EL SALEM NIGERIA LIMITED v. MICHAEL ODEH & ANOR
(2018)LCN/12403(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 6th day of March, 2018
CA/A/385/2015
RATIO
CONTRACT: WHEN A CONTRACT IS DISCHARGED
“The doctrine of substantial compliance arose in this case as a result of the demand for perfection fee when the appellant has not fully performed its own part of the agreement. See Phillips Vs Arco Ltd (supra).
A contract is discharged, only when both parties are released from their obligations under the agreement. A contract is usually discharged by performance if both parties have done all that is required of them by express agreement – Achonu Vs Okuwobi (2017) 14 NWLR (part 1584) 142 at 196 paragraphs D – E; Akinyemi Vs Odu’a Investment (2012) 1 SCNJ 127″ PER TANI YUSUF HASSAN, J.C.A.
CONTRACT: BREACH OF CONTRACT
“The law is well settled that if one party to a contract is in breach of its terms, the other party is entitled to bring an action for damages so as to be placed in the same financial position as if the contractual terms had been duly carried out. See Atadley vs Baxendale (1854) 9 Exch and S.B.N. Plc Vs Opanubi (2004) 15 NWLR (part 896) 437.” PER TANI YUSUF HASSAN, J.C.A.
COURT AND PROCEDURE: WHEN AN ACTON IS RAISED SUO MOTO
“In Gbagbarigha Vs Toruemi & Anor (2013) 6 NWLR (part 1350) 289 at 298 – 299 the Supreme Court held that when a Court raises an issue suo motu, the parties should be heard before a decision is reached on the issue. This is what procedural fairness entails. Kuti Vs Balogun (1979) 1 SC 53; Ogiamien Vs Ogiamien (1967) NMLR 246; Adeniji Vs Adeniji (1972) 4 SC 10 were referred to.
The Supreme Court want further to say there would be no need to call on parties to address the Court on an issue raised suo motu by the Court in the following circumstances:
a) When the issue relates to the Court’s own jurisdiction
b) When both parties are not aware of or ignore statute which may have a hearing on the case; or
c) When on the face of the record, serious questions of the fairness of the proceedings is evident. ” PER TANI YUSUF HASSAN, J.C.A.
JUSTICES
ABUBAKAR DATTI YAHAYA Justice of The Court of Appeal of Nigeria
PETER OLABISI IGE Justice of The Court of Appeal of Nigeria
TANI YUSUF HASSAN Justice of The Court of Appeal of Nigeria
Between
EL SALEM NIGERIA LIMITED Appellant(s)
AND
1. MICHAEL ODEH
2. A G HOMES SAVINGS AND LOANS PLC Respondent(s)
TANI YUSUF HASSAN, J.C.A.(Delivering the Leading Judgment):
This appeal is against the judgment of the Federal Capital Territory High Court, Abuja delivered on the 12th day of March, 2015 in Suit No. FCT/HC/CV/1715/13, by Hon. Justice A. O. Otaluka.
The 1st respondent as plaintiff at the lower Court instituted an action against the appellant and 2nd respondent (as defendants therein) claiming from the defendants jointly and severally as follows:
A) An order that the defendants immediately hand over possession of the fully completed Three-bedroom detached Bungalow specifically known as Plot 19, Road D, located at the cooperative City Gardens at Pyakasa (Lugbe) Airport Road Abuja FCT and all the appurtenance thereto.
B) Specific Damages of a sum of NGN2,200,000 (Two million, two hundred thousand naira) only, being rent paid by the plaintiff for an alternative residence and solicitor’s fees arising from the defendants’ breach of contract.
C) General Damages of the sum N1,000,000.00k (One million naira) only for breach of contract.
D)Total costs of this suit being a total sum of N1,000,000.00k (One million naira) only.
E)And such further or other order(s) as this Hon. Court may deem fit to make in this Suit.
The Writ of Summons and Statement of claim of the plaintiff/ 1st Respondent dated 31st January,2013 and filed on 1st February, 2013 is at pages 1-6 of the record. The 1st defendant/2nd respondent’s statement of defence is at pages 47 – 50, and the 2nd defendant/appellant’s statement of defence is reflected at pages 40 – 45.
The facts of the case are that the appellant made a provisional offer to the 1st respondent, for purchase of a three bedroom detached bungalow, at City Garden Pyakasa by a letter dated 4th August, 2010 at a price of N9,900,000.00 (Nine million, nine hundred thousand naira) only. The 1st respondent accepted the offer by a letter of acceptance dated 5th August, 2010 and he made a part payment of N1,600,000. only being 20% down payment of the property and N30,000.00k for Registration fee.
The 1st respondent applied for a loan of N7,920,000.00k from the Federal Mortgage Bank to enable him make a complete payment for the 3 bedroom detached Bungalow. He was granted the facility which was released to the 2nd respondent on his behalf and the 2nd respondent paid to the appellant on 30th of September, 2011 as the balance of the purchase price. That the 1st respondent complied with payments of N1,980,000.00k personal stake, 3.5% for payment of administration, processing and legal charges in the sums of N277,200.00 on 25th July, 2011 and the sums of N250,000.00k and N130,000.00 on 9th and 10th June, 2011 respectively, in compliance with clause 3.1 of the letter of offer.
The 1st respondent having fulfilled the conditions for purchase of the house, the appellant refused to hand over the property to him. Instead the 2nd respondent, the property developer and the transaction partner of the appellant and also the vendor of plot 19, Road D Co-operative City Gardens, Pyakasa Lugbe Airport Road Abuja, subject matter of this Suit requested the 1st respondent to make Further payment of N790,000.00k being fee for perfection of loan facility dated 6th June, 2011 obtained from the Federal Mortgage Bank by the 2nd respondent on behalf of the 1st respondent in the sum of N7,920,000.00k for the purpose of completion of payment of a 3 Bedroom detached Bungalow from El-Salem Nigeria Ltd, the appellant.
The 1st respondent refused to oblige them for failure to comply with their own part of the transaction.
The 1st respondent’s solicitors wrote to the 2nd respondent and the appellant but they did not respond. Hence the institution of the action at the lower Court. The matter went into trial. At the conclusion of trial, judgment was entered in favour of the 1st respondent.
Dissatisfied, the appellant appealed to this Court. The Amended Notice of Appeal dated 27th April, 2016 was filed on 28th April, 2016 and deemed properly filed on 4th of April, 2017.
The Amended Notice of Appeal has nine grounds of appeal with their particulars and reliefs sought.
The grounds of appeal, shorn of their particulars are as follows:
GROUNDS 1
“The learned trial judge erred in law in entertaining the 1st respondent?s claims against the appellant when in the pleadings presented before the Court, no specific allegation was made against the appellant nor any specific relief claimed against it”.
GROUND 2
“The learned trial judge erred in law when he entered judgment against the appellant on the property purchase contract despite having found that the plaintiff failed to satisfy a condition precedent to the performance of the mortgage loan contract.”
GROUND 3
“The learned trial judge misapplied the principle of substantial compliance (performance) even though having found that:
(a) The allocation of the property to the plaintiff/1st respondent would crystallize after the fulfillment of all conditions.
(b) The payment of perfection fee was a condition precedent as stipulated in the mortgage loan contract.
(c) The plaintiff/1st respondent defaulted in the fulfillment of a condition precedent when he refused to pay the perfection fee”.
GROUND 4
“The learned triat judge misdirected himsetf when he read into the agreement of the parties the principle or doctrine of substantial compliance when indeed the parties intended by their agreement that the plaintiff shall satisfy all the conditions in the contract to be entitled to allocation of the property.”
GROUND 5
“The learned trial judge erred in law when he made out a case for the plaintiff different from the case made out by the plaintiff on his pleadings by importing the doctrine of substantial compliance with the contract to enter judgment for the plaintiff?.
GROUND 6
“The learned trial judge violated the appellant’s right to fair hearing when he suo motu raised the issue of substantial compliance with the contract and decided same without affording the parties an opportunity of addressing him on the point before arriving at a decision thereon.”
GROUND 7
“The learned trial judge erred in law when after making a finding of fact that the plaintiff did not satisfy the condition precedent under the contract, still proceeded to award damages against the 2nd defendant for breach of contract.”
GROUNG 8
“The learned trial judge erred in law when he proceeded wrongly to award damages in the sum of N2,000,000.00 (Two million naira) against the appellant as the award is not based on any principle of law and more particularly in the absence of any finding of fact that could justify the said award”.
GROUND 9
The learned trial judge misdirected himself when he held as follows:
“There is no doubt that the plaintiff has suffered a lot of inconveniences as a result of defendant’s breach” which holding swayed the learned trial judge to award damages against the 2nd respondent”.
The appellant’s brief dated 27th April, 2016 was filed on 28th April, 2016 and deemed properly filed on 4th April, 2017. The brief settled by Mrs. B. O. Akinseye – George has four issues distilled for determination as follows:
1. “Whether the learned trial judge rightly entered judgment against the appellant for breach of the property purchase contract when the condition precedent to the mortgage loan contract was not fulfilled” (Grounds 2 and 3).
2. “Whether the learned trial judge was right when he imported the doctrine of substantial compliance into the contracted relationship between the parties when the issue was neither pleaded nor canvassed by any of the parties” (Grounds 4, 5 and 6).
3, “Considering the circumstances of this case, was the learned trial judge correct to have awarded damages against the appellant for breach of contract” (Grounds 7, 8 and 9).
4. “Whether the respondent’s Suit disclosed a cause of action against the appellant” (Ground 1).
The 1st respondent’s brief dated 14th July, 2016 was filed on the 15th of July, 2016 and deemed properly filed on 4th April, 2017. In it two issues were identified as follows:
a) “Whether the trial judge was right to hold that going by the terms of the contract, the defendants failed to perform their part of the contract and therefore were in breach”.
b) “Whether the trial judge was wrong to rely on the principle of substantial compliance”.
The 2nd respondent’s counsel S. Edward indicated to the Court that they do not intend to file a brief. The appellant’s brief dated reply 28th June, 2017, was filed on 7th July, 2017 and deemed properly filed on 15th January, 2018.
After the adoption of briefs by counsel to the appellant and the 1st respondent’s counsel, the appellant’s counsel drew our attention that the two issues formulated by the 1st respondent have no nexus with the grounds of appeal.
It is trite that an issue for determination in an appeal must flow from the grounds of appeal filed. Where any issue for determination in an appeal is not related to or based on a ground or grounds of appeal, it is incompetent, and liable to be struck out.
A respondent who did not file a cross appeal is at liberty to adopt the appellant’s issues or frame his issues, but in so doing, he must confine himself to the appellant’s grounds of appeal. See Opara Vs S.P.D.C.N. Ltd (2015) 14 NWLR (part 1479) 307 at 338 paragraphs C – D; Okechukwu Vs I.N.E.C (2014) 17 NWLR (part 1436) 255 at 287 paragraph C – D and Okere Vs Governor of Oyo State (2012) 12 NWLR (part 1314) 240.
In the instant case both issues one and two raised by the 1st respondent were based on grounds 2, 3, 4 and 5 of the appellant’s grounds of appeal. Both issues are therefore competent.
I shall be guided by the appellant’s issues. I will first consider issue four.
ISSUE FOUR
“Whether the 1st respondent’s suit disclosed a cause of action against the appellant”.
On issue four, the contention of the appellant is that the 1st respondent’s statement of claim at pages 3 – 6 of the record did not make any specific allegation against the appellant. That the 1st respondent has not complained against the appellant of doing or refusing to do any act in relation to the subject matter of the suit.
