SYNDICATED INVESTMENT HOLDINGS LIMITED v. NITEL TRUSTEES LIMITED & ANOR
(2014)LCN/7227(CA)
In The Court of Appeal of Nigeria
On Friday, the 23rd day of May, 2014
CA/L/349/2013
RATIO
CONTRACT: WHETHER AN EXECUTORY CONTRACT, EXECUTED IN PART, CONSTITUTES A BINDING CONTRACT.
There was offer, there was acceptance and consideration. Payment of the 10% bid price of 36.1 million naira and the undertaking to pay the balance before the 30th of September 2007 constitute the consideration. The contract is not strictly executory. It has been executed in part. Even if it was executory, it does not detract from the fact that a binding contract had come into existence. Amana Suits Hotels Ltd v PDP (207) 6 NWLR (Pt.1031) 455 @ 481 D-H. per CHINWE EUGENIA IYIZOBA, J.C.A.
JUSTICES
JOSEPH SHAGBAOR IKYEGH Justice of The Court of Appeal of Nigeria
CHINWE EUGENIA IYIZOBA Justice of The Court of Appeal of Nigeria
SAMUEL CHUKWUDUMEBI OSEJI Justice of The Court of Appeal of Nigeria
Between
SYNDICATED INVESTMENT HOLDINGS LIMITED Appellant(s)
AND
1. NITEL TRUSTEES LTD (IN LIQUIDATION)
2. OTUNBA OLUSOLA ADEKANOLA
(LIQUIDATOR OF NITEL TRUSTEES LTD) Respondent(s)
CHINWE EUGENIA IYIZOBA, J.C.A. (Delivering the Leading Judgment): This appeal is against the judgment of Dada J of the High Court of Lagos State in Suit No LD/401/2011 delivered on 22nd day of November 2012 dismissing the appellant’s claim for damages for breach of contract.
The facts of the case are not in dispute. On Wednesday, the 2nd day of May 2007, the Respondents, who are a company in liquidation and the liquidator respectively, advertised a number of properties for sale, inviting bids for the same – Exhibit C1. One of the properties advertised for sale was 44 Gerard Road, Ikoyi (henceforth referred to as the property). Among the conditions for the bid were the following: (a) bidders were required to submit their bids within 30 days of the advertisement, i.e. by 2 June 2007; (b) bids were to be accompanied by a bidding fee of N10,000, a certified bank draft for 10% of the bid amount, and the bidders tax clearance certificate; and (c) sitting tenants had a right of first refusal but had to bid in order to qualify to exercise their right of first refusal; (d) winners of bids were required to pay the balance of the purchase price plus 5% transaction costs within 30 days.
Pursuant to the advertisement, on 1st day of June 2007 the Appellant submitted a bid to purchase the Property for N361 million and paid the bidding fee and a mandatory 10% deposit of N36.1 million. On 20th day of June 2007, the Appellant was informed by the Respondents through Exhibit C2 at pages 13 and 14 of the Record that it had won the bid for the Property, subject only to the sitting tenant’s right of first refusal. Exhibit C2 stated that in the event that the sitting tenant did not pay the amount bidded by the Appellant on or before 31st August 2007, the Respondents would revert back to the Appellant with an offer to purchase in accordance with the terms of the exercise. This means that the appellant would be called upon to complete the purchase which, according to Condition “H” of Exhibit C1, entailed paying the balance of 90% plus 5% transaction cost. The Appellant was required to indicate his willingness to wait until the expiration of the stipulated time given to the sitting tenant to exercise the option to purchase in order to take advantage of the offer or if he is not willing to wait, to say so to enable the Respondents refund his 10% bid price. An Acceptance Form was attached to Exhibit C2. On 6 July 2007, the Appellant duly completed the Acceptance Form – Exhibit C3 at page 16 of the Record. By the 31st of August 2007, the sitting tenant in the property did not exercise the right of first refusal. The Appellant averred and led evidence that after 31/8/07 when the Respondents did not revert back to her as to how to go about completing the purchase, the appellant’s sole witness CW1 went to see the Second Respondent at the latter’s house in Abuja. CW1 claimed the Second Respondent said he was about to send the letter. Thereafter CW1 travelled to London. His further calls to the second Respondent were not answered and they never reverted back to him.
Unknown to the Appellant, on the 19th day of September 2007, the Respondents offered the Property to another company, Oystelcom for purchase Exhibit D1. Oystelcom paid its 10% bid deposit on 26 September 2007 and the Property was eventually sold to it.
On 19 May 2008, the Respondents refunded the Appellant’s deposit of N36.1 million (Exhibit C4), which they had kept since the 1st of June 2007.
