MADUBUEZE & ANOR v. MORTGAGES PHB LTD & ORS (2021)

MADUBUEZE & ANOR v. MORTGAGES PHB LTD & ORS

(2021)LCN/15080(CA)

In The Court Of Appeal

(LAGOS JUDICIAL DIVISION)

On Friday, March 05, 2021

CA/L/393/2016

Before Our Lordships:

Chidi Nwaoma Uwa Justice of the Court of Appeal

Tunde Oyebanji Awotoye Justice of the Court of Appeal

Bitrus Gyarazama Sanga Justice of the Court of Appeal

Between

1. MR. PETER MADUBUEZE 2. CONFIDENCE INVESTMENTS LTD APPELANT(S)

And

1. MORTGAGES PHB LTD 2. RIGHTMOVE CONSULTING LTD 3. KEYSTONE BANK (Formerly Known As Bank PHB Ltd) RESPONDENT(S)

RATIO

WHEN DOES PRIVITY OF CONTRACT ARISE

Privity of contract arises where a party has created a state of affairs or has helped to cause to exist and by which the other party has suffered some detriment on the promise that it was not ab initio a party to such a contract. See N.B.N. Ltd V. SAVOL W.A. Ltd (1994) 1 NWLR {Pt. 333} 435 at 468. PER BITRUS GYARAZAMA SANGA, J.C.A.

WHEN DOES A TECHNICALITY IN A MATTER ARISE

While pronouncing on the effect of technicality on substantive justice, the apex Court per TOBI, JSC in MOJEED SUARA YUSUF V. MADAM IDIATU ADEGOKE & ANOR (2007) LPELR – 3534 (SC) held, inter alia, thus: – “…in most cases when the Courts invoke the substantial justice principle they have at the back of their minds the desire to put to naught technicalities which the adverse party relies upon to drum down an otherwise meritorious case. We seem to be overstretching the technicality concept. We should try to narrow down the already onerous and amorphous concept in our judicial process. A technicality in a matter could arise if a party is relying in abstract or inordinate legalism to be cloud or drown the merit of a case. A technicality arises if a party quickly takes an immediately available opportunity, however infinitesimal it may be, to work against the merits of the opponent’s case. In other words, he holds and relies tenaciously unto the rules of Court with little or no regard to justice of the matter. As far as he is concerned, the rules must be followed to the last sentences, the last words and the last letters without much ado, and with little or no regard to the injustice that will be caused the opponent.” PER BITRUS GYARAZAMA SANGA, J.C.A.

WHETHER A PRE-INCORPORATION CONTRACT CAN BE RATIFIED BY A COMPANY AFTER ITS INCORPORATION AND THEREBY BECOMING BOUND BY IT AND ENTITLED TO THE BENEFIT THEREOF

The law is trite that at common law, a company has no capacity to enter into a contract before its incorporation. Consequently, nobody can contract for such company as an Agent nor can a pre-incorporation contract be ratified by the company after its incorporation. See TRANSBRIDGE COMPANY LTD V. SURVEY INTERNATIONAL CO. LTD (1986) 17 NSCC 1084; (1986) 4 NWLR {Pt. 37} 576. When a company came afterwards into existence, it becomes a totally new creature, having rights and obligations from that time but no rights or obligations by reason of anything which might have been done before. The company can however after its incorporation enter into a new contract to put into effect the terms of the pre-incorporation contract. However, all that has now changed in this country as Section 72(1) of the Companies and Allied Matters Act (CAMA) now makes it possible for a pre-incorporation contract to be ratified by a company after its incorporation and thereby becoming bound by it and entitled to the benefit thereof. See SOCIETE GENERALE FAVOURISER LE DEVELOPMENT DU COMMERCE ET DE L’INDUSTRIE EN FRANCE V. SOCIETE GENERALE BANK (NIGERIA) LIMITED (1997) LPELR – 3083 (SC). Section 72(1) of the CAMA provides thus: – “Any contract or other transaction purporting to be entered into by the company or by any person on behalf of the company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by and entitled to the benefit thereof as if it has been in existence at the date of that contract or other transaction and had been a party thereto.” See:BYUAN RESOURCES LIMITTED V. MINISTER OF FEDERAL CAPITAL TERRITORY & ORS (2016) LPELR- 41494 (CA). PER BITRUS GYARAZAMA SANGA, J.C.A.

BITRUS GYARAZAMA SANGA, J.C.A. (Delivering the Leading Judgment): The Appellants as Claimants commenced this Suit No. LD/1138/2010 via a Writ of Summons and Statement of Claim dated 8th June, 2010 before the High Court of Lagos State, Lagos Judicial Division, Holden at Lagos, M. O. Obadina J., presiding. (pages 1 to 8 of the Records).

On 15th November, 2012, the Claimants filed an Amended Writ of Summons and Amended Statement of Claim seeking for the following reliefs:-
1. A declaration that the 1st Defendant or any person acting through its instruction cannot legally dispose off the 1st Claimant’s Residential property known and described as House C100, Alaba Okori Road, Satellite Town Lagos, used as a security for a 10 – year loan facility in the sum of N25,000,000 by bank PHB Plc to the 1st Claimant, the 1st Defendant not being a party to the relevant loan agreement.
2. A declaration that the 3rd Defendant cannot recall a subsisting 10 year loan facility between it and the 1st Claimant, particularly as there are disputes as to the actual outstanding loan and the Account has not been reconciled as the Claimant requested.

A declaration that the 3rd Defendant cannot unilaterally recall the subsisting 10 – year loan facility without Due Demand Notifications.
4. A declaration that the owner’s refinancing loan is not an ordinary mortgage transaction which entails using a loan for housing project.
5. A declaration that the 2nd Defendant not being a Legal Practitioner/Law Firm within the meaning of the Legal Practitioners Act and Rules of Professional Ethics of Legal Practitioners in Nigeria is not entitled to practice or purport to Practice Law under any guise in Nigeria, and any such practice relating to the 1st Claimant is null and void and of no effect whatsoever.
6. A perpetual injunction restraining the Defendants, either by themselves, agents, cronies and anybody whatsoever from threatening or attempting to dispose the 1st Claimant’s Residential property known and described as House C100, Alaba Okori Road, Satellite Town, Lagos, used as security for a 10 – year loan facility which tenor is subsisting transaction.
7. N1,000,000 (One million naira) jointly or severally against the 1st and 2nd Defendants being general damages for malicious

instigation of the police against the 1st Claimant who has been invited by the Commissioner of Police, Special Fraud Unit “O” Department (Force CID) Milverton Road, Ikoyi Lagos on allegation of obtaining money under false pretences on a purely commercial transaction. (pages 311 – 319 of the Records).