It is submitted that the 1st respondent’s statement of claim did not disclose any wrongful act committed by the appellant.
The Court was referred to Black’s Law Dictionary, Eighth Edition at page 235 on the definition of ?cause of action? and the cases of Charles Vs Governor of Ondo State (2013) All FWLR (part 688) 982 and Amodu Vs Amode (1990) 5 NWLR (part 150 356 at 367.
Appellant’s counsel finally submitted that this point was not raised at the trial Court by the appellant’s counsel, but this Court is empowered under Section 15 of the Court of Appeal Act to consider the issue and determine same in the appellant’s favour.
In response, it is submitted that the 1st respondent’s pleadings disclosed facts which indicted the appellant. That the action of the appellant is the core reason why the 1st respondent commenced action at the trial Court.
It is finally submitted that the statement of claim of the 1st respondent is justifiable. The Court was referred to Nwaogwugwu Vs President, FRN (2007) 6 NWLR (part 1030) 237 and United Calabar Co. Vs Elder Dempster Lines Ltd (1972) 8 -9 SC 31.
The appellant submitted in its brief that the point raised on cause of action was not canvassed at the lower Court. Since it does not form part of the case argued at the lower Court, the appellant cannot raise it here for the 1st time without the requisite leave of Court having been sought and granted. See Muhammad Vs State (2017) 13 NWLR (part 1583) 386 at 414; Unity Bank Vs Bouari (2008) 2 SCNJ 116; Friday & ors Vs Governor of Ondo State & Anor (2012) LPELR – 7886 and Okafor Vs Effiong (2017) 11 NWLR (part 1527) 519 at 542.
The Supreme Court in Usman Vs State (2014) 12 NWLR (part 1421) 207 at 219 held that when a party wishes to raise fresh issue before an appellate Court, he must first and foremost seek and obtain the leave of that Court to raise and argue the point(s) intended to be raised. Where no leave of the Court is sought and obtained, the fresh point/issue so raised and argued is, in the eyes of the law, incompetent and liable to be struck out. Leave to raise and argue a fresh point/issue is therefore a condition precedent to the competence of the issue and of the Court concerned to entertain and determine same.
In the instant case, the 1st respondent responded to the crucial submission of counsel for the appellant, without taking into consideration the need for the appellant to first seek and obtain leave to argue the issue of cause of action, which was a fresh issue being raised and argued for the first time before the Court of Appeal. The 1st respondent was deemed to have conceded the point being made by the appellant. The law is that with or without an objection by any of the parties, the appellate Court will not consider on appeal any issue that was not raised at the lower Court unless leave to do so has been sought and obtained.
Therefore the appellant’s issue four, being a fresh issue raised without the leave of this Court is incompetent and is liable to be struck out. Issue 4 is accordingly struck out, along with ground 1 of the appeal.
ISSUE ONE
“Whether the learned trial judge rightly entered judgment against the appellant for breach of the property purchase contract when the condition precedent to the mortgage loan contract was not fulfilled”.
In his submission, learned counsel for the appellant submitted that where parties entered into a contract voluntarily, they are bound by the terms freely entered into.
The Court was referred to Attorney General of Rivers Vs Attorney General of Akwa Ibom & Anor (20O5) 15 NWLR (part 947) 71; Arjay Vs Airline Management Support Ltd (2003) FWLR (part 156) 943 at 990 and C.B.N Vs Igwillo (2007) All FWLR (part 379) 1385 at 1391.
That the 1st respondent’s entitlement to possession of the property from the 2nd respondent is upon the fulfillment by the 1st respondent of the terms comprised in the letter of offer for the loan facility dated the 6th of June, 2011. Learned counsel for the appellant referred to page 101 of the record where the 1st respondent, under cross examination admitted failing to pay the perfection fee.
Also referred is the judgment of the trial Court at page 131 of the record held thus:
“The parties agreed that, at the fulfillment of the conditions, the plaintiff would be allocated a three bedroom detached Bungalow at plot 19 Rd, DEI Salem Corporative City Garden Pyakasa (Lugbe) Estate Abuja”.
The appellant argued that the property purchase contract and the mortgage loan contract are two indivisible contracts that are not severable from each other, because the intention of the parties as could be garned from the transactions is that both contracts are to be treated as one and not separable. The case of Phillips Vs Arco Ltd (Pharmaco Biological Institute) (1971) N.S.C. (Vol. 7) 304 at 311 lines 28 -33 was referred to.
That the non – fulfillment of the conditions of the mortgage loan contract is and automatically translates to the loss of right on the part of the 1st respondent to enforce both the mortgage loan contract and the property purchase contract.
Relying on the case of Phillips Vs Arco Ltd (supra), it is submitted that the doctrine of substantial compliance relied upon by the learned trial judge is not applicable where a fundamental term or condition precedent to the contract has not been complied with.
The Court was referred to William R. Anson in Principles of the Law of Contract at 422 (Arthur L. Corbin ed. 3d Am. Ed 1919) quoted by the learned authors of the Black’s Law Dictionary, Eighth Edition at page 1470.
It is finally submitted for the appellant that failure of the 1st respondent to pay the perfection fee which is a condition precedent to the appellant and the 2nd respondent to hand over the property to the 1st respondent, the non compliance ought to exculpate the appellant from any liability on the property purchase contract.
That it is trite, a party seeking to enforce a contract must show that he has performed all those terms which ought to have been performed by him. The Court was referred to Beta Glass Plc Vs Epaco Holding Ltd (2011) All FWLR (part 579) 1173 at 1193 paragraph H and urged to be resolved in favour of the appellant.
Responding, it is the submission of the 1st respondent that the appellant prevented the 1st respondent from completing the performance of the contract on his own part, for failure of the appellant to complete the property and handover same to the 1st respondent.
Learned counsel for the 1st respondent referred to the observation of the trial Court in its judgment at page 135 of the record after a visit to the locus in quo.
The argument of the 1st respondent is that the delivery of a complete three bedroom bungalow will necessitate the payment of the perfection fee. But the bungalow was never completed, nor handed over to the 1st respondent. That the understanding between the 1st and 2nd respondents is that the 1st respondent was to pay a perfection fee for the perfection of a completed bungalow.
The Court was referred to Help (Nig.) Ltd Vs Silver Anchor Nig. Ltd. (2006) 5 NWLR (part 972) 196 at 203; Adeniran Vs Olagunju (2001) 17 NWLR (part 741) 169; and Agrovet Sincho Pharm Ltd Vs Estate of Engr. Dahiru (2013) LPELR 20364.
That it is not the payment of the perfection fee that is relevant but the effect of the non compliance on the overall result of the agreement between the Appellant and the 1st and 2nd respondents.
Submitting further, that the 1st respondent who had committed considerable funds for the contract cannot be said to lack preparedness to perform his obligation. Rather it was the failure on the part of the appellant despite demands and reminders, who refused and neglected to complete the performance of the contract. That performance of the contract on the part of the appellant was of essence to the 1st respondent’s obligation.
Learned counsel for the 1st respondent contended that the offer for the three Bedroom Bungalow was made in August 2, 2010 and the 1st respondent commenced payment by June 6, 2011.
After the full payment of the purchase price for the Bungalow, the property was not handed over to the 1st respondent.
That the trial judge was right in his analogy of time within which the contract ought to be performed.
Relying on the case of FGN Vs Zebra Energy Ltd (2002) 18 NWLR (part 798) 162 SC, it is submitted that where time is of the essence of a contract, the party who set a new time within which the contract can be performed is deemed to have accepted the contract. The Court was also referred to the judgment of the trial Court at page 135 and 136 of the record. It is finally submitted for the 1st respondent on this issue that it is not the bungalow that is to be perfected but the loan. That there was nothing in the purchase contract relating to any perfection fees owing and payable by the 1st respondent to the appellant.
The Court is urged to resolve in favour of the 1st respondent. The submission of the appellant’s counsel on this issue is that the 1st respondent’s entitlement to possession of the property is upon the fulfillment by the 1st respondent of the terms comprised in the letter of offer for the loan facility dated the 6th of June, 2011.
It will not be out of place to reproduce the letter of offer for the loan facility dated June 6, 2011. It reads:
AG Homes
Savings & Loans Plc
Plot 266, Cadastral A. O
Central Business District
Abuja
June 6, 2011
Micheal Odeh
6B Marachi Street Off,
Kumasi Crescent Wuse II
Abuja
Dear Sir,
OFFER OF N7,920,000.00 NHF MORTGAGE LOAN
We are pleased to inform you that AG Homes Savings & Loans Plc successfully secured on your behalf a loan facility of N7,920,000,00 from the Federal Mortgage Bank of Nigeria under the National Housing Fund Loan Scheme (in our Batch 13) which we offer you as follows:
LENDER: AG HOMES SAVINGS & LOANS PLC
BORROWER: MICHEAL ODEH
FACILITY: NHF MORTGAGE LOAN
LOAN AMOUNT: N7,920,000.00
EFFECTIVE DATE: JUNE 6, 2011
PURPOSE: To pay for a 3 Bedroom Detached Bungalow at El-Salem Cooperative city
Garden Estate.
TENOR: 22 years
INTEREST RATE: (ANNUAL) 6%
MONTHLY REPAYMENT: N54,099.50
SECURITY: 3 BEDROOM DETACHED BUNGALOW.
PRICE: N9,900,000.00
VENDOR: EL SALEM NIGERIA LIMITED
NHF LOAN AMOUNT: N7,920,000.00
PERSONAL STAKE: N1,980,000.00
INITIAL DEPOSIT TO VENDOR: N1,980,000.00
AMOUNT DUE TO VENDOR: N7,920.000,00
BALANCE TO VENDOR: N7,920,000.00
STAMP DUTIES, REGISTRATION, and all costs incidental to the perfection of the Bank’s interest and recovery of principal sum and interests due thereon shall be borne by the borrower.
2. OTHER CONDITIONS:
2.1 You are to domicile your salary account with AG Homes through the duration of this loan or give a standing order to your bankers for a direct debit and remittance to AG Homes Saving & Loans Plc on monthly basis.
2.2 You are to make a bulk cash payment of your first 12 months repayment into your personal stake account.
2.3 You shall maintain a minimum balance of value up to four (4) months repayment (principal and interest) in your salary account with AG Homes throughout the duration of the loan.
2.4 The bank has arranged a mortgage protection insurance policy against fire and natural hazards at your expense, payable monthly over the property with the interest of AG Homes Savings & Loans Plc noted thereon.
2.5 You are to write a letter authorizing the vendor ? El Salem Nigeria Ltd to forward all title documents to AG Homes Savings & Loans Plc as collateral.
3. DISBURSMENT
3.1 Disbursement for the purchase shall be made to the vendor, in accordance with the agreed payment terms for the property. This shall consist of the loan approved by FMBN, and the shortfall if any (comprising your personal stake).
Note that the keys to the bungalow shall be delivered to you upon satisfaction of conditions precedent and payment of you personal stake.
4. REPAYMENT
1. The loan is repayable over a period of 22 years at 6% interest per annum on reducing balance annuity basis also your monthly repayment (principal plus interest on the loan shall be N54,099,50)
2. Monthly repayment shall be by cash/bank draft or direct debit to your salary account.
3. The repayment of loan before maturity is permitted.
EVENT OF DEFAULT
1. The Bank will be authorized to convert the collateral (that is sell the property) if and only if any of the under-listed conditions occurs:
* Your inability to service the loan in four (4) consecutive months.
* Your default in making principal and interest repayment for six (6) months within a year.
* Every month you fail to make your repayment, you shall be charged 10% of your monthly repayment as default charge.