The Appellant consequently as the Claimant at the Court below on the 7th day of March, 2011 initiated an action against the Respondents as 1st and 2nd Defendants. In its Writ of Summons and Statement of Claim, the Appellant/Claimant prayed for the following reliefs:
(1) Specific performance of the contract to sell a property known as 44 Gerard Road, Ikoyi, Lagos
(2) A perpetual injunction restraining the Defendants and each of them whether by servants or agents or otherwise howsoever from parting or dealing with or disposing of the said property otherwise than to the Plaintiff.
(3) Alternatively, damages in lieu of specific performance and injunction
(4) Interest
(5) Further or other reliefs
(6) Costs
The Defendants on the 28th of April, 2011 filed a Memorandum of Conditional Appearance, 1st and 2nd Defendants’ Statement of Defence together with other processes. Claimant thereafter on 12/5/11 filed a reply. Each side called a sole witness. At the conclusion of hearing, written addresses were filed and adopted. In its written address, the Appellant/Claimant withdrew her prayer for specific performance and settled for the alternative claim of damages. The Lower Court in its Judgment at pages 221- 245 of the records held that there was no enforceable contract between the parties and that the Claimant was only entitled to her claim for interest i.e. prayer 4 of the Statement of Claim.
The Appellant dissatisfied with the judgment filed a Notice of Appeal with five grounds of appeal, out of which two issues were distilled as follows:
a. Whether the Lower Court was right in law to hold that there was no binding contract between the Appellant and Respondents for the purchase of the Property.
b. Whether the Lower Court was right in law to hold that the Appellant is not entitled to recover damages for the breach of contract.
The Respondents adopted the issues formulated by the Appellants.
ISSUE 1:
Whether the Lower Court was right in law to hold that there was no binding contract between the Appellant and Respondents for the purchase of the Property.
Prof Fidelis Oditah QC, SAN., for the Appellant in his brief submitted that the Learned Trial Judge erred in coming to the conclusion that Exhibits C1, C2 and C3 did not constitute evidence of the formation of a binding contract between the Appellant and the Respondents to buy and sell the Property because paragraph 2 of Exhibit C2 stated inter alia “We shall revert to you with an offer to purchase in accordance with the terms of this exercise”. Learned senior counsel submitted that in a contract for the sale of real property, the contract normally precedes the conveyance; that where a property is being sold by a public bidding process, the winner of the bid who has paid his 10% deposit has a valid contract to buy. The vendor is then required to produce a conveyance or assignment to be executed, The senior counsel submitted that the “offer to purchase” in paragraph 2 of Exhibit C2 meant the assignment which the respondents were supposed to send to the appellant for execution. Counsel submitted that the idea that a person can invite a public bid without a reserve price, declare a winner, and then turn round and sell the same property to a person who did not bid at all is a complete mockery of the bidding process, a negation of every contract law principle and is inconsistent with Nigerian law of contract.
In their brief settled by Roland Otaru SAN, and Omotayo A. Abiri (Mrs), the Respondents relying on the case of Metibaiye v Narelli Int’l Ltd (2009) 16 NWLR (Pt.1167) 326 @ 346-347 H-A submitted that the elements of a valid and enforceable contract are offer, acceptance, consideration, intention to create legal relationship, and capacity to contract. Learned senior counsel submitted that the elements are conterminous and that absence of any of them voids the contract. Counsel submitted that the contract in the instant case is constituted by Exhibits C1, C2 and C3 and argued that they must be read together. CBN V. Igwillo (2007) 14 NWLR (Pt 1054) 393. He submitted that the Appellant having failed to comply with the terms and conditions stated in Exhibits C1 and C2, Exhibit C3 the letter of acceptance cannot save the day. Learned senior counsel submitted that the appellant had 30 days with effect from 31st of August, 2007 to pay the full consideration in respect of the subject matter of this suit; but she did not pay and did not write to indicate its willingness to wait until expiration of the time given for the exercise of the sitting tenant’s right of first refusal as required by clause 3 of Exhibit C2. Counsel submitted that the offer lapsed with the failure of the Appellant to pay the full consideration and that where there is an acceptance of contract without consideration that contract cannot be enforced.
ISSUE 2:
Whether the Lower Court was right in law to hold that the Appellant is not entitled to recover damages for the breach of contract.
Prof Oditah on this issue submitted that the Lower Court dismissed the Appellant’s claim for damages on the basis that the contract for the sale of the Property was executory, not executed, in that the Appellant had not paid the balance of the purchase price. Learned counsel quoted from the judgment of the Lower Court at page 243 of the Record where the learned trial judge observed:
“I am of the view that the Claimant having failed to take further steps in making full payment of the reserved bid with 5% transaction costs when the right crystallized, she cannot make any claim in damages which is a claim in equity. Equity however aids the vigilant and not the indolent.”
Learned senior counsel submitted that the above proposition does not represent the law and is unsupported by the facts found by the Lower Court. The Lower Court, counsel submitted found that immediately after 31st of August 2007, CW1 visited the second Respondent at Abuja to discuss the mechanics for the completion of the transaction and the payment of the balance of the purchase price. He was promised by the Second Respondent that formal contract documents would be sent to him, but no contract was ever sent. Instead, the Second Respondent stopped taking his calls. Counsel submitted that it is unreal to expect the Appellant to pay almost N345 million without any documentation from the Respondents whatsoever and in circumstances where the Second Respondent had stopped taking CW1’s calls.
Learned SAN submitted that contrary to the holding of the lower court that an executory contract cannot be breached; he argued that an executory contract is a valid contract in all respects; that an executory contract is a contract based on exchange of mutual promises, but where performance has not began. He referred to Amana Suits Hotels Ltd v. PDP (2007) 6 NWLR (Pt. 1031) 455 @ 481 D-H. Learned SAN also referred to Prof Sagay’s book on Nigerian Contract law (2nd ed, 2003 reprint), 67 where the author observed:
“Consideration is termed executory when the offer and acceptance consist of promises – the offeree making a promise in return for the offeror’s promise. This happens very often in commercial transactions, e.g., in a contract for the sale of goods, where the delivery and payment are to be made in the future. This also happens when a contractor’s tender for the building of a house is accepted by the person who wishes to have a house built. Both parties become bound in the contract prior to actual performance. It is the exchange of promises that constitutes the contract. The whole transaction remains in the future. Actual performance will take place at a latter date.
When, however, an act is performed in return for a promise, then the consideration is referred to as executed consideration.”
The learned SAN submitted that the contract between the Appellant and the Respondents was not wholly executory; that it was partly executed in that the Appellant had paid 10% of the purchase price. He argued that the object of damages for breach is to put the innocent party in the same position, so far as money can do so, as if the contract had been performed. He further submitted that where there is a breach of contract for the sale of property, the measure of damages is prima facie the difference between the contract price and the value of the property at the date of breach. Where the property was resold at the date of breach, in the absence of other evidence showing that the resale was above or below market value, the resale price is prima facie evidence of the value of the property at the date of breach/resale. Learned SAN submitted that the Respondents’ evidence is that the Property was sold to Oystelcom for N971,250,000 on 19 September 2007. If the Respondents had not repudiated the contract, on 31 August 2007 or shortly thereafter, the Appellant would have acquired unconditionally the Property for N361 million plus 5% transaction cost, which it was ready, willing and able to pay. Senior counsel submitted that the measure of the Appellant’s damages is the difference between the cost of the Property to the Appellant (N361 million plus 5% transaction cost of N18.05 million, namely N379.05 million) and the value of the Property at the date of breach, namely N971.25 million, which was the price the Respondents say Oystelcom paid for the Property in September 2007. That difference is N591.95 million. Learned SAN prayed the court to award the appellant damages of N591.95 million plus post judgment interest at a rate not less than 10% per annum pursuant to Order 35 Rule 4 of the High Court of Lagos State (Civil Procedure) Rules 2012 and Section 15 of the Court of Appeal Law, 2004. He urged the court to resolve Issue 2 in its favour.
Mr. Otaru SAN for the Respondent on issue 2 submitted that the learned Trial Judge having come to the conclusion that there was no enforceable contract between the parties did not err in holding that the Appellant was not entitled to damages. He submitted that the Appellant never had any intention to comply with the Paragraph H of Exhibit C1 and therefore did not do all that was required of her under the Law. Learned SAN submitted that there was no valid contract between the parties and therefore no breach for which damages is payable. He submitted that the learned trial Judge was correct in his view that since the Appellant failed to take further steps to make full payment of the reserved bid with 5% transaction costs when the right crystallized, she could not make any claims in damages. He urged the court to dismiss the appeal with substantial cost and to affirm the Judgment of the Lower Court that there was no valid and enforceable contract between the parties and that the Appellant is not entitled to damages.
I have considered carefully the above submissions of counsel and other submissions which I shall refer to in the course of the judgment as necessary. It is trite that a binding contract is formed when there is an offer, an acceptance and consideration; that where the parties rely on documents as evidencing the offer, acceptance and consideration, the question whether the documents satisfy the requirements for the formation of a contract depends upon the ascertainment of the parties contractual intention by a process of the construction of the documents.
