law. He referred to Section 168 of the Evidence Act (supra), A.G. LAGOS VS PURIFICATION TECH. NIG LTD (2003) 16 NWLR (PT 845) 1 at 16-17 and AGBOGUNLERI VS DEPO (2008) ALL FWLR (PT 408) 240 (SC) at 255.
It was further contended that even if some clauses of the JVA violated the Privatization Law, the saving provision in the JVA was sufficient to preserve the other unaffected provisions. Learned counsel referred to SOSAN VS H.F.P. ENG. (NIG.) LTD (2003) 3 NWLR (PT 861) 546 and DALEK (NIG.)LTD. VS OMPADEC (2007) 7 NWLR (PT 1033) 402.
Finally, Mr. Ozor submitted for the Appellants that the reliefs being sought were for damages for wrongful termination of contract and not specific performance of the contract. He referred to SAVOA VS SONUBI (2000) 7 NWLR (PT 1) 36 at 46 and ACME BUILDERS LTD VS KADUNA STATE WATER BOARD (1999) 2 NWLR (PT 590) 288 at 293 and 294.
On his part, Mr. Falana, SAN submitted that although parties are at liberty to enter into contracts, such contracts would be rendered void if the terms are in violation of extant statutory provisions which in the instant case was the Enugu State Privatization and Commercialization of Government Enterprises Law (supra) (hereinafter referred to as “the Privatization Law”.
The learned Senior Counsel then made copious references to several provisions of the Privatization Law which vested the Privatization Council established under Section 11 of the said Law with the exclusive statutory powers to ensure the privatization and commercialization of the 1st Respondent and submitted that the purported agreement being founded upon by the Appellants flagrantly violated the said provisions as it concessioned the 1st Respondent instead of privatizing it. He referred to CO-OPERATIVE AND COMMERCE BANK (NIG.) PLC VS A. G. ANAMBRA & ANOR (1992) LPELR-875 (SC), NNADOZIE VS MBAGWU (2008), UDE VS NWARA (1993), OBIOHA VS DAFE (1994) 2 NWLR (PT 325) 164 at 176, AMAKA VS A.G. ONDO STATE (2012) LPELR-8478 (CA), EBUBEDIKE VS FRN (2013) LPELR-22061 (CA) and CORPORATE IDEAL INSURANCE LTD VS AJAOKUTA STEEL CO. LTD & ORS (2014) LPELR-22255 (SC).
In his reply arguments, Mr. Ozor reiterated that the Respondents who had benefited from the JVA would not be permitted to evade liability on the grounds being canvassed as it would amount to the Court aiding a party to commit fraud. He referred to BARCLAYS BANK D.C.O. VS ONASHILE (1962) 2 ALL NLR (PT 1) 58.
It was further submitted that ‘concession’ and ‘privatization’ are essentially the same and that the Respondents had benefited from the contract and could no longer canvass its illegality.
On pages 134-135 of the record of appeal, the learned Trial Judge reasoned and concluded as follows:
I have studied the Enugu State Privatization and Commercialization of Government Enterprises Law, No. 15 of 2010. The law is deemed to have come into force on the 10th day of July, 2008. The tripartite Joint Venture Agreement, which the Plaintiffs are seeking to enforce was made on 17th September 2013, 5 years after the law came into force. The long title of the law reads:
A Law to provide for the Privatization and Commercialization of Government Enterprises and to establish the Enugu State Committee on Privatization and Commercialization; and other matters connected therewith.
Section 3 (1) of the Law states:
The enterprises listed in the First Schedule to this Law shall be privatized in accordance with the provisions of this Law.
The First Schedule contains a list of 14 companies of which Hotel Presidential is number 3 on the list.
Section 13 of the same Law lists the functions and powers of the Council to include amongst others:
(4) approve public enterprises to be Privatized and Commercialized.
(6) determine whether the shares of a listed Enterprise should be Privatized by way of public or private issue or otherwise and advise the State Government accordingly.
(7) determine when an enterprise is to be privatized.
(8) approve the prices for shares or assets of the public enterprise to be offered for sale.
In the case of Corporate Ideal Ins. Ltd v. Ajaokuta Steel Company Ltd & Ors. 2014 Legalpedia SC OZFU, Okoro JSC said the following on whether the Courts can enforce illegal contracts:
“Although it is the duty of a trial Court to enforce agreements between parties and not to speculate or question the reasons for their entering into any such agreement, where such agreement is illegal or contrary to public policy, such agreement or contract should not be enforced by the Court.”
It is my view that the Joint Venture Agreement entered into on 17/9/2013 not being in consonance with the aforesaid law but in flagrant disregard of that law and its provisions, is an illegal agreement/contract and this Court cannot be called upon to enforce such an illegality.
It is trite that illegality renders a contract unenforceable no matter the obligations incurred by the parties in pursuance thereof. Basically, a contract is illegal if the consideration or the promise involves doing something illegal or contrary to public policy or the intention of the parties in making the contract is to promote something which is illegal or contrary to public policy. See ONYIUKE III VS. OKEKE (1976) LPELR-8039(SC), SODIPO VS. LEMMINKAINEN OY (1986) 1 NWLR (PT 15) 220, EKWUNIFE VS. WAYNE (W.A.) LTD. (1989) 5 NWLR (PT.122) 422 at 450 and AYO SOLANKE VS. ABED & 2 ORS (1962) 1 SCNLR 371.
The position of the law in this regard was abundantly elucidated by ALEXANDER, JSC thus:
“It is the law that a contract is illegal if the consideration or the promise involves doing something illegal or contrary to public policy or if the intention of the parties in making the contract is thereby to promote something which is illegal or contrary to public policy; and an illegal contract is void and cannot be the foundation of any legal right. This proposition of law was clearly enunciated by Brett, M.R., in Herman v. Jeuchner (1885), 15 Q.B.D. 561, at page 563 as follows:
“When the object of either the promise or the consideration is to promote the committal of an illegal act, the contract itself is illegal and cannot be enforced.”