* If an encumbrance takes possession or a receiver is appointed over all or any part of the borrower?s property.
* There will be 2 notices to defaulters, and thereafter recovery of the property within 30 days.
* You will bear the cost associated with the loan recovery process.
ACCEPTANCE OF THE OFFER
5. This offer will lapse if it is not accepted within 14 days starting from the date of receipt of the offer.
6. On acceptance, a 3.5% processing, administrative and legal fees must be paid to AG Homes Savings & Loans Plc for processing to begin.
ADMIN. CHARGES:
1.5% of the approved loan amount (N118,800.00)
PROCESSING FEE: 1% of the approved loan amount (N79,020.00)
LEGAL CHARGES: 1% of the approved loan amount (N79,020.00)
The offer of loan facility is Exhibit “D” at page 16 of the record of appeal. The letter of offer (provisional) for purchase of 3 Bedroom Detached Bungalow is Exhibit “A” at page 12 of the record it also reads:
“El-Salem Nigeria Ltd.
Home Ownership & Real
Estate Investment Consultant
August 4, 2010.
Micheal Odeh,
Unity Bank Plc,
Plot 785 Herbert Macaulay Way,
CBD,
Abuja
Dear Sir,
OFFER (PROVISIONAL) FOR PURCHASE OF 3 BEDROOM DETACHED BUNGALOW IN CO-OPERATIVE CITY GARDENS AT PYAKASA (LUGBE) AIRPORT ROAD. ABUJA, Following the application for a House unit at our Cooperative City Garden at Pyakasa (Lugbe) Airport, FCT
Abuja, we are pleased to offer to you Three (3) Bedroom Detached Bungalow Plot 79, Road D upon the following terms and conditions:
The financial implications of this offer are as follows: Disposal price of the House – N9,900,000.00 (Nine million, nine hundred thousand naira, only). In addition to the above, please note that: our offer is net of taxes, fees and statutory charges.
All relevant conditions requisite to transfer of title by the FCDA applies:
1. All allottees shall be required to pay service charges for the maintenance of common facilities and infrastructures to put the Estate in the state to command its value.
The appropriate amount shall be determined at a later stage.
2. A copy of the condition of sale shall be issued upon full payment and shall form integral part of this offer.
3. Please note that this offer is not transferable, Other terms and conditions of this offer shall be embedded in the subsequent offer/Allocation letter to be issued to you after payment. We look forward to hearing from you shortly.
Yours faithfully
For: EI. SALEM NIGERIA LIMITED
BEN OBADE OJO
FOR MANAGING DIRECTOR
The 1st respondent accepted the offer for 3 Bedroom Detached Bungalow in the EL-Salem Cooperative City Garden Estate at Pyakasa (Lugbe) Airport Road, Abuja on the 5th day of August, 2010. The letter of acceptance of offer is Exhibit “B” at page 14 of the record.
The five important ingredients that must be present in a valid contract are as follows:
1. Offer, (2) Acceptance, (3) Consideration, (4) Intention to create legal relationship and (5) Capacity to contract. All these ingredients must be present for a contract to be valid in law. SeeAkinyemi Vs Odu’a Investment (2012) 1 SCNJ 127; Ojo Vs ABT Associatees Incorp (2017) 9 NWLR (part 1570) 167 at 171; Enemchukwu Vs Okoye (2017) 6 NWLR (part 1560) 37 at 41 and West African Offshore Ltd Vs Ariri (2015) 18 NWLR (part 1490 177.
The Black’s Law Dictionary Eighth Edition defines a valid or binding contract to mean “an agreement between two or more parties creating obligations that are enforceable or otherwise recognized at law?.
To determine whether the parties have reached agreement is to ask whether an offer has been made by one party and accepted by the other. There is no dispute as to the fact that the 1st respondent had accepted the offer made to him by the appellant as evidenced by Exhibit “B”. He is therefore bound by the terms as spelt out by Exhibit “A”, the letter of offer.
The contention of the appellant is that payment of a perfection fee is a condition precedent to the delivery of possession to the 1st respondent. That the trial Court was therefore wrong to have found for the 1st respondent when he has failed to fulfill the condition precedent for payment of perfection fee in the sum of N790,000.00 of the loan facility.
Looking at the offer letter and offer of facility loan reproduced above, there is nothing indicating payment of perfection fee in the sum of N790,000.00, therein.
There is also nothing to indicate as found by the trial Court, that the 1st respondent did agree to the payment of the perfection fee. If the parties intended the payment of the perfection fee to be part of the contract, it ought to have been so stated in the terms of contract or in the offer of loan facility. But there is nothing suggesting payment of perfection fee in the offer letter of the loan facility as contemplated by the appellant and the 2nd respondent.
It is the letter of 10th October, 2011 from the 2nd respondent to the 1st respondent that demanded the payment of N792,000.00 (Seven hundred and ninety two thousand) being 10% of the total loan amount to the 1st respondent, as a condition precedent to further steps in respect of the facility.
One may ask, which further steps are required? I say this because the facility was granted to the 1st respondent on 6th June, 2011 by the 2nd respondent.
The 1st respondent in paragraph 9 of his statement of claim at page 4 of the record deposed:
“The plaintiff avers that on the 1st of September,2011, the Federal Mortgage Bank released the loan sum of NGN7,920,000.00 to the 1st Defendant on his behalf and the 1st Defendant paid same to the 2nd Defendant on the 30th of September, 2011 for the specific purpose of payment for the subject matter property on behalf of the plaintiff Exhibit ?E? further refers”.
This fact was not denied by the appellant and 2nd respondent. The 2nd respondent admitted this fact in paragraph 4 of its statement of defence at page 47 of the record. The appellant also admitted in paragraph 2 of its statement of defence, that the 1st respondent has paid for the property.