There are three documents involved in this contract. It is trite that all the documents have to be read together in order to identify the terms and real intentions of the parties. In doing so, the court adopts the objective test in ascertaining the parties’ intentions. See Sparkling Breweris Ltd v Union Bank of Nigeria (2001) 15 NWLR (Pt 737) 539 @ 565 D-F where Achike JSC (of blessed memory) observed:
“Where there is doubt as to whether the parties have concluded a legally binding agreement, the court has the responsibility to analyze the circumstances surrounding the alleged agreement and determine whether the traditional notion of ‘offer’ and ‘acceptance’ can be distilled from the purported agreement. The mutual assent must be outwardly manifested. The test of the existence of such mutuality is objective.”
See also Obaike v Benue Cement Co Plc (1997) 10 NWLR (Pt.525) 435 @ 447 C-D.
I shall now set out the contents of the three exhibits and then go on to consider whether the parties had entered into a binding agreement having regard to the facts that emerged at the trial and the relevant documents tendered.
The first is Exhibit C1 (This Day Newspaper advertisement of 2/5/07). The contents are reproduced hereunder:
“Condition of Bidding
a. Bidding forms are obtainable free of charge at:
i. Office of the Liquidator, OA House, 4, Aderoju Street, Off Alfred Olaiya Street, Awuse Estate, Opebi, Ikeja, Lagos.
ii. Olusola Adekanola & Co. Abuja Office, 5A Suez Crescent, Wuse Zone 4 (Behind Sheraton Hotel &
Towers), Abuja.
b. Bidding forms can also be downloaded from:
www. nmspf.com E-mail daniels@ adekanola. com
c. Payment of non-refundable bidding fee of Ten Thousand Naira (N10,000) Only in certified bank draft to NITEL/MTEL Staff Pension Fund (In Liquidation).
d. Each bidder should indicate on the left hand corner of the envelope the property bidded for:
e. Completed bidding forms should be submitted along with the following:
i. Ten percent (10%) of bid price in certified bank draft, payable to NITEL/MTEL Staff Pension Fund (In Liquidation). Unsuccessful bidders will be refunded this sum while this will form part of the payment for the properties by successful bidders.
ii. Copy of Tax Clearance Certificate for the past 3 years (for individuals and corporate bodies).
iii. Copy of Certificate of Incorporation (for corporate bodies).
iv. Certified Bank Draft for the non-refundable bidding fee in favour of NITEL/MTEL Start Pension Fund (In Liquidation).
f. Completed bid forms should be submitted within 30 days of this publication to either of the addresses below:
The Liquidator: Otunba Olusola Adekanola JP, FCA mni OA House, 4, Aderoju Street, Off Alfred Olaiya Street, Awuse Estate, Opebi, Ikeja, Lagos.
The Liquidator: Otunba Olusola Adekanola JP, FCL mni 5A Suez Crescent, Wuse Zone 4 (Behind Sheraton Hotel & Towers), Abuja.
g. Names of successful bidders shall be published in the print media at the close of bidding.
h. Winners of bids will he expected to pay in full plus 5% transaction cost, within 60 days (for recognized sitting tenants) and 30 days for others.
Prospective buyers are advised to inspect the properties and make their assessment before submitting bids. Where the assistance of the office of the Liquidator is requested such will be made available at bidder’s expense”.
The second is Exhibit C2 (letter dated 20th June, 2007):
“Further to your expression of interest to take up leasehold right in the above mentioned Property (hereinafrer referred to as “The Property”) owned by NITEL/MTEL Staff Pension Fund In-Liquidation (hereinafter referred to as “The Fund”) together with all appurtenances, rights of way, easement and privileges related thereto, and the approval of the committee of inspection constituted by the Federal High Court, Abuja to superintend the affairs of the said fund, I am pleased to inform you that you have emerged the Reserved Bidder of the property on “as is” basis at the stipulated price (hereinafter referred to as “The Consideration”) upon the following terms and conditions:
1. That the property has been offered to the resident staff for first refusal.
2. And in the event that the staff is not able to pay up within the stipulated period, which will be on or before 31st August, 2007 we shall revert to you with an offer to Purchase in accordance with the terms of this exercise.
3. You may therefore wish to indicate your willingness to wait until expiration of the stipulated time given to the staff to exercise his option to Purchase, to take advantage of the offer.
4. You may wish to indicate if you are not willing to take advantage of (3) above in which case we shall be ready to refund your 10% bid price as it is practicable.”
The third is Exhibit C3 (Appellant’s acceptance form dated 20th June, 2007):
“I accept the offer contained in the letter and understand that my acceptance constitutes contract as stated herein.
Details of Property Allocated (Full Address)
44 GERRARD ROAD, IKOYI, LAGOS
…………………………………………………………
………………………………………………………….
Name: SYNDICATED INVESTMENT HOLDINGS LIMITED
…………………………………………………………..
Home Address: HOUSE 7, 19 OKOTIEBO ST. IKOYI, LAGOS
…………………………………………………………….
