INTERNATIONAL TEXTILE INDUSTRIES (NIG) LTD VS DR ADEMOLA OYKANMI ADEREMI & ORS
In the Supreme Court of Nigeria
Friday, June 4, 1999
Case Number: SC. 200/1994
M.L. UWAIS – JUSTICE, SUPREME COURT
A.B. WALI – JUSTICE, SUPREME COURT
A.I. IGUH – JUSTICE, SUPREME COURT
A.I. KASTINA-ALU – JUSTICE, SUPREME COURT
S.O. UWAIFO – JUSTICE, SUPREME COURT
INTERNATIONAL TEXTILE INDUSTRIES (NIG) LIMITED
DR. ADEMOLA OYEKANMI ADEREMI
MRS. TEJUMADE DUROSOMO ALAKIJA
MR. AYOADE ADELAKUN ADEREMI
DR. JOSHUA OLARENI OMITOWOJU
DANGIL HOLDINGS (NIG) LTD
STAGES INVOLVED IN TRANSFER OF AN ESTATE IN LAND
“A transfer on sale of an estate in land is divisible into two distinct stages:
[i] the contract stage, ending with the formation of a binding contract for sale,
[ii] the conveyance stage, culminating in the legal title vesting in the purchaser by means of the appropriate instrument under seal”- Per Uwaifo JSC
WHEN PART PERFORMANCE WILL TAKE A CONTRACT OUT OF THE STATUTE OF FRAUDS
“The ground on which the court holds that part performance takes a contract out of the Statute of Frauds is, that when one of two contracting parties has been induced, or allowed by the other, to alter his position on the faith of the contract, as for instance by taking possession of land, and expending money in building or other like acts, there would be a fraud in the other party to setup the legal invalidity of the contract on the faith of which he induced, or allowed, the person contracting with him to act and expend his money”- Per Uwaifo JSC
ON DISTINCTION BETWEEN AN AGREEMENT TO ALIENATE LAND AND THE INSTRUMENT BY WHICH THE ALIENATION TAKES PLACE
“I think it ought to be stressed that the holder of a statutory right of occupancy is certainly not prohibited by section 22 of the Act from entering into some form of negotiations which may end with a written agreement for presentation to the Governor for his necessary consent or approval. This is because the Land Use Act does not prohibit a written agreement to transfer or alienate land. So long as such a written agreement is understood and entered into subject to the consent of the Governor, there will be no contravention of section 22[I] of the Land Use Act by the mere fact that such a written agreement is executed before it is forwarded to the Governor for his consent”- Per Uwaifo JSC.
APPROACH OF THE COURT WHEN A TERM IN A CONTRACT IS A NULLITY
“A clause which is meaningless can often be ignored, while still having the contract good, whereas a clause which has yet to be agreed may mean that there is no contract at all, because the parties have not agreed on all the essential terms. I take it to be clear law that, if one of the parties to a contract inserts into it an exempting condition in his own favour which the other side agrees and it afterwards appears that that condition is meaningless or is so ambiguous that no ascertainable meaning can be given to it, that does not render the whole contract a nullity. The only result is that the exempting condition is a nullity and must be rejected. It would be strange, indeed, if a party could escape every one of his obligations by inserting a meaningless exemption from some of them”- Per Uwaifo JSC
UWAIFO, J.S.C. (Delivering the Judgment by the Court):
The property in dispute in this case is plot No. 98 at No. 2 Abudu Smith Street, Victoria Island, Lagos. It is state land covered by Title Certificate No. L05166 of 1963 which was leased to late Oba Adesoji Aderemi by the Governor of Lagos State under a deed of lease dated 4 June, 1963. It was developed by the said lessee and at his death, it became vested in the 1st to 4th respondents who are his executors/executrix [hereinafter called the landlords].
Sometime in February 1986, the appellant indicated its interest in taking a sublease of the said property. The landlords, acting through their solicitors, made an offer by letter dated 18 February, 1986 [Exhibit A-A2] to the appellant. The letter contained details which I do not need to state in full. It is enough to say that the sublease was to be for ten years with an option for a further five years; the annual rent was to be N75,000.00 with effect from June 1, 1986, the first five years’ rent of N375,000.00 being payable in advance by the sublessee; and the landlords were to be responsible for the payment of the ground rent.
The letter stated that the property was offered in the condition i n which it was, a detached two-storey house together with stewards’ quarters and garage, but that “you are permitted, at your own expense, to add to, alter or extend it and in other respects carry out all renovations and refurbishments you consider necessary to suit your intended use and taste, subject to you obtaining necessary planning approval and also subject to your submitting your proposals to us for our clients’ prior approval.” In addition, there were the following two paragraphs:
“If you are in agreement with the above terms and conditions, we shall be grateful if you would kindly endorse the attached copy of this letter accordingly and return it to us. You have already deposited with us two cheques totalling N297,000.00. In returning to us the endorsed copy of this letter, you should please let us have also your cheque for the balance of the rent.
Kindly let us know whether you will directly instruct your own solicitor or we should instruct one on your behalf to prepare a draft sublease in accordance with the above terms and conditions.”
This letter was marked ‘subject to contract”.
In reaction, the appellant accepted the offer in its letter of 20 February, 1986 [Exhibit B-B I] with some requests which included the limit of 10% increase in rent utter the First five years, how to determine the rent for the option period, the landlords to bear the cost of erecting a wall fence and that all necessary approvals by the Lagos State Government to ~be obtained by the landlords. The landlords virtually consented by their letter dated 24 February, 1986 [Exhibit C-C] adding in their last two paragraphs:
“We have tried as much as possible to acceed to your various requests in order to bring this negotiation to completion. We trust that you would now kindly confirm your acceptance of our offer by sending us your cheque for the balance of the rent in the sum of N77,500.00.