In addition, it is the evidence of the 1st respondent at page 96 of the record that he made 20% down payment in the sum of N1,600,000.00 for the 3 bedroom bungalow to the appellant. The receipt of payment is exhibit “C” at page 15 of the record. He paid the sum of N30,000.00 as registration fee, exhibit “c2”. The 1st respondent made part payment of N250,000.00 to the appellant for the property on 9/6/2011 and made a final payment in the sum of N130,000.00 to the appellant on 10/6/2011 in addition to the loan facility of N7,920,000.00 paid by 2nd respondent to appellant on behalf of 1st respondent. The 1st respondent also paid a personal stake charge in the sum of N1,990,000.00.
By exhibit “D” the letter of offer of the loan facility, the 1st respondent has complied with the conditions therein. As at the 10th of June, 2011, the 1st respondent had paid fully for the property.
In the letter of provisional offer, it is stated thus:
“Other terms and conditions of this offer shall be embedded in the subsequent offer/Allocation letter to be issued to you after payment”.
However from the evidence on record there is no subsequent allocation letter issued to the 1st respondent despite payment. Also clause 3.1 of the offer of loan facility reads:
“Note that the keys to the bungalow shall be delivered to you upon satisfaction of the condition precedent and payment of your personal stake”.
The keys have not been delivered to the 1st respondent despite payment for the property and payment of personal stake and other charge by the 1st respondent. The trial Court therefore rightly entered judgment against the appellant, for failure of the appellant to comply with its own part of the contract. Issue one is resolved against the appellant.
ISSUE TWO
“Whether the learned trial judge was right when he imported the doctrine of substantial compliance into the contractual relationship between the parties when the issue was neither pleaded nor conversed by the parties”.
The appellant contended on this issue that, in interpreting the relationship of parties to a written agreement, Courts have been enjoined to confine themselves to the plain words which are derivable from the rights and obligations of parties under such agreements. Referring to Gov. of Ekiti State vs Ojo (2006) 17 NWLR (part 1007) 95 at 120 and Abalogu vs S.P.D.C Ltd (2003) 13 NWLR (part 387) 308.
Relying on the case of Afrilec Ltd vs Charles Lee (2013) All FWLR (part 699) 1178 at 1190, it is submitted that the Court is only limited to interpreting the contract of parties the way it is written and not to re-write or introduce strange terms therein.
That the parties intended that the fulfillment of all conditions (especially the conditions precedent) shall be at the heart of their contractual relations and not otherwise.
That the learned trial judge contrary to settled principles of law, imported in his judgment the principle of doctrine of substantial compliance into the contract of the parties when he held the appellant liable for breach of contract on the basis of 95% compliance on the part of the 1st respondent even when the condition precedent of payment of perfection fees has been left unperformed. It is the submission of the appellant that the trial judge descended into arena of dispute when he entered judgment in favour of the 1st respondent on the basis of substantial compliance with the loan contract while the 1st respondent in his pleadings did not establish his case on substantial compliance.
Relying on the case of Muniyas (Nig.) Ltd Vs Ashafa (2012) All FWLR (pat 642) 1-772 at 1786 paragraphs F – G, it is submitted that the Court is bound by the pleadings of the parties before it, and has no jurisdiction to polish, embellish or dress up the case of the party. The appellant argued that the judgment of the trial Court in favour of the 1st respondent on the basis of substantial compliance with the contract is not supportable in law and it is speculative.
That the learned trial judge raised the issue of substantial compliance suo motu and decided same without affording the parties an opportunity of addressing on it, which occasioned a miscarriage of justice to the appellant. The cases of Abaye Vs Ofiti (1986) 1 NWLR (part 15) 134 at 147 paragraph H; Lawal Vs Attorney General of Kwara State (2012) All FWLR (part 618) 958 at 987 – 988 and Phillips vs Arco Ltd pharmaco Biological Institute (supra) among others were referred to.
The Court is urged to resolve in favour of the appellant.
On its part, the 1st respondent contended that the principle of substantial compliance is a discretionary judicial remedy. It is exercised based on the existence of a valid enforceable contract. That a person who has performed his obligation substantially may, in a proper case rely on the doctrine of substantial compliance.
The 1st respondent argued that he had executed his own part of the agreement, but the appellant has failed to deliver a complete 3 bedroom bungalow to him which is a breach of the terms of agreement between the parties.
The Court was referred to MTN NIGERIA COMMUNICATIONS LTD VS BABAYODE (2014) LPELR – 23520; Omoju Vs F.R.N. (2008) 7 NWLR (part 1085) 38 and Ekwere Vs The State (1981) 9 SC 79 among others.
On the submission of the appellant that the trial Court raised the issue of substantial compliance suo motu, learned counsel for the 1st respondent, argued that the trial Court merely applied the law to the facts of the case after the visit to the locus in quo and arrived at the decision that the 1st respondent complied substantially while the appellant did not comply with the terms of the contract.
We are urged to resolve in favour of the 1st respondent against the appellant.
It is not in contention that the agreement between the appellant, the 2nd respondent and the 1st respondent in respect of the property, was that upon satisfaction of the condition precedent, the keys to the property shall be handed over to the 1st respondent.
It is evidence on record and indeed it was not disputed that the 1st respondent has fully paid the sum of N9,900,000.00 (Nine million, nine hundred thousand naira) to the appellant for the property as agreed by the appellant and the 1st respondent. All other payment of charges as contained in Exhibit ‘D’ the loan facility offer has been compiled by the 1st respondent. The only issue in contention is the perfection fee claimed by the 2nd respondent. It is clear that material terms of the contract were met by the 1st respondent.
However the appellant failed on its part to deliver the property to the 1st respondent, which is a breach as a fundamental term of the contract has not been complied with. For, without lawful excuse the appellant failed, neglected or refused to perform its obligation as undertaken by it.
The contention of the appellant on this issue is that the trial Court suo motu imported the doctrine of substantial performance without affording the parties opportunity to address the Court on it. The Supreme Court in the case of Phillips vs Arco Ltd (supra) held that the doctrine of substantial performance arises whether infact, the contract concerned was an entire contract or not. It is usually the party who has not fully performed an agreement who seeks part payment example as in building or other works.
What is substantial performance will therefore depend on the nature of the contract and all the circumstances. where the performance is abandoned, it is clearly a case of substantial non compliance and the contractor may recover nothing.
In the instant case, the appellant having failed in the performance of contract on its part, is claiming for perfection fee from the 1st respondent which the 1st respondent refused to oblige it, for failure to deliver the property to him, as agreed.
The trial Court, on its visit to the locus in quo with the parties, observed in its judgment at page 135 of the record with regard to the 3 bedroom bungalow thus:
1) There was no ceiling board fixed.
2) There were no doors and window fixtures in all the rooms.
3) There were no tiles on the floors.
4) There were no plumbing works done
5) There were no electrical fittings.
6) There was no suck away pit installed.
That, what was on the ground was a block of house with roof and nothing more. The parties did not dispute that the said house was uncompleted as at the 9th of October, 2014, that is three years after the payment for the house by the 1st respondent.
It is obvious that the appellant failed to perform its own part of the contract conditions to effect the allocation of a completed house to the 1st respondent as agreed by the parties.
The appellant argument that upon payment of the perfection fee by the 1st respondent, the property will be delivered to him will not be possible from what was observed on visit to locus inquo.
The submission of the appellant that the doctrine of substantial compliance was imported by the trial Court cannot be correct in view of the circumstances of the case and the act of non performance by the appellant.
The doctrine of substantial compliance arose in this case as a result of the demand for perfection fee when the appellant has not fully performed its own part of the agreement. See Phillips Vs Arco Ltd (supra).
A contract is discharged, only when both parties are released from their obligations under the agreement. A contract is usually discharged by performance if both parties have done all that is required of them by express agreement – Achonu Vs Okuwobi (2017) 14 NWLR (part 1584) 142 at 196 paragraphs D – E; Akinyemi Vs Odu’a Investment (2012) 1 SCNJ 127.
This the appellant has failed to do.
In Gbagbarigha Vs Toruemi & Anor (2013) 6 NWLR (part 1350) 289 at 298 – 299 the Supreme Court held that when a Court raises an issue suo motu, the parties should be heard before a decision is reached on the issue. This is what procedural fairness entails. Kuti Vs Balogun (1979) 1 SC 53; Ogiamien Vs Ogiamien (1967) NMLR 246; Adeniji Vs Adeniji (1972) 4 SC 10 were referred to.
The Supreme Court want further to say there would be no need to call on parties to address the Court on an issue raised suo motu by the Court in the following circumstances:
a) When the issue relates to the Court’s own jurisdiction
b) When both parties are not aware of or ignore statute which may have a hearing on the case; or
c) When on the face of the record, serious questions of the fairness of the proceedings is evident.
The 1st respondent’s argument in response to the appellant’s submission that the trial Court raised the issues of substantial compliance suo motu, was that the Court merely applied the law to the facts of the case after the visit to the locus in quo to arrive at its decision that the 1st respondent complied substantially with the terms of contract.
I agree with the 1st respondent. The issue here relates to fairness of the case as evident in the record of proceedings.
The trial Court was therefore correct to take into consideration the circumstance of the case with regard to the evidence adduced before it and its observation and its visit to the locus in quo. There was no need therefore for the learned trial judge to call on counsel to address him. Justice demands fairness in adjudication. Since the issue of substantial compliance raised suo motu by the judge without affording counsel a hearing has not occasioned a miscarriage of justice, the decision will not be set aside.
It is my view that the trial Court was right in his conclusion on this point.
The attitude of the Courts is presently geared towards achieving substantial justice and shunning technicalities. See Asims (Nig.) Ltd Vs I. B. R. B. Dev. Auth. (2002) 8 NWLR (part 769) 349 at 357; MTN Nig. Communications Ltd Vs Babayode (2014) LPELR 23520.
Issue two is resolved against the appellant.
ISSUE THREE
“Considering the circumstance of this case, was the learned trial judge correct to have awarded damages against the appellant for breach of contract?
The appellant in contending that the 1st respondent is not entitled to damages for breach of contract for failure to fulfill the condition precedent to the loan facility contract, referred to paragraph 9 at page 8 of the record of appeal where the 1st respondent in his witness statement on oath admitted he did not pay the perfection fee. The cases of Haido Vs Usman (2003) FWLR (part 166) 658 – 659; Babington – Ashaye Vs. E. M. A. Gen. Enterprises (Nig.) Ltd (2012) All FWLR (part 645) 256 at 288, were referred to.
That the 1st respondent did not suffer any loss that was natural or a direct flow from the appellant’s non delivery of the property, the subject matter of the property purchase. Relying on the cases of Nigerian Merchant Bank Plc Vs Gerba (2013) All FWLR (part 688) 1004 at 1015 and Swis – Nigerian Wood Industries Ltd Vs Bogo (1971) 1 U1LR 337 and Agbaje Vs National Motors (1961) 1 U1LR 199, it is submitted that a plaintiff in an action for breach of contract is only entitled to damages naturally from the breach.
That the 1st respondent’s accommodation expenses or any other pecuniary loss allegedly suffered cannot by a logical consideration of the facts to be construed as a direct or natural consequence of the alleged breach of the property purchase contract as to entitle the 1st respondent to damages.
Learned counsel for the appellant contended that the award of N2,000,000.00 (Two million naira) by the trial Court is speculative as there was no specific finding in his judgment on the basis of the award. He relied on the cases of Chitex Industries Ltd vs Oceanic Bank International (Nig.) Ltd (2005) All FWLR (part 276) 610 at 629 and Boye Industries Ltd Vs Sowemimo (2010) All FWLR (part 521) 1462 at 1495 and Onwuralu Vs Uche (2010) 2 NWLR (part 1179) 582 at 608 and urged us to resolve in favour of the appellant.
The 1st respondent on his part submitted that once a breach of contract is established, damages flow. That the award of damages in the sum of N2,000,000.00 (Two million naira) to the 1st respondent is adequate for the loss or inconvenience, which flows naturally from the acts of the appellant. The Court was referred to Obmiami Brick & Stone (Nigeria) Ltd vs ACB Ltd (1992) NWLR (part 229) 260; MTN COMMUNTCATION LTD VS AMADI (2012) LPELR 21276; OSUJI vs ISIOCHA (1989) 3 NWLR (part 111) 623 and Wahabi vs Omonuwa (1976) LPELR 3469 (SC) amongst others. We are urged to resolve in favour of the 1st respondent. The appellant’s reply brief was on the incompetence of the two issues formulated by the 1st respondent to which the appellant canvassed argument therein. In any case the issue of incompetence of the 1st respondent’s brief has been taken over by event same having been resolved.
The Supreme Court in the case of G. E. Int’l Operations (Nig.) Ltd Vs Q-oil & Gas Services Ltd (2016) 10 NWLR (part 1520) 304 at 308 held that the principle of assessment of damages for breach of contract is “restitution in integrum”, that is, the plaintiff in so far as money can do it, shall be restored into the position in which he would have been, if the breach did not occur. See also Umuoetuk Vs Union Bank Plc (2002) 3 NWLR (part 755) 647, Shell BP Vs Jammal Engineering Ltd. (1974) 4 SC 33 AND Fairgreen Ltd Vs Bees Co. Ltd (2017) 10 NWLR (part 1573) 233 at 236.
In the instant case, the 2nd and 3rd reliefs sought by the respondent were for specific and general damages respectively.
The claim for specific damages failed, and the award of damages for breach of contract was granted in the sum N2,000,000.00 (Two million naira) only.
The law is well settled that if one party to a contract is in breach of its terms, the other party is entitled to bring an action for damages so as to be placed in the same financial position as if the contractual terms had been duly carried out. See Atadley vs Baxendale (1854) 9 Exch and S.B.N. Plc Vs Opanubi (2004) 15 NWLR (part 896) 437.
The relevant portion of the judgment of the Court below on the award of damages is hereunder reproduced:
“I have considered the nature of the contract terms and entire transaction and ended up with these findings:
1) Offer was made on 4th August, 2010.
2) Acceptance was made on 5th August, 2010.
3) Payment of registration fee was made on 5th August 2010.
4) Payment of personal stake of N1,980,000 was made.
5) Payment of 3.5% processing fee of N277,200 was made on 25/7/2011.
6) Payment of NHF Loan of N7,920,000 was made on 30th September, 2011.
It is obvious that the plaintiff has fulfilled over 95% of the contract conditions by September, 2011 and up till now 9th October, 2014, the house in question is uncompleted. Defendants are in serious breach and failure without any legal excuse to perform the terms of the contract. The unequivocal distinct and absolute refusal of the defendants to act on their promise contravene the contractual rights of the plaintiff and this would attract some damages. There is no doubt that the plaintiff has suffered a lot of inconveniences as a result of the defendant’s breach”.
In addition, the 1st respondent made payment of N1,600,000.00 being 20% down payment for the property.
In my view and based on the facts, the 1st respondent is entitled to damages to restore him to the position he would have been if there was no breach of the contract.
Paragraph 19 of the 1st respondent’s statement of claim at page 5 of the record is to the effect that as a result of the appellant’s refusal to hand over the property to him, he was forced to continue paying rent on an alternate residence from 14th April, 2012 till date. In the circumstance, the appellant is entitled to recover damages for the breach of contract.
If the appellant had not failed in the discharge of its obligation, the 1st respondent would not have been paying rent, for an alternate residence.
The award of damages is ordinarily within the discretion of a trial Court and the appellate Court would be reluctant to interfere except where the trial Court acted on a wrong principle of law or under a mistake of law or where the award is unreasonably high or unreasonably low. SeeF.C.D.A vs MTN Nig. comm. Ltd (2017) 10 NWLR (part 1175) 21.7 at 221 and Kotun Vs Olasewere (2010) 1 NWLR (part 1175) 411.
In the instant case, it is my opinion that the award of N2,000,000.00 damages awarded to the 1st respondent by the trial Court is reasonable. The trial Court was right in its decision that the 1st respondent is entitled to recover damages for the breach of contract.
Issue three is also resolved against the appellant. Having resolved all issues against the appellant, the appeal lacks merit and it is dismissed. The judgment of the trial Court delivered on 12th day of March, 2015 in suit No. FCT/HC/CV/1715/13 is hereby affirmed.
Costs of N50,000.00k for the 1st respondent against the appellant.
ABUBAKAR DATTI YAHAYA, J.C.A.: I have read in advance, the leading judgment of my learned brother Hassan JCA, just delivered. I entirely agree, that the appellant led the 1st respondent to expend money to execute his own part of the agreement, but the appellant failed without justifiable excuse, to honour the agreement by delivering a complete 3 bedroom bungalow. This was a substantial breach of the agreement which led the 1st respondent to cough out more money to rent a residence. He was entitled therefore, to recover damages for the breach of the contractual agreement.
In the circumstances of this case, the quantum of damages granted by the trial Court cannot be faulted in any way, as it did not proceed on the wrong principles of law and has not been unreasonable in any way. We cannot substitute same in a whip of sentiments. I therefore also dismiss the appeal as lacking in merit and I affirm the judgment of the trial Court. I abide by the Order as to costs.
PETER OLABISI IGE, J.C.A.: I agree.
Appearances:
Mrs. B. O. Akinseye – George with him, Chiamaka Anyaba, Vincent AdodoFor Appellant(s)
D. O. Ademoke – for 1st Respondent
S. Edward with him, E. Enezuo- for 2nd RespondentFor Respondent(s)