Office
Address: ……………………………………………. DITTO ………
Signature & Date SIGNED 06 JULY 2007……………….
Details of Bank Draft: FCMB PLC (HEAD OFFICE BRANCH) BANK DRAFT NO.00631088 OF 01/06/07 FOR N36,100.00….”
The appellant bided for the property as stipulated in Exhibit C1 paying as stated the non-refundable bidding fee of Ten Thousand Naira (N10, 000) and 10% of the bid price, 36.1 million naira. It also complied with all the stated requirements.
It is my humble view that Exhibit C2 above constitute a definite offer made by the Respondents to the appellant subject to the following conditions:
1. That the property has been offered to the resident staff for first refusal.
2. And in the event that the staff is not able to pay up within the stipulated period, which will be on or before 31st August, 2007, they shall revert to the appellant with an offer to Purchase in accordance with the terms of this exercise.
3. You may therefore wish to indicate your willingness to wait until expiration of the stipulated time given to the staff to exercise his option to Purchase, to take advantage of the offer.
4. You may wish to indicate if you are not willing to take advantage of (3) above in which case we shall be ready to refund your 10% bid price as it is practicable.”
The offer letter had attached to it an acceptance form Exhibit C3.The Appellant pursuant to the above conditions signed Exhibit C3 It is clearly stated therein that the appellant accepted the offer contained in the letter and that it is understood that that the acceptance constitute contract as stated therein. The contention of the Respondent is that this acceptance letter signed by the appellant is meaningless because the appellant did not comply with two conditions stipulated in exhibit C2 and paragraph H of C1. The conditions are:
1. That it did not write a letter to indicate its willingness to wait until expiration of the stipulated time given to the staff to exercise his option to Purchase, to take advantage of the offer.
2. That it did not comply with paragraph H of Exhibit C1 that is payment in full plus 5% transaction cost of the bid price within 30 days of the date of expiration of the stipulated time given to the staff to exercise his option to Purchase; i.e. 30 days from 31/8/07.
The first point above is of no moment. By signing the acceptance form, the appellant impliedly indicated his willingness to wait. On the second point, by Exhibit C2, the condition was that in the event that the sitting tenant is not able to pay up within the stipulated period, which will be on or before 31st August of 2007, the Respondents shall revert to the appellant with an offer to Purchase in accordance with the terms of the exercise. Prof. Oditah is right that what the phrase meant is that the Respondents would now forward to the Appellant the necessary documentation which on execution, the Appellant would now return with the balance of the bid price and 5% transaction cost before the 30th of September 2007. After the 31st of August 2007, the Appellant waited to hear from the Respondents to no avail. CW1 then paid a visit to the 2nd Respondent in his house in Abuja to find out why they have not contacted him. He was told that they would soon contact him but they never did. Rather, they stopped taking his calls.
This evidence was not controverted. At page 242 of the Record of appeal, the learned trial Judge held thus:
“The question is what did the Claimant do when she did not receive any further offer from the Defendants on or immediately after 31st August 2007? When by 31st August 2007 the Claimant became aware that the sitting tenant’s right would have been extinguished by failure to exercise such right, what would the ordinary man on the street do? The natural thing would have been to forward the cheque with full payment of the outstanding balance plus 5% transaction cost to the Defendants in compliance with paragraph H of Exhibit C1 which is the first document in this transaction. The truth however is that the Claimant never did nor evinced any intention to do so at all. The poser therefore is, has the Claimant done all that is required of her under the law? The simple answer is an emphatic ‘No’. The Claimant did nothing in the exercise of her right to fully satisfy the consideration obligated upon her to pay as a Reserved Bidder. The contract in my humble view is not the promise alone, but the entire complex of other elements such as physical acts, recital of facts and immediate transfer of property interests – see paragraph 3 of page 318 of Blacks Law Dictionary 7th Edition. All the Claimant’s witness said he did was to meet the 2nd Defendant in his house in Abuja. There was no further correspondence between the parties and therefore this can be termed an executory contract which is defined in Black’s Law Dictionary at page 321 as “A contract that remains wholly unperformed or for which there remains something still to be done on both sides.”
With all due respect to the learned trial Judge, I am of the humble view that his conclusions are misconceived. By the acceptance letter, exhibit C3 the Appellant had done all he needed to do. At that stage, there was a contract. All the three exhibits evidencing the terms between the parties must be read together in order to identify the real intentions of the parties.
There was offer, there was acceptance and consideration. Payment of the 10% bid price of 36.1 million naira and the undertaking to pay the balance before the 30th of September 2007 constitute the consideration. The contract is not strictly executory. It has been executed in part. Even if it was executory, it does not detract from the fact that a binding contract had come into existence. Amana Suits Hotels Ltd v PDP (207) 6 NWLR (Pt.1031) 455 @ 481 D-H.