You may then wish to pass copies of our two letters to your solicitors to enable them prepare a draft sublease for the approval of the parties.”
This letter was also marked ‘subject to contract.’
Yet again, the appellant replied by letter dated 28 February, 1986 [Exhibit D-D I] requesting a ceiling of 15% increase in rent in respect of the option period and offering to pay N21,250.00 in final settlement of the rent due owing to the uninhabitable condition of the property of which the landlords were said to have agreed to make funds available for renovation, but now the appellant said it was going to spend about N300,000. “on improvements which will ultimately revert to the Landlord after the lease period.” A cheque for the said N21,250.00 was actually forwarded to the landlords. The landlords by their letter of 28 February, 1986 [Exhibit E-E5] accepted the said cheque for N21,250.00 and the suggested 15%r ceiling increase in rent for the option period. The letter ended with the following two paragraphs:
“We expect that you would endeavour to ensure that the refurbishment and improvements you propose would be carried out and completed within the four months of grace so that your sublease would commence on 1st July, 1986.
You should please instruct your solicitors to put in hand the preparation of the draft sublease agreement for approval of the parties and let us have the draft in due course.
Again, this letter was marked ‘subject to contract’
At a stage the appellant proposed erecting a new building of three storey in place of the existing building but only on a portion of the land in question. This led to a meeting being held by representatives of the parties on 30 October, 1986. Decisions were reached which were recorded [Exhibit E-E5] and signed by one of the solicitors for the landlords. Thereafter, a letter dated 14 May, 1987 [Exhibit F] was written to appellant’s solicitors by the landlords’ solicitors, which reads in part:
“We are pleased to confirm on behalf of our clients that your clients, International Textile Industries [Nigeria] Limited, are granted a rent-free period of fifteen months from the date planning permission is granted for the proposed redevelopment of the above premises.
We are also pleased to confirm the preparedness of our clients to assist in obtaining the planning approval. We trust that your clients would kindly put in hand forthwith the preparation of the plans so that the plans can be submitted before the end of May, 1987.”
This letter was not marked ‘subject to contract’.
The plans were later approved by the Lagos State Government. They were released to the appellant on 15 May, 1989. These facts were stated in a letter dated 17 May, 1989 [Exhibit H] by the appellant’s solicitors to the landlords’ solicitors. A draft deed of sublease had earlier been forwarded to the landlords for execution and return to the appellant in order to seek the Governor’s consent. They took no steps to do so but simply avoided further commitment to the appellant. By June, 1989, it had become obvious that the 5th respondent had begun to assert interest in the property in question. The police had even intervened at the instance of one Lt-General T. Danjuma (rtd.) who was alleged to be the chairman of the 5th respondent. It was said the 5th respondent had made an outright purchase of the property. The police subsequently reached a decision that the matter was a civil one and advised the parties to seek a peaceful resolution of the dispute. What finally emerged was that the landlords had turned their backs on the appellant and sold the property to the 5th respondent.
Those were the circumstances in which the appellant went to law to seek a number of reliefs. I shall later in this judgment set out the said reliefs and discuss them in relation to this appeal. On 21 December, 1990, at the High Court of Lagos, Ope-Agbe J., granted most of the reliefs claimed but ignored the alternative claim of N3, 842,099.70 being special and general damages for breach of contract by the landlords.
He dismissed the counterclaim in which the 5th respondent sought two declaratory reliefs, a perpetual injunction and N1, 000,000.00 damages for trespass against the appellant. He considered the effect of the phrase ‘subject to contract’ which appeared on some of the relevant letters from the landlords and held that it did not affect the fact of the existence of a binding contract in the circumstances. As to whether parties could enter into a valid contract for the sale or alienation of land before the Governor’s consent was obtained under s.22 of the Land Use Act, 1978, the learned trial Judge concluded that they could.
On appeal, the Court of Appeal [Lagos Division] – coram: Sulu-Gambari, Kalgo and Ayoola, JJCA – on 13 May, 1993, set aside the judgment of the trial court. It held that there was no contract by virtue of the use of the phrase ‘subject to contract’. It seemed also to have held that failure to obtain the prior consent of the Governor was fatal. Said Kalgo JCA.: “It is very clear in the circumstances of this appeal that the cardinal issue to the validity of the lease is the consent of the Governor first had and obtained. There is therefore good reason for saying that the issue of consent is a condition precedent in the sub-lease and so there is no binding contract without such consent. There is no consent of the Governor in this case uptil the time the parties came to court.
This means, in my judgment that there is no binding and enforceable contract of lease between the 1st to the 4th appellants and the respondent despite the presence of the 4 certainties i.e. the parties, the property, the length of term, the rent and the commencement date. This is so, because all the correspondences concerned and relevant to the lease, the phrase ‘subject to contract’ was maintained and therefore applies throughout the negotiations as no where was it expressly or by necessary implication expunged.” The appeal against the dismissal of the counterclaim by the 5th respondent was partially allowed by the Court of Appeal.
On appeal against that judgment, the appellant has raised four issues for determination, namely:
“1. Was the Court of Appeal right in reversing the decision of the trial court granting reliefs 2, 3 and 4 of the plaintiff/appellant’s claim which reversal was predicated on the ground that there was no valid and enforceable agreement between the parties having regard to the fact that: