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HYDRO HOTOLES LTD & ANOR v. AMCON (2020)

HYDRO HOTOLES LTD & ANOR v. AMCON

(2020)LCN/14294(CA)

In The Court Of Appeal

(ABUJA JUDICIAL DIVISION)

On Friday, June 05, 2020

CA/A/78/2018

Before Our Lordships:

Abubakar Datti Yahaya Justice of the Court of Appeal

Habeeb Adewale Olumuyiwa Abiru Justice of the Court of Appeal

Amina Audi Wambai Justice of the Court of Appeal

Between

1.HYDRO HOTOLES LTD. 2. ALH. ISAH MOHAMMED LADAN APPELANT(S)

And

ASSET MANAGEMENT CORPORATION OF NIGERIA (AMCON) RESPONDENT(S)

RATIO

STATUTE OF LIMITATION FOR SIMPLE CONTRACTS

The Section 19 of the said law provides:
“No action founded on contract, tort, or any other action not specifically provided for in parts 1 and 111 of this law shall be brought after the expiration of six years from the date on which the cause of action accrued.”
The requirement and purport of this provision is that an action founded on contract (as the present one) or on tort, or any other action not specifically provided for in parts 1 and 111 of the law, to be competent, must be commenced before the expiration of six years from the date on which the cause of action accrued or arose, otherwise the action will be statute barred and incompetent, and no proceedings can validly be instituted to enforce the right. See EGBE VS. ADEFARASIN (1987)1 NWLR (PT 47)11 EBOIGBE VS. NNPC (1994) 5 NWLR (PT. 347) 649, ASABORO VS. POOC (NIG) LTD (2017) ALL FWLR (PT. 884) 1696 @ 1724-INAKOJU VS. ADELEKE (2007) 4 NWLR (PT1025) 423, AMADI VS. N.N.P.C. (2000)6 SC (PT1)66.
The period of limitation simply put, is that period of time after the accrual of a cause of action during which legal proceedings can be brought by a competent party because the period laid down by the Limitation Law or Act has not lapsed. Conversely, an action brought or instituted after the expiration of the limitation period will be statute barred because the period prescribed by the limitation law has lapsed. In other words, an action not commenced within the specified period when the cause of action accrued becomes incompetent. See ADIGUN V AYINDE (1993)8 NWLR (PT. 313) 516, OBIEFUNA V OKOYE (1961) ALL N.L. R.357. PER WAMBAI, J.C.A.

WHEN A CAUSE OF ACTION  ACCRUES

A cause of action thus accrues when the event giving rise to the Plaintiff’s grouse occurs. See MATANMI VS. GOVERNOR OGUN STATE (2004) 5 NWLR (PT.866) 255: NNPC VS. SELE (2005) 5 NWLR (PT.866) 379.
It stands to reason that there cannot be a cause of action before the occurrence of the event or default on the part of the defendant which gives the plaintiff a right of complaint. Put more succinctly, there cannot be a cause of action without a default, neglect or wrong on the part of the defendant and a resultant damage which gives the plaintiff a recognizable right of complaint. See UWAZURUONYE VS. GOV. IMO STATE (supra).
In determining whether and when a cause of action arises, the Court looks at the averments of the plaintiff in his statement of claim to find out when the cause of action arose, and the writ of summons to find out the date when the suit was filed. U.B.N.PLC VS. UMEODUAGU (2004)13 NWLR (PT. 890)365 PARA C – C, MBU V STANBIC I.B.T.C (supra).
The Respondent’s claim before the lower Court as revealed from the pleadings is one for the recovery of debt. In a claim for recovery of debt as in the case at hand, the general law as rightly submitted by the learned Counsel for the Respondents, is that the cause of action accrues when a demand is made and the debtor refuses to pay. See ISHOLA VS. SOCIETE GENERALE BANK (NIG) LTD (1997) 1547 (SC); VICTOR VS. U.B.A. (2007) LPELR – 9043 (CA), OKONTA & ANOR. VS. EGBUNA (2013) LPELR 21253 (CA). PER WAMBAI, J.C.A.

WHETHER R NOT A MERE DEPOSIT OF OF TITLE DEEDS WITH THE MORTGAGEE WITH THE INTENTION OF CREATING A LEGAL MORTGAGE, CREATES AN EQUITABLE MORTGAGE

Recalling the trite state of the law that a mere deposit of title deeds with the mortgagee with the intention of creating a legal mortgage even without a word creates an equitable mortgage. An equitable mortgage unlike a legal mortgage, needs not to be specifically pleaded to be created and or be enforceable. SeeHYDRO-TECH (NIG) LTD & ANR VS. LEADWAY ASSURANCE CO. LTD & ORS (2016) LPELR 40146 (CA). Therefore, the fact that legal mortgage was pleaded but the established facts create an equitable mortgage does not defeat the operation of the law merely because an equitable mortgage was not specifically pleaded. After all, an equitable mortgage, this Court has pronounced through Oredola JCA in the case of HYDRO – TECH (NIG) LTD & ANR VS. LEADWAY ASSURANCE CO. LTD & ORS (supra), can be created by any of the following;
i. By mere deposit of the title deed which could be received or retained as security for a loan.
ii. By an agreement to create a legal mortgage (as in the instant case) and;
iii. By mere equitable charge of the mortgagor’s property.
See alsoYARO VS. AREWA CONSTRUCTION, FBN PLC VS. SONGONUGA (2005) LPELR – 7495(CA). PER WAMBAI, J.C.A.

AMINA AUDI WAMBAI, J.C.A. (Delivering the Leading Judgment): The judgment of Yellim Bogoro J., of the Federal High Court Minna Judicial Division delivered on 23/5/2017 which granted the Respondent’s reliefs against the Appellants gave rise to this appeal. The dispute is in respect of loan facilities granted by the FIN Bank Plc (now an Eligible FINancial Institution) to the Appellants which loan was bought over and acquired by the Respondent on 29/12/2010 as a non-performing loan (Eligible Bank Asset) the recovery of which the Respondent sought before the lower Court claiming against the defendant (now Appellants) jointly and severally, “the repayment of the sum of N611,881,797,21 (Six Hundred and Eleven Million Eight Hundred and Eighty-one Thousand, Seven Hundred and Ninety-seven Naira, Twenty-one Kobo) as at 25th October, 2010 at the interest rate of 18% per annum until judgment is delivered and thereafter, at a post judgment interest rate of 10% per annum until the FINal liquidation of the debt.; leave of Court foreclosing the equitable right of redemption of the 1st Defendant over its property covered by C of O Nos. NG/MN/2753 and NG/MN/2754

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used as security for the loan; an order granting the claimant leave to sell or dispose of all the 1st defendant`s property covered by C of O Nos. NG/MN/2753 and NG/MN/2754 used as security for the loan availed to the 1st defendant and belonging to the 1st defendant, and the sum of ₦20,000,000.00 (twenty Million Naira) as the cost.”
The Appellants filed a statement of defence to deny the claim.

In support of the claim, the Respondent fielded a sole witness who adopted his written statement on oath and tendered some documents. The Appellants also paraded a lone witness, the 2nd Appellants. At the conclusion of trial, the learned trial Judge granted all the Respondent’s reliefs except the one on cost. Appellants were displeased and have sought for the reversal of the decision through their Notice of Appeal filed on 9/06/2017 predicated upon 5 grounds.

The record of appeal complied and transmitted to this Court on 6/02/2018 was deemed properly complied and transmitted on 13/11/2018. The Respondent was granted leave on 9/3/2020 to compile and transmit additional record of appeal, which was so deemed properly complied and transmitted.<br< p=”” style=”box-sizing: inherit; margin: 0px; padding: 0px;”>

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In the Appellant’s brief of argument filed on 16/10/2018 and settled by M. U. Baba (Mrs.), 4 issues were nominated for determination, namely:
1. “Whether, having regard to the limitation Law, 2005 of Niger State, the trial Court was competent to entertain the Respondent claim (distilled from Ground No.1).
2. Whether, having regard to the evidence adduced, the trial Court was right in its finding that the Respondent proved disbursement to and withdrawal of the total loan facility of ₦200M by the Appellants (from Ground Nos. 2 and 3).
3. Whether the trial Court was right when it held that in the circumstances of the instant case, “the status of the (legal) Mortgage becomes an Equitable Mortgage” (from Ground No.4).
4. Whether the trial Court was not wrong in its finding that the principal loan and interest amounted to N611,881,797.21 (from Ground No. 5).”

On behalf of the Respondent, learned Okechukwu Ajunwa, submitted 2 issues for determination in a brief of argument filed on 3/4/2019 and deemed on 9/3/2020, to wit: –
1. Whether the Respondent’s case as Claimant was caught up by

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Section 19 of the Niger State Limitation Law, 2005 so as to oust the jurisdiction of the Court to hear and determine the Respondent’s suit at the trial Court.
2. Whether from the circumstances, facts and evidence before the Court, the trial Court was right to find that the Respondent as Claimant had proved its case entitling it to the judgment of the Court.

APPELLANTS’ ARGUMENT
ISSUE 1
On this issue, which is whether having regards to the limitation Law, 2005 of Niger State the trial Court was competent to entertain the Respondent’s claim, the Appellant’s contention is that by paragraphs 6, 13 and 17 of the Respondent’s Statement of Claim, the total disbursement of the sum of ₦200,000,000.00 (₦200M) was made on the 7/5/2015, seven years after the accrual of the cause of action in contravention of Section 19 of the Niger State Limitation Law, 2005 which bars such action after the expiration of six years from the date of the accrual of the cause of action. He cited the cases of MBU VS STANBIC IBTC BANK PLC (2016) 12 NWLR (PT. 1527) 397, 408 and NECO VS OGBADIBO L.G (2016) 3 NWLR (PT. 1498). In urging us to strike out the

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Appeal, our attention was drawn to pages 193 -194 paragraph G-A where the apex Court re-stated the Law that an established plea of limitation law bars the plaintiffs remedy and extinguishes the right of action.

ISSUE 2
On this issue which challenges the correctness of the lower Court’s finding that the Respondent proved disbursement to and withdrawal by the Appellants of the total loan facility of N200m, the Appellant’s contention is that contrary to the Respondent claim that the Appellants accepted the FIN Bank offers of loan facilities of N150 Million of 21 months tenor at 18% interest and N50 Million of 24 months tenor at 18% interest guaranteed by the 2nd Appellants, the Appellants did not eventually accept the loan facilities and both Loans were neither disbursed to the Appellants nor did the Appellants execute any legal mortgage in favour of the bank to create a debt situation having not obtained the statutory consent of the governor to mortgage the properties.

That the Appellants having denied the disbursements, to prove same, the Respondent ought to have called a staff of the Bank to demonstrate and explain how and where the

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disbursements were made or to produce the cheques in evidence as the mere testimony of PW1 without more or the dumping of the statement on the Court is not sufficient to prove the fact of the disbursement. The case of ACN VS LAMIDO (2012) 8 NWLR (pt. 1303) 560, 592 PARAS B – F was cited in support.

He argued that the Respondent having failed to prove the disbursement, it cannot rely on the Appellants admission in Exhibit D since it does not on its own conclusively prove the disbursement, the draw down being subject to the fulfillment of some conditions precedent which include evidence of receipt of documents perfecting the securities and the statutory consent perfecting the deed, none of which was fulfilled, the statutory consent having not been sought and obtained.

Similarly, he questioned the relevance of the certificate of compliance (Exhibit K) made pursuant to Section 84 the Evidence Act PW1 having admitted that he became the staff of FIN Bank on 28/11/2011 and the statement of account (Exhibit L) being made between 31/7/2008 and 31/7/2014, and argued that PW1 could not have derived the information from his personal knowledge but only from

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another person which renders the evidence hearsay and inadmissible in evidence to which no weight ought to be attached.

Issue 3
On this issue which questions the correctness of the decision of the lower Court that the status of the legal mortgage had assumed that of an equitable mortgage and seeks a determination of the propriety of such a transformation without an amendment to the statement of claim or obtaining the Governor’s consent, it is Counsel’s submission that though the Appellants agreed to create a legal mortgage and for that purpose applied for statutory consent, the consent of the Governor to mortgage the properties NG/MN/2753 and NG/MN/2754 was not granted and the legal mortgage was not created. Thus, the cases of OGUNDIANI VS ARABA (1978) 11 NSCC 334 and GWARZO VS MOHAMMED (2013) 12 NWLR (PT 1369) 605 relied upon by the learned trial judge, learned Counsel argued, neither decided that a trial Court can resort to an equitable mortgage where there is no valid legal mortgage created nor are the cases apposite to this appeal in that in the instant case unlike in those cases, what was pleaded and intended by the parties was to

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create a legal mortgage and not an equitable mortgage. Therefore, evidence on unpleaded facts is not admissible. According to him, the Respondent having failed to prove legal mortgage and without amending the pleadings, the Court cannot transform the legal mortgage to an equitable mortgage more so that even an equitable mortgage, except where first created with the consent of the Governor to be transformed to a legal mortgage, cannot be created without obtaining the Governor’s consent insisting that the consent of the Governor is required to validate a mortgage whether legal or equitable. He referred to Sections 22 (1) and 26 of the Land Use Act and Section 15 of Land Registration Law of Niger State and the cases of FALEKE VS INEC (2016) 18 NWLR (PT. 1543) 61 @ 150 A – B, AFRICAN CONTINENTAL SEAWAYS LTD VS NDRGW LTD (1977) 5 SC 235 @ 249 – 250.

The issue in Gwarzo’s case (supra) learned Counsel submitted, was not whether the mere deposit of deeds without the consent of the Governor will mature into an equitable mortgage but the issue was as between the purchaser of the property from the Bank and the purchaser directly from the

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mortgagor who had the superiority of title.

Premised on the above submission, he concluded that the purported mortgage is null and void having not been preceded by the Governor’s consent as decided in SAVANAH BANK LTD VS AJILO (1989) 1 NWLR (PT 97) 305 and UBN VS AYODARE (supra).

Issue 4
On this issue which queries the correctness of the lower Court’s finding that the principal loan and the interest amounted to N611,881,792.21, learned Counsel wondered how the sum of N411,881,797.21 (about N250m) ( being the difference between the total sum of N200m disbursed and the sum of N611,881,797.21 claimed) accrued as interest within 21/2 years and with no evidence led by the Respondent to show or explain how much of it accrued from each of the first and second loans respectively. Such an amount he argued, translates to an interest rate of 150% p/a as against the 18% p/a agreed upon by the parties in the loan agreements, urging us to hold that the claim of N611,881,797.21 was not proved.

RESPONDENT’S SUBMISSION
ISSUE 1
The position of the learned Counsel for the Respondent on this issue is that the action is not statute

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barred contending that contrary to the view held by the learned Appellant’s Counsel that the cause of action arose on 22/02/2008 and 07/05/2008 when the initial and additional loans were disbursed, a cause of action according to him arises on the date of the occurrence, neglect or default complained of; when there is a cause of complaint and not upon disbursement of the loan, MOSOJO VS OYETAYO & ORS (2003) LPELR 1917 (SC) 11 PARA C. That the Respondent’s case being one for recovery of debt which the Appellants failed or neglected to repay to FIN Bank, the Respondent’s cause of action arose after the demand letter of 2/5/2014 for repayment of the loan and the Appellant’s refusal to pay. He cited in support the cases of ISHOLA VS SOCIETE GENERALE (NIG) LTD (1997) LPELR – 1547 (SC), MBU VS STANBIC IBTC BANK PLC (2016) 12 NWLR (PT 1527) 397 and OKONTA & ANOR VS EGBUNA (2013) LPELR – 21253 (CA). The cause of action having accrued on 2/5/2014 and the suit instituted on 14/5/2015, within one year after the accrual of the cause of action which is well below the 6 years limited by Section 19 of the Niger State Law, Counsel

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contended that the action is not statute barred and the lower Court was fully vested with jurisdiction to entertain the case, urging us to resolve the issue in favour of the Respondent.

ISSUE 2
On this issue which questions the correctness of the trial Court’s finding that the Respondent proved its case entitling it to judgment of the Court, it was submitted that the substance of the Respondent’ case at the lower Court being the recovery of the outstanding principal and interest on the loan facilitates, the trite law is that in any such dispute between a banker and its customer for recovery of loan, the questions the trial Court is to consider are:-
I. Whether Appellants were granted a loan by the FIN Bank Plc?
II. If so, how much was the loan?
III. What was the agreed interest rate? and;
IV. How much, if any, have the Appellants paid out of the loan.
FBN PLC VS OBEYA (1998) 2 NWLR (PT 537) 205 @ 207, ACB PLC VS NWANNA TRADING STORES (NIG.) LTD (2007) 1 NWLR (PT 1016) 596. He contended that the following facts are not in dispute and are thus deemed as proved, viz: that in the banker/customer relationship between

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the FIN Bank Plc and the Appellants, the first Appellants applied for N150,000,000 to enable it acquire Hotel equipment and for the working capital; that while the first facility was still running, the second Appellants applied for additional N50,000,000; that both loan facilities were granted and disbursed by the FIN Bank to the Appellants at an agreed interest rate of 18% per annum plus other charges; that the Appellants have failed to pay the principal sum and the interest as admitted by the second Appellants in cross examination (pp 41 – 43 of the additional record) and that the Appellants are indebted to the Respondent in the sum of N611,881,797.21. That the Appellants having accepted the facts of the offer, acceptance, disbursement and utilization of the loans, same requires no further proof but are deemed established as decided in the cases of A.G NASSARAWA STATE VS A.G PLATEAU STATE (2012) LPELR 9730 stressing further that the parties having agreed on the express terms in Exhibits B & F that the two facilities run at 18% interest rate per annum, the Appellants are bound by the said terms contained in the agreement they entered into and cannot

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rescind therefrom in the absence of any evidence that they were fraudulently led into the agreement, citing the cases of:- UBN VS OZIGI (1994) 3 NWLR (PT 333) 385, ACB LTD VS INTEGRATED DIMENSIONAL SERVICES LTD (2012) LPELR 9710 (SC).

He pointed out that by practice, usage and custom, Banks and other financial institutions not being charitable organizations, do charge interest on loans, overdrafts and other facilities granted to their customers, thus the Respondent was right to have charged 18% interest on each of the facilities as decided in ASIKPO VS ACCESS BANK (2015) LPELR 25845 (CA).

As to what amount, if any, has been repaid, it is Counsel’s submission that the first Appellant’s statement of account tendered in support of the pleadings and the oral evidence of PW1 show that after the utilization of the facilities, the Appellants persistently failed or neglected to fulfill the obligation of repaying the principal loan sum and the accrued interest thereby shifting the burden to the Appellants to show how they liquidated the loan as decided in the case of FCMB VS ROPHINE (NIG) LTD & ANR (2017) LPELR – 42704.

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However, rather than discharge the onus, the Appellants who admitted collecting and utilizing the facilities but deny indebtedness, have chosen to allege non-disbursement of the loan despite the overwhelming evidence on record.

On the submission that the Appellant’s statement of account was dumped on the Court, it was submitted that such an argument is only gold digging, merely a forlorn hope not supported by the records nor by law and is unfounded, the modern civil rules in all superior Courts of records now being that once a witness adopts his written deposition on oath and is cross-examined and re-examined on same, all material depositions therein become his oral testimony and that it is therefore not tenable to argue that Exhibit L evidencing the admitted disbursement of the sum of N200m, was dumped on the Court. Reference was made to paragraphs 9 & 17 of the statement on oath of PW1 (pp 146 – 150 of the record) wherein disbursements of N150m and N50m were shown to have been made to the Appellant on 2/2/2008 and 7/5/2008 respectively.

On the Appellant’s contention that to prove disbursement, the Respondent ought to have called a

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staff of FIN Bank Plc or produced the cheques, if any, in evidence, it was submitted that the question of the disbursement of the loan is not an issue the second Appellants having in cross-examination admitted that fact.
Furthermore, the Respondent having acquired the loan, it became vested with the assets and liabilities of FIN Bank Plc and is empowered to exercise all powers and rights of the Bank including the giving of evidence with regards to Exhibit L (the certificate of compliance with Section 84 of the Evidence Act) and any staff of the Respondent like PW1 who came in contact with the Books has the locus to give evidence on disbursements and the correctness of the entry fed into the computer.
He cited in support the case of SALEH VS. BANK OF THE NORTH LTD (2006) 6 NWLR (pt. 976) 316 (SC).

Moreover, learned Counsel contented that the Appellants having not timeously raised any objection to the admissibility of Exhibits L and K when tendered, they have clearly waved their right and estopped from raising the issue on appeal, citing the cases of OGUMA ASSOCIATED COMPANIES (NIG) LTD  V  INTERNATIONAL BANK FOR WEST AFRICA LTD

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(1988) LPELR – 2318 (SC) and NASIR VS. CIVIL SERVICE COMMISSION KANO STATE & ORS (2010) LPELR – 1943 (SC).