I am of the view that the Respondents cannot in all honesty maintain their stand that because the Appellant did not write to indicate that it was willing to wait until 31st August 2007 for the expiration of the period within which the sitting tenant was entitled to exercise its right of first refusal, that it failed to fulfil a fundamental condition spelt out in the terms of offer. This is because the appellant completed the acceptance form attached to Exhibit C2, that is Exhibit C3 stating clearly that it accepted the offer contained in the letter and that it understood that the acceptance constitutes contract as stated therein. If she did not want to wait for the staff to exercise the option of first refusal, she would not have accepted the offer. Rather she would ask for its deposit to be returned. Learned senior counsel for the Appellants cited several authorities in support of this very reasonable construction of the agreement.
a. Wickman Machine Tools Sales Ltd v Schuler AG [1974] AC 235 at 251, where Lord Reid said:
“The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result, the more unlikely it is that the parties may have intended it”.
b. Society of Lloyd’s v Robinson [1999] 1 WLR 756 at 763, where Lord Steyn said:
“in the process of interpreting the meaning of the language of a commercial document the court ought generally to favour a commercially sensible construction. The reason for this approach is that a commercial construction is likely to give effect to the intention of the parties. Words ought therefore to be interpreted in the way in which a reasonable commercial person would construe them. And the reasonable commercial person can safely be assumed to be unimpressed with technical interpretations and undue emphasis on niceties of language.”
c. Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 @ 2906H-2911F; 2909 G, Lord Clarke said:
“Often there is no obvious or ordinary meaning of the language under consideration. There are competing interpretations to be considered. In choosing between alternatives a court should primarily be guided by the conual scene in which the stipulation in question appears. And speaking generally commercially minded judges would regard the commercial purpose of the contract as more important than the niceties of language. And, in the event of doubt, the working assumption will be that a fair construction best matches the reasonable expectations of the parties.”
d. Vincent Standard Steel Industries Ltd v Lead Bank Ltd (2009) LPELR-CA/A/40/2004:
“Where the wordings of the agreement are not clear, a court of law must go further to interpret the agreement in a way to bring out the real interpretation of the parties.”
In support of his contention that the appellant ought to have written to indicate his willingness to wait for the sitting tenant to exercise his right of first refusal despite the signing of the acceptance form Exhibit C3, learned counsel for the Respondents had referred to the case of Adebanjo v. Brown (1990) 3 NWLR (Pt. 141) 661 @ 689 G. The full observation of Agbaje JSC runs thus:
“I have not an iota of doubt that on the finding of the learned trial Judge that the parties to this case could not albeit unfortunately agree on the prices at which the land in dispute in this case would be sold by the plaintiff to the defendant there was no contract between them whereby the plaintiff agreed to sell the land to the defendant. The point is covered by the general principle that where there is a fundamental term left undecided there is no contract.”
It is obvious that in the above case, there was no consensus as regards the purchase price. There could not therefore have been a contract. It was indeed a fundamental issue. In the instant case, there was consensus as regards offer, acceptance and consideration. It would have been quite superfluous for the appellant after accepting the offer by signing the acceptance form Exhibit C3, to again write a letter saying that he is willing to wait for the staff to exercise its right of first refusal. It is implied in the acceptance letter. There is no basis for insisting that such a non-issue would vitiate a contract duly concluded by the parties. A valid and binding contract came into existence on the 6th of July 2007 when the Appellant completed the acceptance form Exhibit C3. The contract was subject to the sitting tenant’s right of first refusal. It was a condition subsequent that would have terminated the contract if it was exercised. When the sitting tenant failed to exercise his right by the 31st of August 2007, the condition subsequent fell away and the contract to buy and sell the Property became final. Consequently, irrespective of paragraph H of Exhibit C1 that payment of the full amount must be made within 30 days, the Respondents were obligated by clause 2 of Exhibit C2 to revert back to the Appellant with an offer to Purchase in accordance with the terms of the exercise. By failing to revert back to the Appellant, the Respondents were in breach of the contract. To make matters worse, the Respondents did not even wait for the expiration of the 30 days within which the Appellant was to pay the full amount plus 5% transaction cost; on the 19th day of September 2007, eleven days before the expiration of the 30 days, the Respondents sold the Property to Oystelcom. Even if it is assumed that it is the Appellant that should take action notwithstanding that the Respondents did not revert back to her by paying the full amount and the 5%, failure to do so can only work against the Appellant at the expiration of the 30 days given to her under the contract to pay up. I am sure that this aspect of the matter escaped the attention of the learned trial Judge. His Lordship was obviously swayed by what he perceived as the lackadaisical attitude of the Appellant in paying the outstanding balance plus 5% transaction cost. He was in fact of the view that the Appellant did not intend to pay the balance. With due respect, such a conclusion cannot be arrived at without waiting for the expiration of the time within which the Appellant was to pay the balance. Perhaps the Respondent’s intention in failing to revert back to the Appellant as required by Exhibit C2 and not taking CW1’s calls was to goad him into not paying the balance, to enable them claim breach of the contract. In their anxiety to get more money for the property, they forgot to wait for the expiration of the time given to the appellant within which to pay, thus confounding their situation. If the learned trial Judge had adverted his mind to this point, he would have come to a different conclusion. The Respondents were clearly the ones in breach of the contract. The case of BFI Group Corporation v Bureau of Public Enterprises [2012] 18 NWLR (Pt.1332) 209 cited by Prof. Oditah is quite instructive. In the case, the Bureau of Public Enterprises (BPE) refused to execute a share purchase agreement with the highest bidder for the sale of ALSON and instead sold it to another party. The Supreme Court reversed the sale and held that, notwithstanding that BPE had refused to execute a share purchase agreement (SPA) with the highest bidder, and had executed with another party instead, it had entered into a valid and binding agreement with the highest bidder which the court must enforce. At pages 240H-241E, the Supreme Court per Fabiyi JSC observed:
“It occurs to me that to have treated the entire transaction as a mere declaration of interest that amounts only to an invitation to treat points to the fact that the court below did not take into account the peculiar, complex and segmented nature of the transaction…
“The two Lower Courts should have treated the contract in its peculiar form as it is. They should not have put an undue premium and focus on exhibit 2, the prospective Share Agreement which was subject to signature by terms agreed by the parties at the end. The Lower Courts, with due diffidence, took a very simplistic view of the whole transaction from the angle of a simple contract without bearing in mind that the sale of ALSCON to the appellant was by way of an auction sale in which each bid is regarded as an offer which if accepted by the auctioneer by the fall of the hammer, creates a binding and enforceable contract…
“It is clear to me that this is a complex mercantile transaction which is clearly segmented under clause 3.6 of exhibit D1. Under clause 4.8 of the same, parties clearly intended and agreed that acceptance of appellant’s bid of US$410 Million by the respondent created a binding contract between the parties and parties agreed under clause 4.9 that the final and ultimate share purchase agreement in exhibit 2 would be made out in terms and conditions mutually agreeable to both parties. The intention of the parties must be given legal effect.”
The learned trial Judge in the instant case ought to have adopted the same approach. On the contrary, the court treated the matter as if it was a simple contract, and even endorsed the sale of the Property to a party which did not participate in the bidding process. I agree with Prof. Oditah that having invited bids (Exhibit C1), received the Appellant’s bid and 10% deposit, and issued Exhibits C2 and C3 declaring the Appellant as the reserved bidder and the appellant duly completing and submitting the acceptance form, Exhibit C3, the Respondents cannot be heard to say that there was no contract merely because of a condition subsequent which impliedly had been complied with by the Appellant by the completion of exhibit C3. There was a binding contract between the parties. Given that the Appellant had until 30th of September 2007 to pay the balance of the purchase price, the sale of the Property to Oystelcom on 19 September 2007 was a clear breach of the contract by the Respondents. Issue 1 is resolved in favour of the Appellant.
In view of the decision above, the Respondents are liable in damages to the Appellant. The Respondents repudiated their contractual obligations to the Appellant firstly, by not reverting back to her after the 31st of August when the sitting tenant failed to exercise the right of first refusal and secondly by selling the property to Oystelcom before the 30th of September 2007. The Appellant chose to accept the breach by the Respondent by accepting back his deposit, abandoning his claim for specific performance of the contract and settling for damages. It was consequently absolved of any obligation to pay the balance of 90% and 5% transaction cost. See Fercometal SARL v Mediterranean Shipping Co SA, The SIMONA [1989] AC 788 @ 805 D-F; Vitol SA v. Norelf Ltd [1996] AC 800 @ 810H, 811A-B.
The learned trial Judge was of the view that the Claimant cannot claim damages because she failed to make full payment of the reserved bid with 5% transaction costs when the right crystallized. Prof. Oditah in disagreeing with the learned trial judge gave some examples which I consider quite apt.