Upon being served with the originating processes, the 1st and 2nd Defendants joined issues with the Claimants by filing their respective Statement of Defence (pages 36 – 55 of the Records). On 24th March, 2011, the 1st Defendant filed its Amended Statement of Defence and Counter Claim. (pages 135 – 143 of the Records). It counter-claimed against the Claimants as follows:
Wherefore the 1st Defendant/Counter Claimant claims against the 1st and 2nd Claimants jointly and/or severally as follows: –
1. The sum of N39,687,236.61k (made up of N17,028,982.45k representing past due obligation on the mortgaged loan which ought to have been paid by the 1st Claimant, but have not been paid till date i.e. 13/07/2010) and N22,658.16k (which is the loan Account Balance as at 30/06/2010) being the total sum due and payable to the 1st

Defendant/Counter Claimant by the Claimants as at the close of business on 30th June, 2010 as a result of the N25 Million Mortgage Loan granted the 1st Claimant, but guaranteed by the 2nd Claimant as per the Offer and Acceptance Letter of 15th April, 2008 duly executed between the 1st Claimant and the 1st Defendant/Counter Claimant and the Letter of Guarantee dated 18th April, 2008 by the 2nd Claimant on behalf of the Claimant to the 1st Defendant/Counter Claimant.
2. Compound Interest at the rate of 22% per annum on the total sum of N39,687,236.61k from 1st July, 2010 until judgment and thereafter at the same rate until final liquidation of the entire debt in line with the Offer and Acceptance Letter of 15th April, 2008 and the 1st Defendant/Counter Claimant Letter of 3rd July, 2009 which was sent and duly acknowledged by the Claimants.
3. An Order this Hon. Court directing the disposal or sale of the property in line with the Default Clause on pages 3 and 4 of the Offer and Acceptance Letter of 15th April, 2008 which provides as follows: “In the event of default by the obligator (Claimants) to meet his obligation to the Bank in accordance

with the terms and conditions of the offer, the Bank shall be at liberty to dispose of the property provided as security to the Bank in order to reduce the obligator’s indebtedness to the Bank. This is without prejudice to the Bank’s further right of recourse against the obligator until the obligation is fully repaid”.
4. Cost of this action to be borne by the Claimant.

Likewise the 2nd Defendant filed a Statement of Defence on 26th July, 2010. (pages 38 – 39 of the Records). The 3rd Defendant also filed a Statement of Defence and a Counter Claim on 24th March, 2011 (pages 190 – 197 of the Records). The 3rd Defendant’s Counter Claim is in pari materia with that of the 1st Defendant which I quoted above.

BRIEF FACTS OF THE CASE:
The brief facts of the case of the Claimants is that in April, 2008, the 1st Claimant applied for and was granted a 10 year loan facility in the sum of Twenty Five Million Naira (N25,000,000.00) by the 3rd Defendant. The loan was secured with the 1st Claimant’s residential property at House C100 Alaba Okori Road, Satellite Town, Lagos. The Claimants claimed that they serviced

the loan. Two years into the facility, precisely in June 2010, the Claimants received a letter from the 1st Defendant demanding immediate payment of the sum of N37,014,368.40 with threat to dispose of the property. On 10/05/2010 the 1st Claimant received an invitation by the Special Fraud Unit of the Nigeria Police for an interview on the allegations by the Defendant that he (1st Claimant) had obtained money under false pretences. The said 1st Claimant failed to honour the invitation, rather he engaged the services of a legal practitioner who wrote to the police to explain his position. That the police kept on pestering the 1st Claimant with phone calls to the extent that he was living in fear of police arrest. He therefore filed Suit No. FHC/L/CS/597/10 before the Federal High Court to enforce his fundamental right.

The Claimants alleged further that they received a letter from the 2nd Defendant (who is not a legal practitioner) demanding for the payment of the loan and threatening to employ all necessary measures to ensure full repayment of the outstanding loan. The Claimants refused to join issues with the 2nd Defendant, they rather wrote to the 1st

Defendant explaining that within a year of the grant of the facility, the business of Bureau De Change (for which the facility was granted) was stopped by the CBN.

During trial, the 1st Claimant entered the witness box and testified as CW1. After adopting his written deposition on oath the CW1 tendered the following documents in evidence:-
1. Offer Letter dated 15/04/2008 is marked as Exhibit C1.
2. Letter dated 27/05/2010 from 1st Defendant to the 2nd Claimant is Exhibit C2.
3. Letter dated 03/06/2010 from 1st Defendant to 1st Claimant is Exhibit C3.
4. Police invitation letter dated 07/05/2010 is Exhibit C4.
5. Letter by 2nd Defendant dated 13/04/2010 is Exhibit C5.
6. Copy of undated letter from 2nd Claimant to 1st Defendant is Exhibit C6.
7. Valuation Report by Omuojine & Associates is Exhibit C7.
8. Copy of Letter dated 24/04/2008 from Federal Ministry of Environment, Housing and Urban Development tendered but rejected as it was not certified. It was marked as Exhibit C8 rejected.
9. During cross-examination, a letter dated 28/07/2009 was admitted through CW1 and marked as Exhibit D1.

Letter by Claimant dated 07/04/2010 was also tendered, admitted in evidence and marked as Exhibit D2.
11. Judgment delivered by the Federal High Court in Suit No. FHC/L/CS/597/10 was also admitted and marked as Exhibit D3. (pages 400 – 407 of the record of appeal).

I noted that during cross-examination, CW1 testified that the purpose of the loan is to refinance his already built house and not to build a new house. He admitted signing Exhibit C1 after agreeing with the terms and conditions of the loan. He also admitted that the monthly instalmental payment in Exhibit C1 is N511,914.43 which he has not been paying because the letter for repayment was written by the 1st Defendant and not the 3rd Defendant who gave him the money. That though the tenor of the loan is for 10 years, it was not up to 2 years before the Defendants started to call in the facility. That the 3rd Defendant did not demand for the money; rather it was the 1st Defendant, who is a stranger to the transaction, that did. CW1 also admitted that by the provisions contained in Exhibit C1, the purpose of the facility is to re-finance his property in C100 Alaba Okori Road, Satellite Town,

Lagos. But Exhibits D1 and D2 shows that he converted the facility to Bureau De Change business.

The case of the 1st Defendant is that its Parent Company is Bank PHB Ltd. The 1st Defendant is the Mortgage arm of the 3rd Defendant. That during the period of transition from Finacorp Building Society to Mortgages PHB in 2008, the 1st Defendant was using the letter headed papers of the parent Bank PHB to do business pending final processing which was concluded by the approval of the Corporate Affairs Commission Certificate issued on 23/10/2008. That it changed its software after it became Mortgage PHB but all the transactions were not affected by the change in software.

That the 2nd Claimant, whose alter ego is the 1st Claimant obtained a loan facility of Twenty Five Million Naira (N25,000,000) from the 1st Defendant through its Parent Company (Bank PHB Ltd). That by a letter dated 3rd July, 2009, the monthly repayment was increased to N511,914.53. That rather than apply the loan for the purpose it was secured, the 1st Claimant converted it to trade as a Bureau De Change operator. That it is the letter by the 1st Claimant dated 28th July, 2009 to the 1st

Defendant that alerted it to the diversion of the money he secured as a Mortgage Facility to “refinance owner’s existing property located at House C100, Alaba Okori Road, Satellite Town, Lagos valued at N28,000,000.00”, into Bureau De Change operation. That 1st Defendant reported a case of obtaining money by false pretences to the police for which the 1st Claimant was invited by the police. Rather than honour the invitation by the police the 1st Claimant rushed to institute Suit No. FHC/L/CS/597/2010 before the Federal High Court to guarantee his fundamental human right. The said suit was dismissed with cost against the Claimants as reflected in Exhibit D3.

The 1st Defendant asserted that the 1st Claimant is indebted to it in the sum of N39,687,236.61 as at 30th June, 2010. When the 1st Claimant failed to service the loan as at when due, the 1st Defendant called in the facility and demanded full payment of the facility plus accrued interest. At the trial, Mr. Victor Okonkwo, a staff of the 1st Defendant testified as DW1. After adopting his written deposition on oath, he tendered the following documents in evidence:

2nd Claimant’s Letter dated 18/4/2008 – Exhibit D4.
2. Statement of account of 1st Claimant – Exhibit D5.
3. Statement of account of Mortgages Loan Account – Exhibit D6.
4. Copy of CTC of Certificate of Incorporation of Mortgages PHB – Exhibit D7.
5. 1st Defendant Letter to Claimant dated 3/7/2009 – Exhibit D8.
6. 1st Defendant Letter dated 27/5/2010 to Claimants – Exhibit D9.
7. 1st Defendant Letter dated 3/6/2010 to Claimants – Exhibit D10.
8. 1st Claimant’s Letter dated 21/4/2008 – Exhibit D11.

During cross-examination, DW1 testified inter alia, that the loan issued to the Claimants was a mortgage variant meaning the 1st Claimant is using the equity in the property (C100, Alaba Okori Road, Satellite Town Lagos) to secure the loan. That the loan was not given to him to start a new business, but for his existing business i.e. Confidence Investment Limited. That after the change of name from Finacorp was effected, the 1st Defendant wrote letters to the Claimants which were replied. That the 1st Defendant only borrowed the letter headed paper of the 3rd Defendant in

writing Exhibit C1. That the 3rd Defendant did not take any step to recover the loan since it was given to the Claimants by the 1st Defendant. That the cheque attached to Exhibit D1 was given to the 1st Defendant by the 1st Claimant (pages 408 – 414 of the record of appeal).

The case of the 2nd Defendant is that it is an agent of the 1st Defendant. That among its functions, as shown in its Memorandum of Association, is to engage in corporate and consumer debt collection services. That it had the right to issue Demand Letters dated 24/02/2010, 26/03/2010 and 13/04/2010 on behalf of the 1st Defendant to the Claimants. That it is not a Law Firm though it had lawyers on its Board. That it’s Managing Director is a Fellow of the Institute of Debt Recovery Practitioners of Nigeria.

During trial Mr. Gbenga Olutimehin the CEO of the 2nd Defendant testified as DW2. He adopted his Written Deposition on Oath and tendered the following documents in evidence: –
1. Certify True Copy (CTC) of Police Report on the loss of personal and official documents in a fire incidence was marked as Exhibit D12.
2. CTC of Certificate of Incorporation – Exhibit D13.

C.T.C. of Memorandum of Association of 2nd Defendant – Exhibit D14.
4. CTC of Institute of Debt Recovery Practitioners of Nigeria Certificate – Exhibit D15.
5. Letters of Demand Notices on the Claimants dated 24/02/2010, 26/03/2010 and 13/04/2010 were admitted in evidence and marked as Exhibits D16, D17 and D18 respectively.

During cross-examination, DW2 testified inter alia, that the 2nd Defendant has in-house lawyers as well as lawyers on its Board. That the 1st Defendant gave him the authority to recover the loan. That he wrote a petition to the police against the Claimants based on their letter dated 28/07/2009. (pages 415 – 418 of the record of appeal).

During trial the 3rd Defendant called Mr. Stanley Gideon Obale who testified as DW3, he is a staff of the 3rd Defendant. After adopting his written Statement on Oath he did not tender any document but was cross-examined. He testified under cross-examination that there is an Offer Letter (Exhibit C1) and Mortgage Agreement which he said he did not know if it is before the Court. That the 3rd Defendant made a demand for payment of the loan through its

subsidiary, the 1st Defendant. (pages 428 – 430 of the Records).

On 27/2/2015the learned trial Judge adjourned the matter to 20th April, 2015 for adoption of Final Addresses. (page 430 of the Records). However, on 16th November, 2015 the learned trial Judge gave a bench Ruling thus: –
“I am not going to grant any further indulgence to the Claimant counsel to file the address. The order for Final Addresses was made on 27th of February, 2015. Defendants Counsel filed his Final Address on the 4th of March, 2015. This is the 5th adjournment for adoption of Final Address. Up till now, Claimants’ address has not been filed. On 29/06/2015, Claimants’ counsel passionately pleaded for an adjournment to file the address. Today he has come with another story, stories of Claimant Counsel. The 2012 Rules is geared towards efficient and speedy dispensation of justice. Justice is for the Claimant as well as the Defendants”.
“As Claimants counsel rightly said, it is not must that a Final Address be filed. I foreclose Claimants’ address and I call on Defendants’ counsel to adopt his final address”.

“MR. OKONKWO: Our Final Address is dated 04/03/2015, it was served on Claimants Counsel. I urge the Court to dismiss the claim of the Claimant and enter judgment for the 3rd Defendant/Counter-Claimant”.
“MR. OGBUANYA: I plead with the Court for even one day to file our Reply. I plead to be allowed to orally address the Court”.
“COURT: Oral address is not allowed by our Rules. Application refused. Judgment is fixed for 26/01/2016”.
(pages 433 – 434 of the Records).

Thus the learned trial Judge foreclosed the Claimants right to address it. Judgment was delivered by the learned trial Judge on 26th January, 2016. After reviewing the oral and documentary evidence adduced before him during trial learned trial Judge held thus: –
“In all, I hold that the Claimants’ failed to prove their entitlement to any of the reliefs claimed. Claimants’ case is dismissed in its entirety.”

While pronouncing on the 1st and 3rd Defendants claim in their Counter Claims, the learned trial Judge held thus: –
“I gave judgment to the Counter Claimants for the said amount made up of N17,028,982.45k

representing past due obligation on the mortgage loan which ought to have been paid by the 1st Claimant but have not been paid till date i.e. 13/07/2010 and N22,658,254.16 (which is the loan account balance as at 30/06/2010) being the total sum due and payable to the 1st Counter Claimant by the Claimants at close of business on 30th June, 2010 as a result of the N25m mortgage loan granted the 1st Claimant but guaranteed by the 2nd Claimant as per the Offer and Acceptance of 15th April, 2008 duly executed between the 1st defendant/counter claimant and the Letter of Guarantee dated 18th April, 2008 by the 2nd Claimant on behalf of the 1st Claimant to the 1st Defendant/Counter Claimant.
I make an order for interest on the said N39,687,236.61 in line with the agreed terms on Exhibits C1 and D8 from 1st July, 2010 until judgment and thereafter at the same rate until final liquidation of the said sum.
I make an order directing the disposal or sale of the property located at House C100, Alaba Okori Road, and Satellite (sic) Town Lagos in line with the Default Clauses in Exhibit C1.
I awarded to the Defendants N100,000.00 cost of this action.”

(the entire judgment is at pages 444 – 469 of the record of appeal).

The Claimants were aggrieved with this decision. They filed a Notice of Appeal containing seven grounds of appeal on 15/02/2016 at pages 470 to 479 of the Records. The Record of Appeal was compiled and transmitted to this Court on 11th April, 2016. The Appellants’ brief of argument was settled by N.C.S. Ogbuanya Esq. It was filed on 31st January, 2017 but deemed properly filed and served on 20th June, 2018. Respondents’ brief of argument dated and filed on 30th June, 2017 was prepared by Tochukwu Okonkwo, Esq. The Appellants’ reply brief was filed on 28th June, 2018.

Learned counsel to the Appellants formulated 3 issues for determination as follows: –
1. Whether the judgment is not against the weight of evidence and liable to be set aside, having regard to the finding of facts and conclusions reached by the learned trial Judge, which were perverse and not supported by available evidence on record and at the trial particularly in respect of whether the 1st Respondent is a party to the Mortgage Loan transaction which was executed between the 1st Appellant

and the 3rd Respondent, as evidenced by Exhibit C1, and as such, can the 1st Respondent enforce and or benefit from the contract, having regard to the application of the doctrine of privity of contract?
2. What is “Owner’s Refinancing Loan” as a variant of Mortgage Loan and did the borrower unlawfully diverted the loan when it uses the fund for its chosen business without any restriction by the lender, particularly in the light of the terms of the Exhibit C1 (the loan agreement between the 1st Appellant and the 3rd Defendant)?
3. Whether the refusal by the trial Court of the Appellant’s Counsel’s right to Final Address or even to address the Court orally, after paying the cost ordered by the trial Court for default, did not amount to breach of fair hearing in judicial proceedings in respect of the matter?