Besides, he contended on the authority of TRADE BANK VS. CHAMI (2003) 13 NWLR (pt. 83) 217 that the uncontroverted evidence of indebtedness even where the documentary evidence in proof of the debt is rejected, is sufficient to ground a claim for debt.

In response to the Appellant’s argument that the lower Court was wrong to have assumed the creation of the equitable mortgage between the parties in the absence of proof of the pleaded legal mortgage, it was submitted that the parties having agreed to create a legal mortgage in furtherance of which the Appellants deposited their title documents with the clear intention that same be taken or retained as security for the loan facilities, such act of depositing the title documents and the intention to create a legal mortgage operated as the creation of equitable mortgage (which is what was pleaded and proved and not a legal mortgage) though the legal mortgage was not registered, the law being that mere deposit of title document without any writing or word of mouth as to the

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creation of a legal mortgage, operates as the creation of an equitable mortgage. He cited the cases of GWARZO VS. MOHAMMED & ANOR (2012) LPELR – 22375 (CA), HYDRO TECH (NIG) LTD & ANOR VS. LEADWAY ASSURANCE CO. LTD & ORS (2016) LPELR 40146 (CA), USENFOWOKAN VS. IDOWU & ANR (1975) LPELR 3426 (SC), FBN VS. M. O NWADIALU & SONS LTD & ORS (2015) LPELR – 24760 (CA).

It was therefore submitted that the Appellants cannot be heard urging this Court to nullify the equitable mortgage created by the parties as it will be morally despicable to allow the Appellants escape liability. Premised on the above, it was contended that the remedy available to the Respondents is a right of foreclosure or sale of the mortgage properties.

Similarly, Section 15 of the Niger State Land Registration Law Cap 67 to the effect that an unregistered instrument affecting land cannot be pleaded in evidence to show proof of title no longer represents the law by virtue of the decision in the case of BENJAMIN VS. KALIO (2018) 15 NWLR (pt. 1641) 51 – 52 PARAS B-B., F-A.

On the issue of how the interest on the facilities rose to

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N411,881,797.21 within 2 years, the Respondent’s response is that the Appellants did not challenge or controvert Exhibit L tendered by PW1 showing the indebtedness as at 25/10/2010 to be N611,881,797.21.

Moreover, he argued, the issue being a fresh one cannot be raised and argued on appeal without the leave of Court first sought and obtained, citing the case of COMPTOIR COMM. & IND S.P.R LTD VS. OGUN STATE WATER CORP. & ANR (2002) LPELR – 889 (SC).

He contended that even if the leave is sought and this Court is minded to consider same, it cannot be granted for the absence of an exceptional circumstance, to wit: (i) existence of a substantial point of law capable of turning the judgment of the trial Court and (ii) that no further evidence is required to prove the fact, stressing that in the case at hand, evidence outside the record will definitely be required to establish the fresh issue thereby opening an endless door to litigation. He cited cases of UBA PLC VS. B.T.L INDUSTRIES LTD (2005) 4 (SC) 40, TRANSCORP (NIG) PLC VS. ANKOR INTERGRATED LTD (supra) in support.

We were urged to hold that the claim of N611,881,979.21 was

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proved by the Respondent and to resolve the issue in favour of the Respondent and dismiss the appeal with substantial cost.

In reply, the learned Appellants’ Counsel argued that the Appellants having denied the claims and issues joined on how the interest on the principal loan rose to N411,881,979.21 in two and half (2 ½) years, a finding which the Appellants challenged in ground 5, the burden of proof is on the Respondent to prove same which is not discharged by mere tendering of the statement of account, calling in aid the cases ofSKYE BANK PLC VS. DALAMI PLC (NIG) LTD (2017) 23 WRN 152 @ 168 paras 20 – 25, AKINBADE VS. BABATUNDE (2018) 20 WRN I @ 6 ratio. Thus, according to him, reading the ground 5 together with its particulars as it should be read to understand the Appellants complaint, the question of the interest being N411,000,000, is not a fresh issue. Now, looking at the issues nominated for determination by both parties, it is my view that the two issues crafted by the learned Respondent’s Counsel encapsulating the Appellants issues are sufficient to determine this appeal. I will utilize same in the resolution of the appeal.

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RESOLUTION OF APPEAL
ISSUE 1
The main issue for determination here is whether or not the Respondent’s action is statute barred having regards to the provisions of Section 19 of Niger State Limitation Law, 2005 and the facts of this case.
The Section 19 of the said law provides:
“No action founded on contract, tort, or any other action not specifically provided for in parts 1 and 111 of this law shall be brought after the expiration of six years from the date on which the cause of action accrued.”
The requirement and purport of this provision is that an action founded on contract (as the present one) or on tort, or any other action not specifically provided for in parts 1 and 111 of the law, to be competent, must be commenced before the expiration of six years from the date on which the cause of action accrued or arose, otherwise the action will be statute barred and incompetent, and no proceedings can validly be instituted to enforce the right. See EGBE VS. ADEFARASIN (1987)1 NWLR (PT 47)11 EBOIGBE VS. NNPC (1994) 5 NWLR (PT. 347) 649, ASABORO VS. POOC (NIG) LTD (2017) ALL FWLR (PT. 884) 1696 @

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1724-INAKOJU VS. ADELEKE (2007) 4 NWLR (PT1025) 423, AMADI VS. N.N.P.C. (2000)6 SC (PT1)66.
The period of limitation simply put, is that period of time after the accrual of a cause of action during which legal proceedings can be brought by a competent party because the period laid down by the Limitation Law or Act has not lapsed. Conversely, an action brought or instituted after the expiration of the limitation period will be statute barred because the period prescribed by the limitation law has lapsed. In other words, an action not commenced within the specified period when the cause of action accrued becomes incompetent. See ADIGUN V AYINDE (1993)8 NWLR (PT. 313) 516, OBIEFUNA V OKOYE (1961) ALL N.L. R.357.
The soul of this issue is therefore a determination of whether the Respondent’s case was filed at the lower Court within or outside the six years of the accrual of the cause of action. Thus it is of utmost importance when dealing with a limitation statute, to first and foremost ascertain the exact date of accrual of a cause of action because the period of time prescribed by a statute of limitation begins to run the moment a cause of action

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accrues to the person entitled to it.
What then is a cause of action and when does a cause of action accrue for the purpose of the limitation law?
A cause of action means the factual situation the existence of which gives a person a right to judicial relief, or which if sustained entitles the plaintiff to a remedy against the defendant. See EGBE VS. ADEFARASIN (supra): YUSUF VS. CO-OPERATIVE BANK LTD. (1994) 7 NWLR (PT. 359) 676; UNION BANK OF NIGERIA LTD. VS. OKI (1999) 8 NWLR (PT.614)244 and it consists of every fact which would be necessary for a claimant to prove, if traversed, in order to support his right to judgment: READ VS. BROWN (1889) 22 QBD 128; T. COOKE VS. GILL (1873) E.R 3 CP. 107; and everything necessary to give a right of relief in law or even in equity. In AKILU VS. FAWEHINMI (NO.2) (1989) 2 NWLR (PT. 102) 122 AT 169, the Supreme Court held: -“Cause of action has been held to mean every fact which is material to be proved to entitle the plaintiff to succeed, or all those things necessary to give a right to relief in law or equity.”
A cause of action thus consists of the bundle or aggregate of facts which the law recognizes as giving the

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claimant a substantive right to make a claim and seek a remedy. These include every material fact necessary to be proved to entitle the claimant to succeed. See DUZU VS. YUNUSA (2010) 10 NWLR (PT. 1201) 80. See BELLO VS. A.G. OYO STATE. (1986) 5 NWLR (PT. 45) 828; COOKEY VS FOMBO (2005) ALL FWLR (PT.271) 25 AT 38
In IBRAHIM VS. OSIM (1988) 3 NWLR (PT. 82) 257 AT 267, a cause of action was said to be the entire set of circumstances giving rise to an enforceable claim. It is, in effect, the facts or combination of actions which give rise to a right to sue and it consists of two elements:
(a) The wrongful act of the defendant, which gives the plaintiff his cause of action or complaint, and
(b) The consequent damages.
​A plaintiff is said to have a cause of action when his pleadings reveal that there has been an infraction or trespass to his rights and obligation. In other words, there must be a cause of complaint; a civil right or obligation fit for determination by the Court; and the issue must be justifiable. The plaintiff’s pleadings must therefore disclose the wrongful act of the defendant, which in effect gives the plaintiff his

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cause of complaint and the resultant damage from the defendant’s wrongful acts. See UWAZURUONYE V GOVS. IMO STATE (2013) 8 NWLR (PT. 1355) 56 – 57, PARAS H – C.
Implicit in this is that a cause of action is not just constituted in the reliefs sought by the plaintiff, per se, but in the facts or aggregate of facts alleged by the plaintiff as acts or conduct of the defendant, which give rise to the reliefs and which infringe the recognizable right of the plaintiff. SeePASTINOR INVESTMENT CO. LTD. & ANOR. VS. BON & ANOR (2014) LPELR 23622 (CA).
Simply stated, an act on the part of the defendant which gives the Plaintiff his cause of complaint is a cause of action and when these facts have occurred and provided there are in existence a competent plaintiff and a competent defendant, a cause of action is said to accrue to the plaintiff because he can prosecute an action effectively. In other words, the accrual of cause of action is the event whereby a cause of action becomes complete so that the aggrieved party can begin and maintain his cause of action. A cause of action thus accrues when the event giving rise to the Plaintiff’s grouse

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occurs. See MATANMI VS. GOVERNOR OGUN STATE (2004) 5 NWLR (PT.866) 255: NNPC VS. SELE (2005) 5 NWLR (PT.866) 379.
It stands to reason that there cannot be a cause of action before the occurrence of the event or default on the part of the defendant which gives the plaintiff a right of complaint. Put more succinctly, there cannot be a cause of action without a default, neglect or wrong on the part of the defendant and a resultant damage which gives the plaintiff a recognizable right of complaint. See UWAZURUONYE VS. GOV. IMO STATE (supra).
In determining whether and when a cause of action arises, the Court looks at the averments of the plaintiff in his statement of claim to find out when the cause of action arose, and the writ of summons to find out the date when the suit was filed. U.B.N.PLC VS. UMEODUAGU (2004)13 NWLR (PT. 890)365 PARA C – C, MBU V STANBIC I.B.T.C (supra).
The Respondent’s claim before the lower Court as revealed from the pleadings is one for the recovery of debt. In a claim for recovery of debt as in the case at hand, the general law as rightly submitted by the learned Counsel for the Respondents, is that the cause of