In Halsbury’s Laws of England , 3rd Edition, Volume 8, page 126 para. 218, the law on the point is also succinctly stated as follows:
“A contract is illegal where the subject-matter of the promise is illegal or where the consideration or any part of it is illegal.”
And in William Hill (Park Lane) Ltd. v. Hoffman (1950) 1 ALL E.R. 1013, it was held that a deed of charge executed in respect of gaming debts must by virtue of the Gaming Act 1835, be deemed to have been executed for an illegal consideration, and was therefore void. See ONYIUKE III V. OKEKE(supra) at 9-10. See alsoCORPORATE IDEAL INSURANCE LTD VS. AJAOKUTA STEEL COMPANY LTD & ORS (2014) LPELR-22255 (SC) Per OKORO, JSC at 25 and ALAO VS. ACB LTD (1998) 3 NWLR (PT. 542) 339 at 346, AJAYI VS TOTAL NIG. PLC (2013) LPELR-20898 (SC) Per MAHMUD MOHAMMED at 18, FASEL SERVICES LTD & ANOR VS.NPA & ANOR (2009) LPELR-1245 (SC) and PAN BISBILDER (NIG) LTD VS.FBN LTD (2000) LPELR-2900 (SC) at 14.
The parties herein are not contesting the existence of the Enugu State Privatization and Commercialization of Government Enterprises Law, No. 15 of 2010 as at the time of the transaction culminating in the MOU and the JVA. The said law is a specialized legislation specifically providing for the privatization and commercialization of government enterprises with the 1st Respondent clearly named therein. The said legislation also established the Enugu State Committee on Privatization and Commercialization, a body unequivocally charged with the responsibilities for privatizing or commercializing the said 1st Respondent.
A perusal of the MOU and JVA reveals not just deviation from the provisions of the said extant law, the Enugu State Privatization and Commercialization of Government Enterprises Law, No. 15 of 2010, but a total failure to acknowledge its existence.
Laws are not made to decorate the book shelves and every citizen to be law abiding, must comply with the laws of the land. Carrying out transactions in outright disregard for extant laws is contrary to public policy and patently illegal. Courts must not be seen or heard to encourage such conducts which strike at the very root of the raison d’etre for the existence of the State. Arguments now canvassed would only obfuscate the issues and I cannot see how they avail the Appellants.
It has been argued for the Appellants that the failure or omission in this regard should be attributed to the Respondents who were seeking to profit from their wrongdoing. With due respect to learned counsel, I find it difficult to agree with this position. The existence of a duly enacted law is not within the closet purview of any party including the government and its operatives.
Due diligence prior to financial or commercial transactions, is a basic necessity of prudence and parties failing to conduct due diligence would render themselves liable to pay the necessary price of their recklessness. The Appellants in the exercise of reasonable diligence would have availed themselves of the relevant law operating within the area of their intended transaction.
The contention of the Appellants that they were only seeking damages for breach of contract and not specific performance is met by the position of the law that none of the parties to an illegal contract is entitled to any remedy or relief from the Court. See ONAMADE V. A.C.B. LTD (1997) LPELR-2671(SC) at 36-37.
I therefore resolve this remaining issue against the Appellants and in favour of the Respondents.
In totality therefore, I find no merit in this appeal and I accordingly dismiss it.
The decision of the trial Court is hereby affirmed.
Cost of N100,000.00 is awarded against the Appellants and in favour of the Respondents.
MISITURA OMODERE BOLAJI-YUSUFF, J.C.A.: I had the privilege of reading in advance the lead judgment just delivered by my learned brother, JOSEPH OLUBUNMI KAYODE OYEWOLE, JCA. I agree with his Lordship that this appeal has no merit. Enugu State Privatization and Commercialization of Government Enterprises Law No. 15 of 2010 came into force before the parties engaged in the transaction, subject matter of this case and it is still in force. The Law specifically gives the power to approve Public Enterprises to be Privatized and Commercialized, when an enterprise is to be privatized, how privatization should be carried out and the prices of the public assets to be offered for sale to Enugu State Committee on Privatization and Commercialization, a body established by the law. There is no doubt that the sole purpose of the Memorandum of Understanding and Joint Venture Agreement entered into by the parties herein is to circumvent the provisions of the Law. In Corporate IDEAL INSURANCE LTD. V. AJAO KUTA STEEL CO. LTD. & ORS (2014) LPELR-22255 (SC) AT 25 (B-F), the Supreme Court clearly held that any contract or transaction which seeks to Circumvent the provisions of a statue is ex-facie illegal and no party can take benefit from it. The illegality of the MOU and Joint Venture Agreement which the appellants are seeking to enforce is not in doubt. It is settled law that every Court has a duty not to allow itself be used to enforce an illegal contract or allow any of the parties to benefit from it.
For these and other reasons lucidly stated by my learned brother, I too dismiss this appeal. I abide by the order for costs made therein.
ABUBAKAR SADIQ UMAR, J.C.A.: I had the opportunity of reading the draft of the judgment just delivered by my learned brother, JOSEPH OLUBUNMI KAYODE OYEWOLE, JCA.
His lordship has thoroughly considered the issues and rightly concluded that they should be resolved against the Appellants. I totally agree with his reasoning and conclusions.
I also dismiss this appeal for lacking in merit.
I abide by the consequential order therein.
Appearances:
Mr. I. Ozor with him, N. Okafor, Esq. For Appellant(s)
Mr. Femi Falana SAN, with him, Mr. B. Aneke For Respondent(s)