“AB pays a deposit of N5000 towards the purchase of a bag of rice at a contract price of N15,000 per bag and the price rises to N30,000 per bag. Could the seller simply resell the rice for N30, 000 and refund AB his N5, 000 without any further liability in damages for breach of contract because AB had not paid the balance of N10,000 when the time for payment had not arrived? Similarly, if AB contracts with a photographer to cover his wedding and pays a deposit, could the photographer simply fail to turn up and after the wedding refund his deposit and avoid all liability for not turning up? So also if AB paid a deposit for a cab to take him to the airport and the cab fails to turn up because it got a more lucrative assignment elsewhere, as a result of which AB misses his flight and the business he was going to transact. Could the cab driver simply refund his deposit and leave him with his loss because, in each case, the contract was “executory” as opposed to “executed” Surely not. In each of the three examples, on the Lower Court’s approach, the contract breaker – rice seller, photographer and cab driver – has no liability to AB over and above the refund of his deposit and AB has no remedy for the deliberate breach of contract. That is wrong. The refund of AB’s deposit is not a remedy because it is his money. If his deposit is not refunded, he would surely be entitled to damages plus a refund of his deposit.”
The Appellant is undoubtedly entitled to damages. The issue now is the quantum. The rule in Hadley v. Baxendale (1854) 9 Ex. 341 or [1843-60] All E.R. 461 @ 465 is that where two parties made a contract which one of them has broken the damages which the other party ought to receive should be such as may fairly and reasonably be considered as either arising naturally from such breach or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it. Prof Oditah had submitted that the appellant is entitled to damages, measured by the difference between the amount the Appellant contracted to buy the Property from the Respondents and the market value of the property as at the date of the breach. He argued that since the Property was sold to Oystelcom at the time of the breach for the sum of N971,250,000 that the figure must be taken as the market value. He argued that the difference of N591.95 million is the amount of damages due to the Respondent. This reasoning to my mind cannot apply here. The appellant had not actually paid the purchase price.
Notwithstanding the fact that the Respondent had defaulted, if the Appellant had gone ahead to pay the full purchase price and had actually instituted the action before the refund of his deposit, it would have been well positioned to ask for specific performance or in the alternative the kind of damages Prof Oditah is asking for. The breach of the contract by the Respondents gave the appellant a lee way or an excuse for the non performance of its own side of the bargain. The Appellant chose that route and thereby treated the contract as extinguished or at an end. He took back his deposit and thereby absolved itself from performing its own part of the obligation. The contract is extinguished. It is not now possible to go back to that position by claiming damages in the sum of N591.95 million being the difference between the amount the appellant agreed to pay and the market value of the Property when the Respondent is not in possession of the Appellant’s purchase price. Is the court to order the Appellant to now pay the money to the Respondent after all these years? It took the appellant three years after the breach to sue. That to my mind meant the appellant chose to regard the matter as closed. But years after, it changed its mind and decided to sue. The appellant did not plead or lead evidence of any loss. It did not claim any special damage. The presumption is that he suffered none. His claim therefore is for general damages. General damages are such damages as the court may award where it cannot point at any measure to assess the loss caused by the wrong complained of except the opinion and judgment of a reasonable man. It is usual in cases such as this where it was not shown that any loss was suffered as a result of the breach to award nominal damages. See Artra Industries (Nig.) Ltd. v. N.B.C.I. (1988) 4 NWLR (Pt.546) 357; Ogbechie v. Onochie (1988) 1 NWLR (Pt.70) 370 @ 396
In the circumstances, I hold that the Lower Court was wrong in its decision that the Appellant is not entitled to recover damages for the breach of contract. Issue 2 is resolved in favour of the Appellant.
Having resolved issues 1 and 2 in favour of the Appellant, this appeal succeeds and is allowed. The part of the judgment of Dada J of the High Court of Lagos State in Suit No LD/401/2011 delivered on 22nd day of November 2012 dismissing the appellant’s claim for damages for breach of contract is hereby set aside. In its place, judgment is entered for the Appellant in the sum of N20,000,000.00 (twenty million naira) general damages for breach of contract with interest at the rate of 10% from this day until the entire judgment debt is fully paid. Cost assessed at N100,000.00 in favour of the Appellant.
JOSEPH SHAGBAOR IKYEGH, J.C.A.: I had the honour of reading in advance the succinct judgment prepared by my learned brother, Chinwe Eugenia Iyizoba, J. C. A., with which I agree and adopt as my judgment in the appeal pro tanto.
SAMUEL CHUKWUDUMEBI OSEJI, J.C.A.: My Learned brother C. E. Iyizoba JCA has afforded me the opportunity of a preview of the lead judgment just delivered.
Exhaustive consideration was given to the issues raised, the relevant facts and the applicable laws, and as such I have little or nothing useful to add.
I agree with the reasoning and conclusion contained therein to the effect that this appeal has merit. It is accordingly allowed and I also abide by the consequential orders made in the lead judgment including order as to cost.
Appearances
Fidelis Oditah SAN with Kelly Agbonze, Johnson Agwu and Karima BankoleFor Appellant
AND
Rowland Otaru SAN with C. W. Udeh Esq. and M. T. Abiola (Miss)For Respondent