25

action accrues when a demand is made and the debtor refuses to pay. See ISHOLA VS. SOCIETE GENERALE BANK (NIG) LTD (1997) 1547 (SC); VICTOR VS. U.B.A. (2007) LPELR – 9043 (CA), OKONTA & ANOR. VS. EGBUNA (2013) LPELR 21253 (CA).
In the instant case, the Appellants were availed an initial loan facility of N150M on 18/2/2008 and an additional facility of N50M on the 7/5/2008 which they refused or neglected to liquidate, whereupon the Respondents demanded repayment vide a demand letter dated 2/5/2014 and served on the 1st and 2nd Appellant’s respectively. Therefore, by the general principle of law, the cause of action accrued on the 2nd May, 2014 when the demand letter was written and served on the Appellants and the Appellant’s refused to pay. From the 2/5/2014 to 14/05/2015 the date the suit was instituted as disclosed on the Special Claims Form is a period of one year, which is well below the limitation period of six years from the date of the accrual of the cause of action.
​Therefore, for the purpose of Section 19 of the said Niger State Limitation Law, the six years limitation period began to run for the Respondent to institute an

26

action for the recovery of the loan, from the 2/5/2014 when demand for payment was made and not as erroneously submitted by the learned Appellant’s Counsel, from the disbursement of the loans on the 18/2/2008 or 7/5/2008 at a time when no cause of action had arisen or accrued. Thus, the Respondent’s suit instituted on the 14/05/2015 within one year of the accrual of the cause of action was properly instituted within the Limitation period and is competent. I therefore agree with the submission of the learned Counsel for the Respondent that the cause of action arose and ripened upon demand for liquidation of the loan and not upon disbursement of the loan facilities. I disagree with the submission of the learned Appellant’s Counsel that the cause of action accrued on the dates of disbursement of the loans. Obviously, there was no cause for complaint as at the date(s) of disbursement of the loan to give rise to a cause of action.
Furthermore, even by the date of purchase of the Eligible Bank Asset which was on the 29/12/2010 to the date of the institution of the suit on the 14/05/2015 is still less than the six years limitation period.

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The Respondent’s action filed within the limitation period is therefore competent and not statute barred. Resultantly, this issue is resolved against the Appellants.

RESOLUTION OF ISSUE 2
Flowing from the Banker/customer relationship between the FIN Bank Plc and the Appellants, the Appellants who maintain account number 246435176101 vide a request letter dated 18/12/2007, applied for a loan facility of N150M to enable the 1st Appellants purchase Hotel equipment and for working capital. The FIN Bank (now simply called the ‘Bank’) acceded the request vide an offer letter dated 18/2/2008 (at tenor of 21 months inclusive of 3 months moratorium at 18% interest per annum).

While the 1st facility was still running, the 2nd Appellants applied for additional loan facility of N50M to procure additional equipment and same was also granted vide an offer letter dated 21st April, 2008, for a period of 22 months (inclusive of the 4 months moratorium) at 18% interest per annum (p.a).

The two loans were guaranteed by the 2nd Appellants and secured by two title documents, C of O NG/MN/2753 and NG/MN/2754 in respect of which parties agreed to create a Legal Mortgage.

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According to the Respondent, the loans were disbursed to and utilized by the Appellants who refused or failed to repay the loan until same were later classified as non-performing loans and subsequently acquired on 29/12/2010 by the Respondent as an eligible Bank asset.

While the Appellants admit the loan offers of both the initial facility of N150M and the additional facility of N50M by the FIN Bank, they have denied disbursement and utilization of the loans and the accrued interest as well as the execution and perfection of any legal mortgage in respect of the offers. The bone of contention therefore as captured by the learned Appellants Counsel is as to the disbursement of the total sum of ₦200M and the accrued interest thereon as well as the creation of legal mortgage on the secured properties.

The Respondent pleaded at paragraphs 6 & 13 of the statement of claim that both facilities were availed and disbursed into the 1st Appellant’s account, but these were traversed at paragraphs 7 & 9 of the Statement of Defence.

Learned Appellant’s Counsel contends that the Appellants having denied the

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disbursement of the loans, the burden was on the Respondent to prove same by calling a staff of FIN Bank or tender in evidence, the cheques evidencing the disbursement. That the burden was not discharged by the mere oral testimony of the PW1 or by the dumping of the statement of account by the PW1 without demonstrating how the disbursements were made.

It is not in dispute that the Appellants applied for the two loan facilities and same were granted vide the letters of “offers of credit facility” dated 18/2/2008 (Exhibit C) and 21/4/2008 (Exhibit F) respectively.

On the question of the disbursement and utilization of the loans which is denied, the law is trite that disbursement of loan by a bank to its customer can be proved by the statement of account, Bank cheques or other documents evidencing the disbursement or by admission.

In the instant case, in addition to tendering the Appellant’s statement of account (Exhibit L) and the oral testimony of PW1 at paragraphs 9 & 17 of his written statement on oath that the loan sum of N150M and the additional sum of N50M were disbursed into the 1st Appellant’s account on

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27/2/2008 and 7/5/2008 respectively, the 2nd Appellants pointedly and unequivocally admitted the disbursement and utilization of the loans.
In its application dated 10/4/2008 for additional ₦50M term loan (Exhibit D), the 1st Appellants through the 2nd Appellants in its opening sentence stated thus;
“I refer to your earlier letter dated 19/2/2008 for a facility of N150M (One Hundred and Fifty Million Naira only) which has since been drawn down…” (underlying for emphasis).
Furthermore, the 2nd Appellants as DW1 when asked of the disbursements had this to say in cross-examination:
“I signed the acceptance columns of both Exhibits B & F. I also signed Exhibit C. ₦50M was disbursed to the 1st defendant and ₦150M was disbursed to me in my personal account.”
On the utilization of the loans, he stated
“1st defendant did not utilize the ₦150,000,000.00 but 2nd defendant (that is; myself) utilized the ₦150,000,000.00.”
Though he said was not sure whether the 1st Appellants has actually been paid the ₦50M, he admitted being the Managing Director and the sole owner of the 1st

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Appellants and with no claim that the utilized money was returned or repaid to the bank.
The above far reaching admission by the 2nd Appellants in cross-examination puts it beyond any argument that the two loan facilities were disbursed to and utilized by the Appellants. Indeed, as the West African Court of Appeal held in the case of CHIEF NWIZUK AND ORS VS. ENEYOK AND ORS (1953) 14 WACA 354, admissions under this section are not confined to written or documentary admissions. They include oral admissions if made clearly in open Court during the proceedings. Therefore, were any person to be in doubt about the disbursement and utilization of the loans, these pieces of evidence by the 2nd Appellants clears any doubt even to the doubting Thomases that the total loan sum of ₦200M was not only disbursed to the Appellants but was also utilized by them. To contend otherwise as the Appellants are wont to do will not only be flying in the teeth of the clear evidence on record but will also violently wreak havoc on the elementary and settled law on the relevance, strength, authenticity, potency and eminence of evidence elicited in cross examination in proof of a

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pleaded fact in issue and the entitlement of the Court in making the appropriate finding of fact based on the elicited evidence. The legal and evidential effect of the said evidence elicited in cross examination is such that had the Respondent decided not to adduce further evidence on the issue of disbursement and utilization of the loans, the evidence elicited from the 2nd Appellants in cross-examination would have sufficed the Respondent and established the fact in issue entitling the lower Court to make the appropriate finding thereon.
Illuminating on the potency of cross examination Onnoghen, JSC (as he then was) in the case of: Akomolafe VS Guardian Press Ltd. (2010) 3 NWLR (Pt.1181) 338 @ 351 F-H, stated thus:
“On the Issue as to whether both parties called evidence in support of their pleadings, as held by the lower Court, it is settled law that evidence elicited from a party or his witness(es) under cross-examination, which goes to support the case of the party cross-examining, constitute evidence in support of the case or defence of that party. If at the end of the day the party cross-examining decides not to call any witness, he can rely on

33

the evidence elicited from cross-examination in establishing his case or defence. In such a case, you cannot say that the party calls no evidence in support of his case or defence. One may however say that the party called no witness in support of his case or defence, not evidence, as the evidence elicited from his opponent under cross examination which are in support of his case or defence constitute his evidence in the case.”
Thus, these admitted facts attract yet another application of the well settled position of law statutorily backed up by Section 123 of the Evidence Act and a legion of decided authorities that facts admitted need no further proof.
By Section 123 of the Evidence Act, no fact needs to be proved in any civil proceeding which the parties to the proceeding or their agents agree to admit at the hearing, or which, before the hearing, they agree to admit by any writing under their hands, or which by any rule or pleading in force at the time they are deemed to have admitted by their pleadings; Provided that the Court may, in its discretion, require the facts admitted to be proved otherwise than by such admissions.

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By these provisions, generally in civil proceedings, unless a Court deems it fit as provided for in the proviso to call for further evidence, what is admitted requires no further proof other than by such admission. There are too many decided cases on this principle. I shall cite only a few. See AKINLAGUN VS. OSHOBOJA (2006) LPELR 348 @ P. 33; (2006) 12 NWLR (PT 993) 60; PER OGBUAGU J.S.C, ALHAJI NDAYAKO VS. ALHAJI DANTORO & 6 ORS (2004) 5 SCNJ 152 @ 172, (2004) 13 NWLR (PT 889) 189, DIN VS. AFRICAN NEWSPAPERS OF NIGERIA LTD. (1990) 3 NWLR (139) 392 AT 405, and the case of A.G NASARAWA STATE VS. A.G PLATEAU STATE (2012) LPELR 9730 cited by the Respondent’s Counsel where Muhammad JSC restated the law thus:
“…the law is very certain and clear that facts admitted require no further proof….”
Where issues are not joined, proof is not required. This was the trite position of law that was restated in the case of AKIBU VS. ODUNTAN (1992) 2 NWLR (222) 210 AT 226 -7. Paramountly, this stated principle per force of law also applies to admissions elicited under the fire of cross examination as they are more reliable and compelling than

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the facts oozing out from examination-in-chief. See ADEOSUN VS. GOVS., EKITI STATE (2012) 9 NWLR (PT. 1291) 581; OKULEYE VS. ADESANYA (2014) 12 NWLR (PT. 1422) 321.
Such admitted facts require no further proof and the fact in issue which they support are deemed established by the party in whose favour the admitted facts inure. See ALIYU VS. BULAKI (2019) LPELR-46513 (CA) A.G NASARAWA STATE VS. A.G. PLATEAU STATE (supra), MAI-KIRI VS. YAHAYA (2018) LPELR-46595 (CA).
After all, admission is the best evidence in favour of the adversary and against the maker which relieves the adversary from further proof. Reiterating this position of law, the apex Court in the case of SALAWU & ANOR VS. YUSUF & ANOR (2007) LPELR – 2988 (SC) held:
“Admission of a party in law is the best evidence, in the sense that the opposing party need not make any effort to prove the admitted fact. A Court of law is entitled to give judgment based on admission by a party if the admission is relevant to the facts in issue. See Salamatu VS. Bupa (1975) NMLR 243 …”
​The admission made by the second Appellants being against his interest and that of his

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alter ego, the first Appellants, the law is trite that an admission by a party against his interest is the best evidence in favour of his adversary in the suit. See ONYENGE VS. EBERE (2004) 13 NWLR (PT. 899) 20; KAMALU VS. UMUNNA (1997) 5 NWLR (PT. 505).
In the light of all these, no further proof is required on the part of the Respondent to establish the disbursement of the total loan facilities of ₦200 million, and it does not lie in the mouths of the Appellants who have expressly and unequivocally admitted the facts of the disbursement and utilization of the loan facilities to now turn around to deny same. Such a denial is only idle and a red herring.

The further argument of the learned Appellants’ Counsel that the said admission in Exhibit D is not conclusive proof of disbursement and utilization of the loans the conditions precedent to draw down of the loans having not being perfected, is of no moment. This is so because the argument is not only violently negated by the express and explicit nature of the admission therein, but also by the unequivocal oral evidence of the 2nd Appellants in cross-examination admitting and corroborating the

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same facts of disbursement and utilization of the loans.

It is true as submitted by the learned Counsel to the Appellants that Exhibit B makes availability of the loan subject to the fulfillment of some conditions precedent to draw down, among which is the receipt by the Bank of all documents necessary to perfect the securities. That notwithstanding, the Appellants who claimed that the said documents were not executed admitted drawing down the loan and utilizing same. Can the same self-Appellants be heard or turn around to argue that the loan which they admitted utilizing was not accessed by them because the documents necessary to perfect the securities were not executed? Methinks not. It would be morally despicable for the Appellants after benefiting from the loan facilities granted by the Bank to turn around to deny taking the loan merely on the ground of non-proof of a condition precedent to drawing down the loan. The Appellant’s cannot, after admitting disbursement of the loan and utilizing same contend that they did not access the facility because the documents necessary to perfect the loans were not executed.

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The law is that where a contract is not ex facie illegal as was in SODIPO VS. LEMNINKAINEN (1986) 1 NWLR (PT. 15) 220, a party who has taken benefit of the contract to the detriment of the other party cannot be heard in argument seeking to void the contract see OILFIELD SUPPLY CENTRE LTD. VS. JOSEPH LLOYD JOHNSON (1987) 2 N.W.L.R. PART 58. P.265, 266, 639, 640) and this Court will not entertain any such argument seeking to void the contract the benefit of which the Appellants have reaped to enable the Appellants escape liability. That will be unjust and inequitable. No person shall, after reaping benefit from a transaction of which he is a party, be heard to say such a transaction is illegal or void or voidable when it comes to him to fulfill his obligation under the transaction so far, the other party has done all he had pledged to do under it. See IBRAHIM VS. OSIM (1988) 3 NWLR (pt. 82) 257.
Such beneficiaries of loan facilities as the Appellants have both the moral and legal obligation to repay the loan. See the case of AFRIBANK VS. ALADE (2013) NWLR (PT 685) 591, where the Court reiterated that a debtor who benefitted from a loan or overdraft from a bank has both the moral

39

and legal duty and obligation, expressed or implied, to repay it as and when due. See also NATIONAL BANK OF NIGERIA VS. SHOYOYE (1997) 5 SC 181. Thus, no person who admits a loan would be heard after reaping its benefits, to deny taking the loan on ground that a condition precedent to the draw-down of the loan (which has been drawn down and utilized) was not fulfilled. The law would be failing in its duty to allow such an escape route to be created for debtors to escape liability from fulfilling their obligations.

Admittedly, by the terms of the two offers (Exhibits B & F) the parties agreed to create mortgage on the properties belonging to the 1st Appellants covered by Certificates of Occupancy Nos. NG/MN/2753 and NG/MN/2754 used as collateral for the loans, and in furtherance of that the Appellants deposited the said title documents with the intention of creating a legal mortgage. For that purpose, the Appellants applied for the statutory consent of the Governor to mortgage the properties. The 2nd Appellants signed the Personal Guarantee Form (Exhibit C). However, the said consent was not obtained, and the legal mortgage was not executed.

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The learned trial Judge found as a fact that a legal mortgage was not created but reasoned that in view of the stated facts and the circumstance of the case, an equitable mortgage was created. He held, inter alia thus:
“in the instant case by Exhibit ‘B’ and Exhibit ‘F’ the two offer letters for the loan advance to the defendants, the acceptance duly signed by the 2nd defendant and also deposit of two title documents should be retained as security for the loan facility. See Exhibit ‘B’ where it is written’’. …
Since therefore the legal mortgage was not registered what then becomes of the mortgage agreement? Relying on the case of OGUNDIANI VS. ARABA (supra), the status of the mortgage becomes an equitable mortgage.”

Learned Counsel for the Appellants picked hole with the above finding and holding of the lower Court contending that the Court was wrong to have relied on the said cases of OGUNDIANI VS. ARABA (SUPRA) AND GWARZO VS. MOHAMMED (supra), which he argued are inapplicable here, to have transformed the intended and pleaded but unproved legal mortgage to an un-pleaded equitable

41

mortgage without amending the pleadings and without obtaining the consent of the Governor as mandatorily required by Sections 22 (1) (a) and 26 of the Land Use Act to create either a legal or equitable mortgage.

Legally and commonsensically both the learned trial Judge and the learned Appellants Counsel cannot be right. One of the two must be wrong and the other right. In determining whose position is right, regards must be had not only to the security clause in Exhibits B and F and the pleadings, but also to the purpose of the clause as well as the facts and circumstances of the case.
The Respondent pleaded at paragraph 10;
“The claimant avers that by the terms of the offer letter, parties agreed to create a mortgage on the property belonging to the 1st defendant and covered by two certificates of occupancy Nos. NG/MN/2753 and NG/2754 respectively’”
and the security clause in Exhibit reads: –
“Legal mortgage to be created on property covered by C of O NG/MN/2753 and NG/MN/2754.”

Undoubtedly, as rightly submitted by the learned Appellant’s Counsel, the intention of the parties was to create a legal

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mortgage and it was in furtherance of that intention that the Appellants deposited the two title documents with the bank.

In addition, they applied for the statutory consent to mortgage the properties covered by the title documents. In a letter written on 14/12/2007 (page 180 of the record of appeal) titled “consent to mortgage” the Appellants wrote:
“We hereby give our consent to First Inland Bank Plc to Mortgage our property covered by C of O NG/MN/2753 and NG/MN/2754.”

All these were for the purpose of using the title documents as securities for the loan

The deposit of the title documents with clear intent to create a legal mortgage as required by Exhibits B and F together with the application for statutory consent though not obtained, clearly Exhibits the intent of the parties to create a mortgage over the properties for the purpose of obtaining the loan.
​Looking at the agreement created between the Appellants and the Respondent, the manifest intention of both parties to create a legal mortgage was for the purpose on the part of the Appellants, of obtaining the loan and on the part of the Respondent, of securing

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same in the event of failure to repay the loan.
Though the statutory consent was eventually not obtained, the loan was nonetheless granted by the Respondent and utilized by the Appellants based on the deposit of the title documents by the Appellants which were kept in the possession of and retained by the Respondent with the clear intention of later creating and executing a legal mortgage over the properties upon obtaining the statutory consent of the Governor.
The intent of the parties though to create a legal mortgage, the facts as stated supra show that the Appellants to whom the loans were advanced by the Bank secured the loans by depositing the title deeds with the Bank. It is settled law that the mere deposit of title deeds with a Bank as security for a loan creates an equitable mortgage as against legal mortgage which is created by transferring the legal estate to the mortgagee.
In BON VS. AKINTOYE (1999) 12 NWLR (PT. 631) 398, the law was stated thus;
In law, it is generally accepted that a mere deposit of a title deed which cannot be accounted for in any other way, is taken as part performance of contract to create a legal mortgage

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even when no word about a contract has been said, such a deposit creates an equitable mortgage.” See also OGUNDIANI VS. ARABA (supra).
It is to be noted that a mortgage is simply a conveyance of title to property (legal or equitable interest) that is given as security for payment of a debt or the performance of a duty that will become void upon payment or performance according to the stipulated terms. It is also said to be the transfer of an interest in specific immovable property for the purpose of securing payment of money advanced or to be advanced by way of loan, an existing or future debt. See BON LTD VS. AKINTOYE (supra). While a legal mortgage is created by a Deed of mortgage or mortgage Deed, an equitable mortgage on the other hand as earlier stated, is created by mere delivering of the title documents to the mortgagee. All that are required to create an equitable mortgage are:
i. The existence of a debt.
ii. The deposit of the deeds, and
iii. The deposit of the title deeds must be as security for the debt.
See GWARZO VS. MOHAMMED (supra).
​Appellant’s Counsel concedes that all these requirements exist in the

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case at hand but disagrees that an equitable mortgage was or could have validly been created therefrom having regards to the intention of the parties at pleadings.
I do readily agree with the learned Appellants Counsel that what was pleaded and intended between the parties was the creation of a legal mortgage and not an equitable mortgage but hasten to disagree that the learned trial Judge was in the circumstance of the case, wrong to have found an equitable mortgage created which assumed the status of a legal mortgage.
It is my humble but firm view that an equitable mortgage needs not to be specifically pleaded; it is created by operation of law where the factual requirements of its creation exist. Recalling the trite state of the law that a mere deposit of title deeds with the mortgagee with the intention of creating a legal mortgage even without a word creates an equitable mortgage. An equitable mortgage unlike a legal mortgage, needs not to be specifically pleaded to be created and or be enforceable. SeeHYDRO-TECH (NIG) LTD & ANR VS. LEADWAY ASSURANCE CO. LTD & ORS (2016) LPELR 40146 (CA). Therefore, the fact that legal mortgage was

46

pleaded but the established facts create an equitable mortgage does not defeat the operation of the law merely because an equitable mortgage was not specifically pleaded. After all, an equitable mortgage, this Court has pronounced through Oredola JCA in the case of HYDRO – TECH (NIG) LTD & ANR VS. LEADWAY ASSURANCE CO. LTD & ORS (supra), can be created by any of the following;
i. By mere deposit of the title deed which could be received or retained as security for a loan.
ii. By an agreement to create a legal mortgage (as in the instant case) and;
iii. By mere equitable charge of the mortgagor’s property.
See alsoYARO VS. AREWA CONSTRUCTION, FBN PLC VS. SONGONUGA (2005) LPELR – 7495(CA)
To this extent, I find some considerable strength in the argument of the learned Respondent’s Counsel at paragraph 4.6.7 of his brief of argument that the agreement of parties to create a legal mortgage and the deposit of the title documents to that effect actually created and brought into existence an equitable mortgage.
​Learned Counsel for the Appellant’s also contended that even an equitable mortgage requires the

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statutory consent of the Governor to be valid. I also disagree with him on this preposition of law. It is alien to our well established and settled principle of law, as it is only a legal mortgage that requires registration or statutory consent to be valid. An equitable mortgage does not require registration or statutory consent to be valid or enforceable. In the case of HYDRO-TECH (NIG) LTD & ANOR VS. LEADWAY ASSURANCE CO. LTD & ORS (supra) where a similar argument was proffered, the Court held:
“Also, it is unknown to law as the Appellant’s Counsel contended that an equitable mortgage is required to be registered before it can be held enforceable and/or admissible (as the case may be) before a Court of law. Only a legal mortgage is required to be registered and is mandatorily required to be made in deed form, executed by both parties and registered in accordance with the extant law.”
It needs to be emphasized that an equitable mortgage is the type of mortgage recognized under common law to protect the rights and obligations under a mortgage that is not completed in law and by its very fact that it is equitable in nature

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unlike a legal mortgage, is one which is lacking in one or more of the formalities of legal requirements, like stamping, filing, registration or statutory consent. Understandably so, its validity or enforcement cannot be subject to the same stringent conditions of a legal mortgage. In FBN PLC VS. SONGONUGA (supra) Ogunbiyi JCA (as he then was) observed:
“deducing from the conduct of parties, even in the absence of a formal consent obtained from the Governor, it is sufficient that the intention to appropriate the property to the discharge of a debt was clearly manifested and thus creating a sufficient pre-requisite of an equitable charge…..”
In sum, I am at one with the learned Counsel for the Respondent that the learned trial Judge was right to have relied on the cases of OGUNDIANI VS. ARABA (supra) and GWARZO VS. MOHAMMED (supra) to have found that an equitable mortgage was created. The distinction which the learned Appellants Counsel strenuously tried to draw between those cases and the present appeal is only a distinction without a difference. What is paramount is that in all cases, it is manifestly clear that the unambiguous

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intention of the parties in each case is that the title deeds are to be taken and retained as security for the loan.
A Court of law and a Court of equity will find in the circumstances as the lower Court did, that an equitable mortgage was created and give effect to same. This is so because Equity looks on that as done which ought to be done and a Court of law and equity will willingly enforce the intention of parties, even if appropriate legal validity have not been met.

Now, having come this far that the 2 loan facilities were granted to and utilized by the Appellants, the dispute that has arisen between the Appellants and the Bank in whose stead the Respondent now stands, pertains to the recovery of the said loan. The well settled position of law as rightly submitted by the learned Respondent’s Counsel is that where there is a dispute between a bank and its customer in relation to recovery of loan advanced by the bank to the customer, the normal questions the Court should ask are: –
1. Was the defendant granted a loan by the plaintiff;
2. If so, how much was the loan;
3. What was the interest agreed upon; and
4. How much

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if any, has the defendant paid out of the loan.
See: ASIKPO VS. ACCESS BANK (2015) LPELR 25845 (CA), ACB PLC VS. NWANNA TRADING STORES (NIG) LTD (2007) 1 NWLR (PT 1016) 596, FBN PLC VS. OBEYA (1998) NWLR (PT. 537) 205 @ 207.

The questions whether the Appellants were granted loan by the bank and the amount of the loan granted, have been resolved in the preceding part of this judgment. The Appellants were granted a total loan sum of ₦200 Million in two parts; an initial loan facility ₦150 Million in Exhibit B and an additional facility of ₦50 million in Exhibit F.

On the agreed interest, both Exhibits B and F indicate an interest rate of 18% per annum with a tenor of 21 months and 24 months respectively. (Paras 7 & 14 of the statement of claim at page 142 of the ROA)

The Appellants grouse is with the amount claimed as the accrued interest on the principal loan sum of ₦200,000,000.00. With regards to the said sum of ₦411,881,797.21 claimed as the accrued interest being the difference between the principal sum of N200,000,000.00 and the sum of ₦611, 881,797.21 claimed as the total debt due as at 25/10/2008, the learned

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Counsel for the Appellants argued that there was no proof of the said sum claimed as no evidence was adduced to show how the said sum was arrived at as the accrued interest within 21/2 years of the loan at the agreed interest rate of 18% per annum or as to what amount of the interest related to the 1st or 2nd loan. He argued further that the mere tendering of Exhibit L (1st Appellants statement of account) and Exhibit K (the certificate of compliance with Section 84 of the Evidence Act) without explaining how the figure was arrived at is not sufficient to establish the claim.

On the other hand, the argument of the learned Counsel for the Respondent is that the Appellants having accepted the offers conveyed by Exhibits A and B and signed the acceptance columns as well as a memorandum of acceptance, and the Respondent having tendered the Exhibit L and Exhibit J (the notice of purchase of FIN Bank ) which were served on the Appellants both of which contain the said figure as the outstanding debt and which facts PW1 testified to in his oral testimony in Court and without being challenged or controverted in cross examination, the Respondent had proved its

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claim of N611,881,797.21 as the outstanding debt comprising the principal sum and the accrued interest thereon. He argued further that the issue of the sum of N411,881,797.21 as the accrued interest being a fresh issue cannot without leave of this Court first sought and obtained be raised in this Court not having been pleaded or canvassed at the lower Court.

The Appellants have in the reply brief denied the issue being a fresh one the learned trial judge having made a finding and pronouncement on same and upon which ground 5 of their grounds of appeal is predicated.
In its judgment, at pages 436-437 of the records of appeal, lower Court held:
“suffice that the claimants have in their evidence in chief of Pw1 i.e witness statement on oath of Pw1 gave life to Exhibit ‘K’ having given evidence that the principal loan and interest accrued amount to N611, 881, 797.21 the defence has not contradicted, controverted or challenged it. The position of law is that where as seen in TRADE BANK VS. CHAMI (2003) 13 NWLR (Pt. 83) PG.217.
The Court held thus:
“uncontroverted oral evidence adduced in proof of party’s

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indebtedness is sufficient to ground a claim for debt even if documentary of (sic) account adduced in proof of the debt is rejected in this case.”

At paragraph 25 of the statement of claim, the Respondent pleaded as follows:
“the claimant further avers that the outstanding sum of credit facility granted to the 1st defendant with its accrued interest as at 25th October, 2010 is the sum of N611,881,797.21 (Six Hundred and Eleven Million, Eight Hundred and Eighty-one Thousand, Seven Hundred and Ninety-Seven-naira, Twenty-one Kobo) Only. The claimant shall rely on the non-performing statement of account of the 1st defendant showing the 1st defendant’s indebtedness to the above-mentioned tune at the hearing of this suit and hereby pleads same.”

In reaction to this pleading, the Appellants as defendants in a terse manner without more, averred at paragraph 12 of the statement of defence that:
“The defendants deny the averments in paras. 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30 and 31 of the statement of claim and shall contend that the claimant is not entitled to any or all the claims contained in para. 32

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thereof and that same should be dismissed.

It is trite that to constitute a proper traverse where material and essential allegations are made, every material fact in a statement of claim must be specifically traversed, and a general traverse is not sufficient, AJANI VS. OKUSAGA (1976) 1 FWLR 188, 193,LEWIS & PEAT VS. AKHIMIEN (1976) 7 SC 157.
Looking at the averment at para. 25 of the statement of claim, the material and essential allegations raised thereat are that:
i. The credit facility (the principal loan) and
ii. The accrued interest thereon as at 25th October, 2010 amounted to the sum of N611,881,797.21.
Therefore, to constitute a proper traverse to paragraph 25 of the statement of claim, the material and essential allegations averred therein must be specifically denied and the Appellants version be specifically averred. The denial must state whether they deny the principal loan sum as well as the accrual of interest at all or the amount claimed as the accrued interest and or the total amount claimed as above.
​It thus stands out clear that the general traverse in paragraph 12 of the statement of defence is in law

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insufficient traverse to the material and essential allegations raised at paragraph 25 of the statement of claim.
As a cardinal principle of pleadings, for an issue of fact to be said to be joined, there must be proper and specific traverse of the facts contained in the pleadings such that to every positive and specific allegation or statement of fact in a statement of claim, there must be an express and specific traverse of such allegation of facts in the statement of defence or in a reply as the case may be.
An half-hearted, evasive or weak denial of a specific fact in the statement of claim would be regarded as insufficient traverse to put the matter thus denied in issue and thus considered as an admission of the material fact pleaded in the statement of claim. See OTAPO VS. SUNMONU (1987) 2 NWLR (pt. 587), 592, LEWIS & PEAT VS. AKHIMIEN (supra) Thus, the law is settled that where the defendant did not join issues with the plaintiff, the issues involved are deemed admitted and there will be no need for the plaintiff to prove those facts. See BUA VS. DAUDA (2003) LPELR 810, ATOLAGBE VS. SHORUN (1985) 1 NWLR (1-2) 360.

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Flowing from this, it is clear that the issue of the amount claimed as the accrued interest and how it was arrived at was never an issue at pleadings. The Appellants case is that of a total denial of the disbursement of the loan and its utilization. Issues were not joined on the amount claimed as the accrued interest nor was there any argument canvassed on the issue of interest. I would therefore align myself to the submission of the learned Counsel to the Respondent that the issue of how the accrued interest rose to the sum of N411,881,797.21 within 21/2 years of the loan now raised on appeal is a fresh issue.

The finding and pronouncement of the learned trial judge to the effect that the principal sum and the accrued interest amounted to N611,881,797.21 which forms the complaint in ground 5 of the appeal cannot, as the learned Appellants Counsel is wont to argue, be relied upon to introduce for the first time on appeal and without leave of Court, the question or issue of how the accrued interest or the amount claimed as the accrued interest was arrived at.

This is so because while it is elementary and the correct position of law that a ground of appeal targeted at or

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complaining against the ratio decidendi of the decision appealed against is a competent ground of appeal upon which argument can be validly canvassed on appeal see C.B.N. VS. SAP (NIG) LTD (2005) 3 NWLR (PT. 911) 152. ALSO, IN KUMALIA VS. SHERIFF (2009) 9 NWLR (PT. 1146) 423, it is also the law that argument to be canvassed on appeal must relate to or stem from and be circumscribed by the ratio decidendi of the decision appealed against. The real question therefore is whether the argument canvassed questioning how the accrued interest was arrived at stems from the referred ratio decidendi of the lower Court. In other words, whether the ratio decidendi referred to, decided the issue of the computation of the accrued interest and resolved how the figure was arrived at. My short but sure answer to this poser is a resounding “NO” as there is nowhere in the ratio decidendi of the judgment of the lower Court in question or anywhere on record where the learned trial judge pronounced on the computation of the accrued interest and how the figure was arrived at nor was any argument canvassed on the issue at trial. The issue of or the challenge to the

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computation of the accrued interest being the sum of N411,881,797.21 was not canvassed, considered or pronounced upon by the lower Court and so cannot be pinned to the ratio decidendi of the judgment quoted in Ground 5 to validate any argument on the issue on appeal without leave of Court.

The pronouncement of the lower Court referred to and quoted in Ground 5 is only a pronouncement on the total indebtedness of the Appellants arising from the principal sum and the accrued interest. The issue of how the sum of N411,881,797.21 was computed as the accrued interest on the principal loan within 21/2 years of the loan now canvassed before us in this appeal, we agree with the Respondent’s Counsel, is a fresh issue in respect of which no leave was sought and obtained. Barring a few exceptions, none of which applies here, the elementary law is that the Court will not allow a party on appeal to raise a question or issue that was not raised or tried at the lower Court without leave of Court. See CORPORATE IDEAL INSURANCE CO. LTD VS. AJAOKUTA STEEL CO. LTD (2014) 7 NWLR CPT 1405/165. The consequence of raising a fresh issue on appeal without leave of Court

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1st sought and obtained is that the issue and argument canvassed are incompetent and liable to be struck out. See IKEANYI VS. A.C.B (1997) 2 NWLR (CPT 489) 508, LAWSON VS. AFANI, CONTINENTAL CO (NIG) LTD & ANOR (2001) LPELR – 9155 (CA).

In addition, assuming without so deciding that the issue of interest is not a fresh issue and also that issues were joined on it at pleadings, I agree with the learned trial judge that the oral evidence of PW1 in support of Exhibit “K” that the total indebtedness of the Appellants comprising the principal sum and the accrued Interest amounted to N611,881,797.21 having not been challenged or controverted, the Respondent proved its claim against the Appellants.
The law is clear and settled that the effect of failure of the adversary to cross-examine a witness on a particular matter or a material fact is a tacit acceptance of the truth of the evidence of the witness. OFORLETE VS. STATE (2000) 12 NWLR (PT. 681) 415 @ 436 B-C PER ACHIKE JSC, GAJI VS. PAYE (2003) 8 NWLR (PT. 823) 583 @ 605 PER EDOZIE JSC, OR AT LEAST THAT HE DOES NOT DISPUTE THE FACT. ISAH VS. STATE (2017) LPELR 43472(SC) per Rhodes Vivour Jsc.

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In the instant case, the implication of the failure to cross-examine PW1 on the evidence that the principal sum and the accrued interest amount to N611,881,797.21 is that the Appellants are deemed to have accepted the truth of that evidence or at least that they do not dispute the evidence and the fact which the evidence supports. Therefore, though the usual way of proving a customer’s indebtedness to the bank on the basis of the overall debit balance on the customer’s statement of account is by adducing both documentary and oral evidence explaining or demonstrating clearly the entries therein particularly where the debit is constituted mainly by interest charges to show how the overall debit balance was arrived at. See BILANTE INTERNATIONAL LTD VS. NDIC (2011) 6 SCNJ 481, IFEMESIA VS. ECOBANK (2018) LPELR 46589 (CA), HADYER TRADING MANUFACTURING LTD VS. TROPICAL COMMERCIAL BANK (2013) LPELR 20294 (CA), where as in the case at hand issues were not joined on the accrued interest and the oral evidence on the total indebtedness is not challenged or controverted, the need to explain or demonstrate by oral evidence what is admitted

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or not denied does not arise. The lower Court was thus right to have found that the Appellants were indebted to the Respondent in the total sum of N611,881,797.21.

The last of the 4 questions to consider is whether the Appellants have paid the whole or any part of the total sum claimed or shown any reason why they said sum should not be paid.

The law is trite that where a customer of a bank admits taking a loan or is proved to have taken a loan from the bank, he has the responsibility of proving that he has repaid the loan see ISHOLA V S.G.B. (1997) SCNJ 23, and a mere denial of liability is not sufficient defence to a claim of a debt which has been admitted. See BIOSOLA NIG. Ltd VS. MAINSTREET BANK Ltd (2013) LPELR – 22062 (CA). Once a debt is admitted or proved, it must be paid off. The debtor must show how the debt has been liquidated or give cogent and justifiable reason why the debt has not been paid in full or in part. See SANUSI BROTHERS (NIG) LTD VS. COTLA C.E.I.S.A (2000) 11 NWLR CPT 679/566.

Expectantly, the Appellants herein who denied disbursement of the loan to them cannot be expected to have repaid in full or in part the loan they claimed

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not to have taken or enjoyed. Consequently, the Appellants have not paid any part of the loan. In other words, the principal loan sum including the accrued interest thereon amounting to the total sum of N611, 881, 797.21 remains unliquidated and with no justifiable reason why it has not been settled or paid off. The learned trial judge correctly found at pages 430-431 as follows;
“in the instant case, the defendant initially denied any indebtedness to the claimant/plaintiff at all…. that goes to show that defendants were not disposed to liquidating the debt. Besides there is no iota of evidence before me that the defendants have liquidated either in part or whole of the debt.”

All said and done, the learned trial judge was right to have found at page 427 of the record that:
“From the evidence evaluated above and the Exhibits so considered it is not in dispute or in doubt that the defendants had applied for a N150,000,000.00 (one Hundred and fifty million Naira) only facility from the FIN Bank Plc and an additional ₦50,000,000.00 (Fifty Million Naira) only loan facility from the FIN Bank Plc which were all granted.

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The defendants equally accepted the offers made. Same amount were (sic) disbursed and same drawn down by and to the account of both defendants. It is therefore my considered opinion that the defendants were granted loan by FIN Bank Plc which the claimant i.e. AMCON has purchased given Exhibit “j” same was disbursed to the account of the defendant. I so hold.”

The overwhelming evidence on record support the said findings and decision of the lower Court that the principal loan and the interest amounted to N611,881,797.21 and that the Appellants adduced no iota of evidence of liquidating the whole or part of the loan.
It will therefore be morally despicable and legally wrong for the Appellants who have benefited from the loan agreement to turn around seeking to rely on the case of SAVANAH BANK LTD VS. AJILO (supra) to escape liability on the ground that a condition precedent to draw down of the loan was not fulfilled or that the statutory consent of the governor to mortgage the properties having not been obtained, there was no valid and recognizable mortgage to perfect the agreement. The latter is not the intendment of the Supreme Court

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in the AJILO’s case (supra). The case did not decide and is not an authority that a mortgagor should take advantage of his wrong doing in failing to obtain the consent of the governor so as to escape liability of fulfilling his obligation. That case was not intended and shall not be allowed to be used as an escape route by a mortgagor who has benefitted from loan agreement at the detriment of the mortgagee to shy away from his obligation. That was not and cannot be the intendment of the apex Court as was later explained in the case of C.C.B Ltd (1996) 6 NWLR (pt 456) 524 per Ogundare JSC where the law Lord explained at page 540 paras. E-G thus:
“it has become vogue these days for mortgagors in similar circumstances to fall upon the decision of this Court in Savannah Bank VS. Ajilo (supra) as a vehicle to escape from their liability under the mortgage deed they have entered into. I think that (this) is an unfortunate development and I do not think that the case, that is Savannah Bank VS. Ajilo (supra) decides such a thing. In any event, I hope that someday this Court will have an opportunity to revisit this case. To allow a mortgagor to resile

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from his liability on the ground of his failure to do that which the law enjoins him to do will only result in paralysis of the economic activities of the country. This Court, I dare say, will not allow such a situation to arise.”
Therefore, unless the judiciary as a key driver in driving the national economy plays its coveted and sacrosanct role and shy away from the old-fashioned technicalities, acts such as the Appellants who take loans and refuse to repay their debts which have led to the collapse of many banks will continue to bring down our economy to its knees. This is why our Courts must resist all unnecessary technicalities capable of creating or facilitating an escape route for debtors and ensure that our judicial system does not go the way ‘The financial Times’ of 25/5/2995 described the Brazilian Judicial system in the following terms:
“Brazil’s dysfunctional judiciary … Is increasingly seen as an obstacle to national development. It is a system that allows debtors of all kinds to abscond at will, knowing that none but the most determined of creditors will pursue them through the Courts. It forces banks to

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lend at astronomical rates of interest because they cannot foreclose on debts. More worryingly, it means that vital infrastructure projects are stalled because investors cannot be sure the judiciary will uphold their rights.” ‘Why Brazil’s judicial system is driving the country nuts” Financial Times, 24 May 2005.’
​Similarly, this Court will not allow the Appellants to rely on the AJILO’s case (supra) which here does not apply, to resile from their liability of repaying the loan which benefit they have reaped. To allow the Appellants do so, is to encourage mortgagors to wittingly refuse to do that which the law enjoins them to do only to be beneficiaries of their own wrong doing at the detriment of the banks and the nation’s economy. This Court and indeed no Court of law will allow that to happen.