Tochukwu Okonkwo, Esq., learned counsel to the Respondents formulated the following four issues for determination in his brief of argument:
1. Having regards to the facts of this matter and the Exhibits tendered, whether the 1st Respondent is a necessary party to this Mortgage Loan transaction or not? (Ground 3)

Having regards to the facts of this matter, the pleadings evidence adduced in support thereof and the exhibits tendered, whether Exhibit C1 is a pre-incorporation contract of the 1st Respondent or not? (Grounds 2 and 7)
3. Whether the Appellants are in breach of the terms and conditions as contained in Exhibit C1 that will make the Respondents to invoke the default clause in the said offer letter of 15th April, 2008 i.e. Exhibit C1. (Grounds 4 and 5).
4. Whether the learned trial Judge was right to have foreclosed the opportunity given to the Appellants’ counsel to file his Final Written Address after five (5) consecutive adjournments at the instance of the Appellants counsel that spanned eight (8) months which the Appellants counsel failed to make use of. (Ground 6)

Upon a careful perusal of the issues canvassed by the learned counsel to the parties in their respective briefs, it is obvious that the appellants’ issue one, which is cumbersome and unwieldy was neatly split into issues 1 and 2 by the respondents’ counsel while issues two and three of the appellant is similar with issues three and four by the

respondents’ counsel. However I will adopt the issues formulated by the appellants in determining this appeal. In doing so, I will consider the argument by learned counsel to the respondents in their issues 1 and 2 together.
Issue 1 formulated by the Appellant is: –
Whether the judgment is not against the weight of evidence and liable to be set aside, having regard to the finding of facts and conclusions reached by the learned trial Judge, which were perverse and not supported by available evidence on record and at the trial, particularly in respect of whether 1st Respondent is a party of the Mortgage Loan transaction which was executed between the 1st Appellant and the 3rd Respondent as evidenced by Exhibit C1, and as such, can the 1st Respondent enforce or benefit from the contract, having regard to the application of the doctrine of privity of contract? (Grounds 7, 5, 3, 2 and 1).

In his submission while arguing this issue, learned counsel to the appellants contended that the judgment by the learned trial Judge is “a replica of numerous perverse decisions and findings not backed and supported by the evidence led and exhibits

tendered at the trial”. Cited in support the Supreme Court decision in IHUNWO V. IHUNWO (2013) 8 NWLR {Pt. 1375} 550 at 568 – 569; FK CONSTRUCTION LLTD V. N.D.I.C. (2013) 13 NWLR {Pt. 1371} 390 at 420 – 421. Learned counsel then made an analysis of the judgment by the learned trial Judge which, in his opinion, led to a miscarriage of justice. He quoted the holding by the learned trial Judge on privity of contract at pages 454 – 458 of the Records and at page 460 where the learned trial Judge held thus: –
“As I noted, the 1st defendant is not an agent of the 3rd defendant in this transaction.”

That however, the learned trial Judge made a volte-face by introducing the issue of pre-incorporation contract when he held that the 1st defendant was a subsidiary of the 3rd defendant and that the 1st defendant borrowed the letter headed paper of the 3rd defendant to enter into the Loan Facility Agreement (Exhibit C1) and that the Exhibit C1 amounts to a pre-incorporation contract. Learned counsel quoted the holding by the learned trial Judge at pages 468 – 469 of the Records. He also cited the decision by this Court in

UBN V. SOARES (2012) 11 NWLR (Pt. 1312) 550 at 580 where it held that once there is no privity of contract between parties, a party cannot enforce such a contract. That the Courts consistently held that “where parties have embodied the terms of their contract in a written document extrinsic evidence is not allowed to add, vary, subtract from or contradict the terms of the written instrument”. Cited: S.F. & A.P. LTD V. NDIC (2012) 10 NWLR {Pt. 1309} 552; AKINBUIRO V. MOBIL OIL (NIG) PLC (2012) 14 NWLR.

That from a cursory examination of Exhibit C1, the 1st Respondent is not a party to the Mortgage agreement, but the learned trial Judge erroneously made it a party without any evidence on record to support that finding. That in an attempt to link the 1st Respondent with the Appellant in respect to the transaction in issue (thus defeating the established principle of absence of privity of contract), the learned trial Judge misconstrued the evidence and held that Exhibit C1 amounts to pre-incorporation contract made in favour of the 1st Respondent and was later ratified by it. That the 1st Respondent was already an incorporated and existing

legal entity when Exhibit C1 was executed between the 1st Appellant and the 3rd Respondent. That there was no evidence on record that the 1st Respondent was not yet in corporate at the time of execution of Exhibit C1, such that it could amount to a pre-incorporation contract made on its behalf.

That the finding by the learned trial Judge that Exhibit D7 (the certified true copy of the certificate of incorporation of the 1st Defendant) is a mere Certificate of Incorporation is perverse and a gross misrepresentation of the facts. Learned counsel quoted some portions of Exhibit D7. That Exhibit D7 revealed that Finacorp Building Society Ltd., was incorporated on 26/5/1993. As at 2/4/2008, a Resolution was already passed to change its name to Mortgage Bank PHB Ltd, which certificate was issued on 23rd October, 2008. That the Mortgage Loan between the 1st Appellant and Bank PHB Ltd was executed on 15/04/2008. That the question is: What is the legal hindrance that necessitated the purported borrowing of letter head paper of another separate legal entity to execute the loan transaction without disclosing such material issue in any document or on Exhibit C1 itself?

That by the provision of Section 548(1) (c) of the Companies and Allied Matters Act (CAMA), a letter headed paper of a company is “a serious document of legal correspondence and documentation which use is regulated by law”.

That the learned trial Judge erred in law by holding that the signature of one Mr. Asuquo E. Bassey appended with the name of Bank PHB Mortgages amounts to ratification of the said contract in Exhibit C1 for Mortgage Bank PHB (1st Respondent). That the Mortgage Scheme operated by Bank PHB Ltd (3rd Respondent) is certainly not by the corporate body, Mortgage PHB Ltd. Thus Mr. Asuquo could not have signed for Mortgage PHB Ltd which was not a party or even mentioned in Exhibit C1. That it is this misconception of the law that made the learned trial Judge to erroneously hold that Mr. Asuquo’s signature amounts to pre-incorporation contract. That a cursory look at the Exhibit C1 clearly shows that it was duly executed by the 1st Appellant and the relevant officers of the 3rd Respondent.

That Exhibit D8 which learned counsel described as a “letter of the 1st Appellant meant to be sent to the 3rd Respondent,

explaining the transaction and problems associated with the Bureau De Change Business of the 2nd Appellant – Guarantor of the loan facility – occasioning delay in repayment of the loan according to the schedule, but was erroneously sent to the 1st Respondent” was misconstrued in the judgment by the learned trial Judge to amount to ratification of Exhibit C1. That there was no evidence on record of any resolution passed by the 1st Respondent to ratify Exhibit C1 if it could be held to be pre-incorporation contract made in favour of the 1st Respondent. That the learned trial Judge suo motu raised the issue of pre-incorporation contract without calling on learned counsel to the parties to address him on it. Cited the authority of MUHAMMED V. MUHAMMED (2012) 11 NWLR {Pt. 1310} 1 at 34.

Learned counsel to the Appellants argued further that there was no evidence on record that both 1st and 3rd Respondents jointly own the loan fund as the judgment did not clarify who between the 1st and 3rd Respondents own the money and should lawfully enforce the default clause in Exhibit C1. That ownership of the money ought to be definite and made in clear terms as an

attribute of a good judgment. That the 1st Appellant did not state that he will not pay back the loan. What worried him was that just 2 years into the 10 years term loan the 3rd Respondent did not take any step to recover the loan, rather it is the 1st Respondent (who is not party to the agreement) that is harassing the 1st Appellant to the extent of writing a petition to the police on false allegation of diversion of the loan. That the 3rd Respondent was not made a party to this suit, it was the 1st and 2nd Respondents that applied to join the 3rd Respondent as a party to this suit. That there is no evidence that the 3rd Respondent demanded a repayment of the loan or issued a Notice of Enforcement of the Mortgage in the event of default pursuant to the Default Clause in Exhibit C1. Learned counsel referred to the testimony of DW1 at page 451 of the Records.

Another grouse of the Appellants is Exhibit D6, the statement of account prepared by the 1st Respondent which learned counsel submitted “unjustifiably varied the interest rate agreed by the 1st Appellant and the 3rd Respondent in Exhibit C1” from 18% to 22% per annum. That it was relied

upon by the lower Court in its judgment in arriving at the value of the judgment sum awarded against the appellants which learned counsel considered as a perverse decision.

Learned counsel to the appellants submitted that another area of the judgment by the learned trial Judge which is perverse is the holding in respect to the trial Court’s omission to consider the Appellants’ Witness Statement on Oath in reply to the Respondents’ Counter-Claim. That the lower Court “openly discountenanced” defence put forward by the Appellants in their reply to the 1st and 3rd Respondents’ counter-claim by holding that the reply was not accompanied by a Witness Statement on Oath. Learned counsel quoted the holding by the learned trial Judge at page 454 of the Records and submitted that the Claimants’ witness statement on oath on their Reply to Statement of Defence and Defence to Counter Claim is part of the process filed by the Appellants at pages 329 – 330 of the Records. That the learned trial Judge held it was not filed which learned counsel termed “a gross miscarriage of justice”. That this omission is a

clear breach of the hallowed principle of fair hearing. That in paragraph 5 of the Claimants’ Witness Statement on Oath in Reply to the Statement of Defence and Counter Claim the Appellants as Claimants duly challenged the issue of interest rate. Learned counsel quoted the said paragraph 5 verbatim and the holding by the learned trial Judge at page 468 of the Record which stated that the amount reflected at the statement of account remains unchallenged. That this holding by the trial Court visited on the appellants the injustice of lack of fair hearing as enshrined in Section 36(1) of the 1999 Constitution (as amended) and occasioned a gross miscarriage of justice against the Appellants. Learned counsel cited and quoted the holding by the apex Court on denial of fair hearing in CITECH INT’L ESTATES LTD V. FRANCIS (2014) 8 NWLR {Pt. 1308} 139 at 163 paragraphs E – H and 170 paragraphs B – C. He urged the Court to resolve this issue in favour of the Appellants.

Issue 1 and 2 formulated by learned counsel to the Respondents are as follows: –
1. Having regards to the facts of this matter and the exhibits tendered; whether the 1st

Respondent is a necessary party to this Mortgage Loan Transaction or not?
2. Having regards to the facts of this matter, the pleadings, evidence adduced in support thereof and the exhibits tendered; whether Exhibit C1 is a pre-incorporation contract of the 1st Respondent or not?

In his submission while arguing issue 1, learned counsel to the Respondents submits that the 1st Respondent is a necessary party to the Mortgage Loan Facility of Twenty Five Million Naira that was given to the Appellants. Therefore there is privity of contract between the Appellants and the 1st Respondent. That the submission by learned counsel to the Appellants that there is no privity of contract between the Appellants and the 1st Respondents is not the correct position of the law. That the money in issue belongs to the 1st Respondent not the 3rd Respondent. That a careful scrutiny of Exhibits D5 and D6 at page 68 of the Records and also pages 74, 181, 219, 225 clearly shows that the loan for the N25 Million was applied for from the 1st Respondent on 29/4/2008 when the said Respondent was still bearing the name of Finacorp Building Society Ltd., prior to the issuance of a

new Certificate of Incorporation by the Corporate Affairs Commission on 23/10/2008 which is Exhibit D7 at pages 168 and 209 of the Records.

That all correspondences by the Appellants (including the payment of N1,400,000.00) were made to the 1st Respondent including the last payment of N500,000.00 Ecobank Cheque which was attached to Exhibit D1 (which is the 1st Appellant’s letter of 28/7/2009) were all paid to the 1st Respondent Account with the 1st Appellant. That Exhibit D1 dated 28/7/2009; Exhibit D2 dated 17/4/2010; Exhibit D4 dated 18/4/2008 and 1st Appellant’s letter dated 4/6/2010 were all addressed to the 1st Respondent and not to the 3rd Respondent. That it is on the strength of all these correspondences by the Appellants to the 1st Respondent that the learned trial Judge made his finding at page 465 of the Records. That by Exhibit C1 at pages 172 and 340 of the Records, it was a staff of the 1st Respondent Bank, one Asuquo E. Bassey who signed the Offer Letter on behalf of the 1st Respondent, not 3rd Respondent thus the learned trial Judge held thus: –
“The signatory of a document is the owner or author of the document.

Exhibit C1 was not signed by an official of BANK PHB (3rd Respondent). It was signed by one Asuquo E. Bassey for Mortgages PHB (1st Respondent). In the case of Adefarasin Vs. Dayekh (2007) All FWLR {Pt. 348} 911 at 932 paragraphs F – G it was held “A person’s signature written names or mark on a document not under seal, signifies an authentication of that document that such a person holds as bound or responsible for the contents of such a document.” Page 460 of the Records.

Learned counsel submitted further that the staff in question is a staff of the 1st Respondent and he signed as such, not as a staff of the 3rd Respondent and yet learned counsel to the Appellants is alleging that there is no privity of contract between the Appellants and the 1st Respondent. He urged the Court to reject such contention by the counsel to the Appellants and uphold the findings by the trial Court on this issue.

While arguing issue 2, learned counsel to the Respondents submitted that Exhibit C1 is a pre-incorporation contract of the 1st Respondent. To support that assertion, learned counsel quoted the finding by the learned trial Judge in that

respect at pages 460 to 462 of the Records. On the submission by the Appellants’ counsel that Exhibit C1 cannot amount to a pre-incorporation contract on the basis that the 1st Respondent was already in existence using the name Finacorp Building Society Ltd and that Exhibit D7 was just a change in name and not that the 1st Respondent came into being on 23/10/2008, learned counsel to the respondents replied that the law is trite that a document speaks for itself. That Exhibit D7 is Certificate of Incorporation of a Company. That if the Corporate Affairs Commission that issued the Certificate of Incorporation wanted it to be a mere change of Name Certificate (as alleged by learned counsel to the Appellant), they would not have called it a “Certificate of Incorporation of a Company. That they would have called it “Change of Name Certificate”. Learned counsel quoted the Certificate of Incorporation of a Company issued by the Corporate Affairs Commission at pages 67 and 209 of the Records. He also cited and quoted the Supreme Court decision in AGBAREH V. MIMRA (2008) ALL FWLR {Pt. 409} 559 AT 584 paragraphs E – F. That the learned

trial Judge was right in his judgment and urged the Court not disturb that finding but affirm it by resolving this issue in favour of the Respondents.

I have carefully considered the submission by learned counsel to the Appellants in the Reply Brief wherein learned counsel to the appellants re-argued the earlier submission in his brief of argument. However, I will refer to the submission in the Reply Brief if I consider it necessary.

FINDING ON ISSUE 1:
Issue 1 formulated by the Appellant is:
Whether the judgment is not against the weight of evidence and liable to be set aside having regard to the finding of facts and conclusions reached by the learned trial Judge, which were perverse and not supported by available evidence on record and at the trial, particularly in respect of whether the 1st Respondent is a party to the Mortgage Loan transaction which was executed between the 1st Appellant and the 3rd Respondent as evidenced by Exhibit C1 and as such, can the 1st Respondent enforce and or benefit from the contract, having regard to the application of the doctrine of privity of contract?

Learned counsel to the Respondent reframed

this issue by splitting it into two as follows:-
1. Having regards to the facts of this matter and the exhibits tendered, whether the 1st Respondent is a necessary party to this Mortgage Loan transaction or not?
2. Having regards to the facts of this matter, the pleadings evidence adduced in support thereof and the exhibits tendered, whether Exhibit C1 is a pre-incorporation contract of the 1st Respondent or not?

In answering this issue in order to have a clear picture of the facts, I will have to once again give a brief summary of the facts that led to filing this suit. The 1st Appellant is customer to the 1st Respondent and he maintains two accounts to wit; current account and mortgages loan account. As at April, 2008 when the transaction in issue took place the 1st and 3rd Respondents were doing Universal Banking as approved by the C.B.N. In April, 2008, the 1st Respondent changed its name from Finacorp Building Society Limited to Mortgages PHB Ltd., the name of the 3rd Respondent was Platinum Habib Bank Plc or Bank PHB Plc. Upon the application by the 1st Appellant for Mortgage Loan, the 1st Respondent through their parent bank, which is the

3rd Respondent approved and granted a N25 million Mortgage Loan Facility to the 1st Appellant which is contained in an Offer and Acceptance Letter dated 15/4/2008 (Exhibit C1). The purpose of the facility is to:
“To refinance owner’s existing property located at House C100, Alaba Okori Road, Satellite Town Lagos valued at N28,000,000.00.” (page 211 of the Records)

The tenor of the loan is 120 months while the interest rate was 18% per annum. Equal monthly principal and interest payments of N450,463.00 throughout the tenor of the facility is part of the condition of the loan. Legal ownership of the property will reside with the 3rd Respondent. Among the conditions attached to the loan are: –
“Default on any installment repayment will result in sale of the property without recourse to the obligator”.
“In the event of default by obligator to meet his obligation to the bank in accordance with the terms and conditions of the offer, the Bank shall be at liberty to dispose of the property provided as security to the Bank in order to reduce the obligator’s indebtedness to the Bank. This is without prejudice to the

Bank’s further right of recourse against the obligator until the obligation is fully repaid”.
“Notwithstanding the term conditions of this offer, the Bank reserves the right to demand immediate repayment and/or alter terms at any time should the facility not be discharged at maturity, interest/fees will be charged on the outstanding balance at prevailing rates to be determined by the Bank”.
“If the above terms and conditions are acceptable to you, please sign and date and return same to the Bank”. (pages 211 – 214 of Records).

That 1st Appellant signed the Memorandum of Acceptance on 3rd July, 2009, the 1st Respondent wrote officially and informed the 1st Appellant of revising the monthly loan obligations based on the new interest rate of 22% per annum. Thus the Monthly Loan Obligation is N511,914.53. Further details are: –
“Next Schedule Payment – 28 July, 2009 and subsequently 28th of every month.
Current Loan Balance = N23,925,646.13
Current Account Status = N6,979,386.35 DR.”
The 1st Appellant accepted the changes above and even made instalmental payment of

N500,000.00 on 28/7/2009 as reflected at page 216 of the Records.

Unfortunately, the 1st Appellant never kept to this repayment agreement. By his Statement of Account (Exhibits D5 and D6), the 1st Appellant had only paid back the sum of N1,400,000.00 since April, 2008 as against his last due obligation of N17,028,982.45 as at 13th July, 2010 (pages 223 – 224 of the Records). For the failure of the 1st Appellant to keep his side of the bargain, the 1st Respondent instructed the 2nd Respondent to write Letters of Demand to the 1st Appellant which it did dated 24/2/2010, 26/3/2010 and 13/4/2010. The letters were tendered in evidence during trial and marked as Exhibits D16, D17 and D18. By letters dated 27/5/2010 (Exhibit D9) and 3/6/2010 (Exhibit D10) addressed to the 2nd and 1st Appellants respectively the 1st Respondent had to CALL IN the facility and demand for full payment of the outstanding balance since the Appellants were no longer ready to service the debt.

To further compound the situation, by his own admission, the 1st Appellant changed the purpose of the Mortgage Loan he took. By a letter dated 28/7/2009 at page 217 of the Records he

wrote to the 1st Respondent, inter alia, as follows: –
“Actually, I collected this money for the purpose of investing it into the business of Bureau De Change, which every documentation has been concluded. The operating licence was issued to me on the 23rd day of December, 2008. While I commenced trading two (2) months later within the second week of the month of February, 2009 before the Central Bank stops all the BDC from trading.
Gladly, the embargo was lifted up on the 15th day of the June, 2009 and I will commence bidding very soon by the grace of God. Therefore ask you to exercise patience with me. Hopefully, I am going to liquidate this money before the expiration of the period stated therein offer letter. The cause of not fully complying is as a result of the delay in operations which is of a National issue and not mine.”
(pages 217 – 218 of the Records).

The 1st Respondent was not amused by this turn of events wherein the 1st Appellant not only failed to meet the condition in Exhibit C1 of remitting N511,914.53 monthly to service the debt he took as promised, but unilaterally changed the fundamental condition for

obtaining the loan, which is “to refinance owner’s existing property located at House C100, Alaba Okori Road, Satellite Town, Lagos…” by venturing into the business of Bureau De Change in December, 2008. The 1st Respondent engaged the 2nd Respondent to write a petition to the police on the basis that the 1st Appellant is guilty of obtaining money under false pretences. The police invited the 1st Appellant, he refused to report himself, he rather filed Suit No. FHC/L/CS/597/2010 before the Federal High Court, Lagos seeking for among others, a declaration that the invitation by the police infringed his fundamental right. The Federal High Court dismissed the suit and awarded cost in favour of the Respondents (pages 267 – 289 of the Records). The Appellants thereafter filed this suit before the High Court of Lagos State which also dismissed the suit with cost of N100,000 against them.

I find it necessary to recount the facts that gave rise to filing this suit in order to determine whether the decision by the learned trial Judge is perverse particularly whether the 1st Respondent is a party to the Mortgage Loan transaction, and

whether it (the 1st Respondent) can enforce or benefit from the contract having regard to the application of doctrine of privity of Contract.

I am of the firm belief that learned counsel to the Appellants misconceived the essence of the doctrine of privity of contract. Privity of contract arises where a party has created a state of affairs or has helped to cause to exist and by which the other party has suffered some detriment on the promise that it was not ab initio a party to such a contract. See N.B.N. Ltd V. SAVOL W.A. Ltd (1994) 1 NWLR {Pt. 333} 435 at 468. As I stated above, the 1st Appellant is a customer to the 1st Respondent, he maintains two accounts, current account and mortgage loan account. The 1st Appellant applied for mortgage loan and the 1st Respondent, through their parent Bank (the 3rd Respondent) approved and granted to the Appellants a N25 Million Mortgage Loan facility as contained in Exhibit C1. I have stated the purpose of the loan and the amount the 1st Appellant agreed to be paying monthly. The said 1st Appellant breached both agreements. In two years (2008 – 2010) he was able to repay just N1.4 Million thus defaulting in

repayment. Among the conditions the 1st Appellant willingly accepted is that which states thus: –
“Default on any installment repayment will result in sale of the property without recourse to the obligator.” (page 213 of the Records).

Thus the 1st Respondent has the right to sell the property used as collateral “without recourse to the obligator”. The 1st Appellant by his letter dated 28th July, 2009 at page 217 of the Records agreed that he defaulted in making the installmental payment. The Respondents did not sell the property used as collateral, they rather wrote three letters to the Appellants calling upon them to fulfill their promise of making the monthly installmental payments. The Appellants failed and/or refused to do the needful. The trial Court held that the 1st and 3rd Respondents counter claim was proved and ordered the sale of the property used as collateral by the Appellants to collect the loan. The Appellants appealed to this Court with the nebulous argument about privity of contract. I have already made my finding on what constitute privity of contract and it is clear as crystal that the Appellants in their

attempt to resile from a Mortgage Loan Agreement (to which they willingly accepted all the conditions therein and signed) are now trying to be clever by half by resorting to technicalities on the wrong assumption that they will escape liability. This Court will not be a party to such shenanigans.

The Courts in a plethora of authorities made it clear that justice cannot be dispensed with on mere technicality. That the Courts are there to do substantial justice rather than adhering to mere technicality as the Appellants are unsuccessfully trying to do in this suit. The crux of the matter is that the Appellants willy nilly entered into a binding mortgage loan agreement of N25 Million; accepted all the conditions attached to the loan; collected the money; failed and or refused to make the monthly instalmental payments as and when due; used the money by investing in a hair brained scheme of Bureau De Change business, which by all indication failed woefully. Now they are shouting to the high heavens that the 1st Respondent, from whom they collected the loan and made some paltry part payments, is not a party to the agreement by the doctrine of privity of contract.

While pronouncing on the effect of technicality on substantive justice, the apex Court per TOBI, JSC in MOJEED SUARA YUSUF V. MADAM IDIATU ADEGOKE & ANOR (2007) LPELR – 3534 (SC) held, inter alia, thus: –
“…in most cases when the Courts invoke the substantial justice principle they have at the back of their minds the desire to put to naught technicalities which the adverse party relies upon to drum down an otherwise meritorious case. We seem to be overstretching the technicality concept. We should try to narrow down the already onerous and amorphous concept in our judicial process. A technicality in a matter could arise if a party is relying in abstract or inordinate legalism to be cloud or drown the merit of a case. A technicality arises if a party quickly takes an immediately available opportunity, however infinitesimal it may be, to work against the merits of the opponent’s case. In other words, he holds and relies tenaciously unto the rules of Court with little or no regard to justice of the matter. As far as he is concerned, the rules must be followed to the last sentences, the last words and the last

letters without much ado, and with little or no regard to the injustice that will be caused the opponent.”

It is my humble opinion that the above description of technicality by the Supreme Court and the intended purpose for which it was resorted to aptly fits into the pattern adopted by the Appellants in this suit. They are holding on, tenaciously to technicality of privity of Contract to claim that the 1st Respondent (from whom they took a Mortgage Loan of N25 Million and are unwilling to pay back) is not a party to the loan agreement (Exhibit C1) however they had already made some installmental payments to the said 1st Respondent, though not as they contracted to do in the Loan Agreement. The Appellants also shifted the goal post, so to speak, by leaving the purpose to which they took the loan and venturing into the business of Bureau De Change. These two fundamental breaches of the term of the Loan Agreement entitled the 1st Respondent to call in the loan and dispose of the collateral, (the documents to which are in its possession) with a view to recover its money. No amount of sophistry or technicality can extricate the Appellants from the

quagmire they willing entered into.

It is my holding on this issue that upon considering the documents tendered in evidence, particularly Exhibit C1, the 1st Respondent is a necessary party to this Mortgage Loan transaction. As for the submission by learned counsel to the Appellants on privity of contract, I have already made my finding known that the doctrine of privity of Contract cannot be applied in this suit considering the facts as I narrated above. Learned counsel to the Respondents in his submission argued, rightly in my view that Exhibit C1 is a pre-incorporation contract of the 1st Respondent.

might have been done before. The company can however after its incorporation enter into a new contract to put into effect the terms of the pre-incorporation contract. However, all that has now changed in this country as Section 72(1) of the Companies and Allied Matters Act (CAMA) now makes it possible for a pre-incorporation contract to be ratified by a company after its incorporation and thereby becoming bound by it and entitled to the benefit thereof. See SOCIETE GENERALE FAVOURISER LE DEVELOPMENT DU COMMERCE ET DE L’INDUSTRIE EN FRANCE V. SOCIETE GENERALE BANK (NIGERIA) LIMITED (1997) LPELR – 3083 (SC).
Section 72(1) of the CAMA provides thus: –
“Any contract or other transaction purporting to be entered into by the company or by any person on behalf of the company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by and entitled to the benefit thereof as if it has been in existence at the date of that contract or other transaction and had been a party thereto.”
See:BYUAN RESOURCES LIMITTED V. MINISTER OF FEDERAL CAPITAL TERRITORY & ORS (2016) LPELR

– 41494 (CA). I took note of the fact that apart from Exhibit C1, all other correspondences from the Appellants in respect to the loan agreement in issue were written to the 1st Respondent. Moreover it was the 1st Respondent not the 3rd Respondent that wrote letters to the 1st Appellant on the transaction. This state of affairs is a clear ratification of the pre-incorporation contract executed by the 1st Respondent with the 1st Appellant. Thus the learned trial Judge was right by holding that it was the 1st Respondent (the Mortgage Arm of the 3rd Respondent) that advanced the loan to the Appellants. It is my finding that the Exhibit D7 (the Certificate of Incorporation of the 1st Respondent) showed that the said 1st Respondent was incorporated on 28/10/2008 while the offer for the Mortgage Loan Facility was given in April, 2008. Therefore all transactions involving the 1st Respondent prior to 23/10/2008 with the Appellants amounted to a pre-incorporation contract which the Appellants by their various correspondences (all of which were addressed to the 1st Respondent) have ratified same by their conduct and actions, particularly, their Exhibit D1 dated

28/7/2009 attached to which is copy of Ecobank Cheque (at pages 90 – 92 of the Records). The letter by the 1st Appellant dated 4th June, 2020 among others clearly shows the ratification of this transaction by the Appellants with the 1st Respondent and not the 3rd Respondent.

Also Exhibit D4, a Board Resolution by the 2nd Appellant dated 18/4/2008 signed by the 1st Appellant as Chairman was addressed to the 1st Respondent and not Finacorp Building Society Limited or the 3rd Respondent thus lending credence to the ratification of the pre-incorporation contract of Exhibit C1 by the Appellants. Therefore this issue is resolved in favour of the Respondents.

The second issue canvassed by the Appellants is:-
On what is “Owner’s Refinancing Loan as a variant of Mortgage Loan, and does the borrower unlawfully divert the loan when it uses the fund for its chosen business without restriction by the lender, and whether it was right for police to be invited to intervene in the recovery of a commercial loan transaction in Exhibit C1.

Learned counsel to the Respondents reframed this issue, as follows: –
Whether the Appellants are

in breach of the terms and conditions as contained in Exhibit C1 that will make the Respondents to invoke the Default Clause in the said Offer Letter of 15th April, 2008 i.e. Exhibit C1.

Without recourse to the submission by learned counsel to the parties, it is my finding (as I stated in issue 1 above) that the Appellants are in breach of the terms and conditions attached to the loan as clearly, spelt out in Exhibit C1 in two respects. Firstly, they failed to comply with the condition of remitting N511,914.53 monthly to service the loan agreement. This default in repaying the loan instalmentally gives the 1st Respondent the right to dispose of the property used as collateral without notice to the Appellants. Exhibit C1 is explicit in this respect, it provides thus: –
“default on any installment repayment will result in sale of the property without recourse to the obligator.” (page 213 of the Records).

The Appellants accepted this condition as clearly exhibited in Exhibit C1, however they defaulted in making the instalmental payment. The 1st Appellant admitted that much in his letter to the 1st Respondent at page 217 of the Records.

Secondly, the Appellants breached the main reason the money (N25 Million) was given to them which is: “To refinance owner’s existing property located at House C100, Alaba Okori Road, Satellite Town Lagos Valued at N28,000,000:00” (age 211 of the Records).

In a letter dated 28th July, 2009, signed by the 1st Appellant at page 217 of the Records, he wrote inter alia, thus: –
“Actually I collected this money for the purpose of investing it into the business of Bureau De Change which every documentation has been concluded, the operating licence was issued to me on the 23rd day of December, 2008… I therefore ask you to exercise patience. Hopefully, I am going to liquidate this money before the expiration of the period therein the offer letter. The cause of not fully complying is as a result of the delay in operations which is of a National issue and not mine…”

The 1st Respondent was right when it informed the police that the Appellants who took the loan for a particular purpose diverted the funds into another business venture thus giving rise to the suspicion by the Respondents of criminal

intent to use the funds for a different purpose. All the arguments by the Appellants cannot change these facts. It is my finding on this issue that the Appellants are in breach of the Terms and Conditions as contained in Exhibit C1 that can make the Respondents to invoke the Default Clause in the said Exhibit C1. I also resolve this issue in favour of the Respondents.

Issue 3 formulated by the Appellant is: –
On whether the refusal by the trial Court of the Appellants’ counsel’s right to Final Address or even to address the Court orally, after paying the cost ordered by the trial Court for default does not amount to breach of fair hearing in judicial proceedings.
Learned counsel to the Respondents reframed this issue as their issue 4 as follows: –
Whether the learned trial Judge was right to have foreclosed the opportunity given to the Appellants’ Counsel to file his Final Written Address after five (5) consecutive adjournments at the instance of the Appellants’ Counsel that spanned eight (8) months which the Appellants Counsel failed to make use of …

In answer to this issue, I will again record what led

to the foreclosure of the Appellants’ Counsel from addressing the lower Court as reflected at pages 433 – 434 of the records when on 16th November, 2015, the learned trial Judge held thus: –
“I am not going to grant any further indulgence to the claimants’ counsel to file the address. The order for Final Addresses was made on the 27th of February, 2015 Defendants’ counsel filed his Final Address on the 4th of March, 2015. This is the 5th adjournment for adoption of Final Address. Up till now, Claimants’ address had not been filed. On 29/06/2015, Claimants’ Counsel passionately pleaded for an adjournment to file the address. Today he has come with another story, stories of Claimants Counsel. The 2012 Rules is geared towards efficient and speedy dispensation of justice. Justice is for the Claimants as well as the Defendants. As Claimants’ Counsel rightly said, it is not a must that a Final Address be filed. I foreclose Claimants’ address and I call on the Defendants’ Counsel to adopt his final address”.
“MR. OKONKWO: Our final address is dated 04/03/2015, it was served on Claimants’ Counsel. I urged the Court to

dismiss the claim of the Claimants and enter judgment for the 3rd Defendant/Counter-Claimant”.
“MR. OGBUANYA: I plead with the Court for even one day to file our reply. I plead to be allowed to orally address the Court”.
“COURT: Oral address is not allowed by our Rules. Application refused. Judgment is fixed for 26/01/2016.”

In his judgment at page 451 of the Records, the learned trial Judge gave a succinct appraisal of the situation as follows: –
“Defendants’ counsel filed his final address on the 4th of March, 2015 and served Claimants’ Counsel on the same day. The Court adjourned for Claimants’ Counsel to file his final address on 20th April, 2015; 20th May, 2015; 29th June, 2015; 5th October, 2015 and 16th November, 2015”.
“On the 16th November, 2015 since no address has been filed after 8 months of service, the Court foreclosed Claimants right to file same.”

This decision by the learned trial Judge cannot be faulted even if learned counsel to the Appellants is to be in his shoes. Therefore the submission by learned counsel to the Appellants, no matter how

brilliant cannot take the place of evidence. In JAMES CHIOKWE V. THE STATE (2012) LPELR – 19716 (SC) apex Court per PETER-ODILI, JSC held thus: –
“It needs to be reiterated that submissions of counsel however beautiful or enticing cannot take the place of evidence. This is because address of counsel to be accepted and utilized must be a reminder to Court on evidence proffered. On its own address of counsel cannot stand.”
This Court put the issue succinctly in OLA EMMANUEL ADEBOWALE ADEBAYO V. CHIEF JULIUS ADEDURO OKEYA (2015) LPELR – 40095 (CA) per BELGORE, JCA as follows: –
“The address of counsel cannot take the place of evidence and it cannot be the basis upon which an appeal will be decided.”
The Supreme Court also put its imprimatur on this issue in UNION BANK OF NIGERIA Plc & ANOR V. AYODARE & SONS NIGERIA LIMITED & ANOR (2007) LEPLER – 3391 (SC) when it held, per ONNOGHEN, JSC (as he then was) as follows: –
“It is also settled law that address of counsel however brilliant cannot take the place of evidence particularly where there is no evidence as in the instant case, in support of the submission(s).”

On this issue, I agree in toto with learned counsel to the Respondents that the learned counsel to the Appellants is the architect of his own misfortune. He cannot be heard to complain of being deprived of his right to fair hearing since he was accorded all the opportunity to address the Court but he chose to misuse the opportunity. He shot himself on the foot, so to speak, and he ought to bear the consequences of his action. I also resolve this issue against the Appellants.

Since all the issues canvassed by learned counsel to the parties are resolved in favour of the Respondents, it is obvious that this appeal is bereft of merit, it is hereby dismissed. The judgment by the lower Court delivered on 26th January, 2016 in Suit No. LD/1138/2010 is affirmed by me. The Respondents are entitled to cost which I assess at N300,000 against the Appellants in favour of the Respondents jointly and severally.

CHIDI NWAOMA UWA, J.C.A.: I read in advance the judgment of my learned brother, BITRUS G. SANGA, JCA. My learned brother has comprehensively resolved the issues that arose in this appeal, I agree with his

Lordship’s reasoning in adopting same as mine. I abide by the order made as to costs in the leading judgment.

TUNDE OYEBANJI AWOTOYE, J.C.A.: I had the opportunity of reading in advance the erudite judgment of my learned brother Bitrus Sanga JCA. I entirely agree with the reasoning and conclusion therein.

I resolve all the issues in favour of the Respondent and accordingly dismiss the appeal for lacking merit. I abide by the consequential orders (including costs) in the lead judgment.

Appearances:

N.C.S. OGBUANYA, ESQ. For Appellant(s)

TOCHUKWU OKONKWO, ESQ. For Respondent(s)