Having said this, I also resolve this 2nd issue in favour of the respondent and against the appellants. I find no merit in this appeal. It deserves to be and is hereby dismissed. The verdict is that the judgment of the lower Court delivered on 23rd May, 2017 is hereby affirmed and the appeal is dismissed.

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The Respondent is entitled to cost assessed at N200,000 (Two Hundred Thousand Naira Only) against the Appellants.

ABUBAKAR DATTI YAHAYA, J.C.A.: I read in advance, the leading judgment of my learned brother A. A. Wambai, JCA just delivered and I agree that this appeal has no merit and I dismiss it.

HABEEB ADEWALE OLUMUYIWA ABIRU, J.C.A.: I have had the privilege of reading before now the lead judgment delivered by my learned brother, Amina Audi Wambai, JCA. His Lordship has ably considered and resolved all the issues in contention in the appeal. I agree with the reasoning and abide the conclusions reached therein. I only wish to comment on two of the contentions of the Appellants.

The first is on the submission that the action of the Respondent for recovery of debt was statute barred. Section 19 of the Limitation Law of Niger State provides that actions for recovery of debt, which is predicated on contract, must be commenced within six years of the date of accrual of the cause of action. It was an agreed fact between the parties that the loan leading up to the indebtedness of the Appellants was advanced by Fin Bank Plc and that by reason of the failure of the

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Appellants to repay the loan, it was classified as a non-performing loan and was subsequently purchased by the Respondent as an Eligible Bank Asset on the 29th of December, 2010. Section 35(5) of the Asset Management Corpotation of Nigeria (AMCON) Act of 2015, which was the law applicable to this case, provides that:
“For the purpose of the provision of the Limitation Law of a State or the Limitation Act of the Federal Capital Territory, with respect to any debt owed to the Corporation by reason of its acquisition of an eligible bank asset, time shall begin to run, and the cause of action deemed to arise from the date of the purchase of the eligible bank asset.”
The interplay between this provision and the time for commencing actions stated in the Limitation Laws of States has been settled by this Court to mean that the period of limitation of action for AMCON purchased debts commence running from the date of the purchase of the debt- Tropics Securities Limited Vs Asset Management Corporation of Nigeria (2019) LPELR 47275(CA), Octopus Trust Nigeria Limited Vs Asset Management Corporation of Nigeria (2019) LPELR 47277(CA),

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Myeko Nigeria Limited Vs Asset Management Corporation of Nigeria (2019) LPELR 47643(CA). The present action was commenced in the lower Court on the 14th of May, 2015 and this was thin six years of the 29th of December, 2010 when the Respondent purchased the debt of the Appellant. The action was thus not statute barred.

The second contention of the Appellants that I wish to comment on is as regards the status of the mortgaged properties. Counsel to the Appellants contended that by the terms of the loan agreement between the Appellants and Fin Bank Plc, the parties agreed to create a legal mortgage over the properties in question as security for the loan and consequent on which the Appellants deposited the title deeds of the properties with the Bank, wrote a letter of consent to mortgage and applied for the consent of the Governor to mortgage the properties. The consent to mortgage was not obtained and the deed of legal of mortgage was not executed and Counsel to the Appellants contended that the lower Court was in error in finding that by depositing the title documents and signing the consent to mortgage form, the Appellants created an equitable mortgage over the properties and

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which equitable mortgage was valid and enforceable. Counsel stated that what was pleaded was an agreement to create a legal mortgage and not an equitable mortgage and that the consent of the Governor was essential to validate a mortgage, whether legal or equitable.
Now, an equitable mortgage is an agreement or declaration in writing not necessarily in the form of a deed, which demonstrates an intention to give a legal mortgage of the borrower’s property as a security for a loan or a deposit of title deeds relating to the property with the same intention- Kadiri Vs Olusoga (1956) SCNLR 150, British and French Bank Vs Akande (1961) WNLR 277 and Union Bank of Nigeria Plc Vs Fajebe Foods Ltd (1998) 6 NWLR (Pt 554) 380. It is a specific lien or charge upon real property to secure the payment of money or the performance of some obligations which a Court will recognize and enforce but which lacks the essential features of a legal mortgage because it grows out of a transaction without any deed- First Bank of Nigeria Plc Vs Songonuga (2007) 3 NWLR (Pt 1021) 230.
An equitable mortgage may be created in any of the following ways: (i) by mere deposit of

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title deeds of a property with a clear intention that the deeds should be taken or retained as security for the loan; (ii) by an agreement to create a legal mortgage; and (iii) by mere equitable charge on the mortgagor’s property- Kadiri Vs Olusoga (1956) SCNLR 59, Ogundiani Vs Araba (1978) 6-7 SC 55, Okuneye Vs First Bank of Nigeria Plc (1996) 6 NWLR (Pt 457) 749, Bank of the North Ltd Vs Akintoye (1999) 12 NWLR (Pt. 631) 392, Federal Mortgage Bank of Nigeria Vs Adesokan (2000) 11 NWLR (Pt. 677) 108, Union Bank of Nigeria Plc Vs Taylor (2005) 15 NWLR (Pt 947) 27. A mere deposit of a title deed which cannot be accounted for in any other way is taken as part performance of a contract to create a legal mortgage; even when no word about a transaction has been said, such a deposit creates an equitable mortgage – First Bank of Nigeria Plc Vs Songonuga (2007) 3 NWLR (Pt 1021) 230, Yaro Vs Arewa Construction Ltd (2007) 17 NWLR (Pt. 1063) 333, Pharmatek Industrial Projects Ltd Vs Trade Bank Nigeria Plc (2009) 13 NWLR (Pt. 1159) 577.
What the Respondent pleaded in paragraph 10 of their pleadings was that by the terms of the offer letter for the loan, parties

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agreed to create a legal mortgage over the properties of the Appellants as collateral. The Respondent did not plead that a legal mortgage was created and it did not give the particulars of any such legal mortgage. Thus the assertion of Counsel to the Appellants that what the Respondent pleaded was a legal mortgage and not an equitable mortgage is incorrect. A plea of an agreement to create a legal mortgage is indeed a plea of the existence of an equitable mortgage over the mortgaged properties.
​Now, applying the above principles to the facts of this case, it is without doubt that by the agreement to create a legal mortgage, coupled with the deposit of title deeds and the signing of the letter of consent to mortgage, the Appellants created an equitable mortgage in favour of the Respondent in respect of the properties in question, pending when the legal mortgage will be finalized. The law is that an equitable mortgage created with an intention to create a legal mortgage is as potent as a legal mortgage. Under the general principles, the remedies of an equitable mortgagee correspond as nearly as possible with those of the legal mortgagee because equity

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regards as done that which ought to be done. The legal consequence of an equitable mortgage created with an intention- overt or constructive – to create a legal mortgage gives the equitable mortgagee an immediate power of sale, foreclosure and all other remedies open to a legal mortgagee, once the equitable mortgagor defaults- Ogundiani Vs Araba (1978) 6-7 SC 55 and Federal Mortgage Bank of Nigeria Vs Adesokan (2000) 11 NWLR (Pt. 677) 108. The only difference is that an equitable mortgagee must seek an order of Court to foreclose the mortgage before he can proceed to exercise the powers- Ogundiani Vs Araba (1978) 6-7 SC 55 and Okuneye Vs First Bank of Nigeria Plc (1996) 6 NWLR (Pt 457) 749.
The question of whether the consent of the Governor is necessary for the creation of an equitable mortgage was considered by the Court of Appeal in Okuneye Vs First Bank of Nig. Plc (1996) 6 NWLR (Pt 457) 749. In that case, the Court of Appeal referred to the provisions of Sections 22 and 26 of the Land Use Act and stated that ‘to alienate’, as used in the provisions of the sections, in real property amounts to “the transfer of the property and

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possession of lands, tenements or other things, from one to another” and that “the term is particularly applied to absolute conveyance of real property; The voluntary and complete transfer from one person to another person.” The Court proceeded there from to state on pages 755 to 756 F-A thus:
Under the Land Use Act, the best a holder can have is a right of occupancy. To alienate that right under Section 22, it has to be done either by assignment, mortgage, transfer of possession, sublease or otherwise. The methods specifically mentioned affect the legal title of the land itself or of the possession thereof. A legal mortgage transfers title in the property to the mortgagee; so does assignment or sublease of property to an assignee or sublessees as the case may be … Therefore in interpreting Section 22, it must be recognized that to alienate, it must be by any of those methods specified therein, and the word “otherwise” must be construed under the ejusdem generis rule. By this rule, it is meant that a general word coming alter particular and specific words must be confined to things of’ the same kind as those

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specified. In the present case, “otherwise” must be confined to any of the means by which legal title or possession of real property can be transferred from one person to another.
The Court concluded that the creation of an equitable mortgage either by mere deposit of title deeds of a property with a clear intention that the deeds should be taken or retained as security for a loan or by an agreement to create a legal mortgage or even by mere equitable charge on the mortgagor’s property does not constitute an alienation within the provisions of Section 22 of the Land Use Act and as such did not require the consent of the Governor.
The Supreme Court shared a similar view in Yaro Vs Arewa Construction Ltd (2007) 17 NWLR (Pt. 1063) 333 where, relying on the case of Kadiri Vs Olusoga (1956) SCNLR 150, the Court stated that where security given over a loan is not in the form of a legal mortgage; that is by deed, transferring the legal estate to the mortgagee, but by the deposit of title deeds, the loan is secured. A deposit of document of title without either writing or word of mouth will create upon the property to which the document relates to the extent of

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the interest of the person who makes the deposit and in the absence of consent, that charge can only be displaced by actual payment of the amount secured. A mortgagor coming into equity to redeem must do equity and pay the principal interest and cost before he can recover the property which at law is not his.
The finding of the lower Court that the Appellants did create a valid and enforceable equitable mortgage in favour of the Respondent over the properties in question, notwithstanding the failure to obtain the consent of the Governor, and to execute a deed of legal mortgage was thus correct.

It is for these reasons and the fuller exposition of the law in the lead judgment that I too find no merit in this appeal and I hereby dismiss same. I affirm the judgment of the Federal High Court sitting in Minna and delivered by Honorable Justice Bogoro on the 23rd of May, 2017. I award the costs of this appeal assessed at N250,000.00 in favour of the Respondent.

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Appearances:

M.U. BABA (MRS) For Appellant(s)

OKECHUKWU AJUNWA, ESQ. For Respondent(s)