MR. ROBERT AYOADE OLALEYE v. WEMA BANK LIMITED & Anor
(2010)LCN/3861(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 8th day of June, 2010
CA/I/93/2001
RATIO
ACTION: EFFECT OF FAILURE TO FILE A DEFENCE TO COUNTERCLAIM
Since a Counterclaim is a separate action, the effect of failure to so file a defence to Counterclaim is exactly the same as that of a Defendant in a normal action commenced by writ of summons who having been served with a statement of claim fails to file a statement of defence in challenge of the statement of claim. Even where a statement of defence has been filed and no evidence is led on it the Defendant is deemed in law to have abandoned his defence and admitted as true the Averments in the statement of claim and the onus placed on the Plaintiff to prove his case becomes minimal. See OKE V. AIYEDUN (1986) 2 NWLR (PART 23) page 548 at Pages 560-565; BELLO AKANBI V. MAMUDU ALAO & ORS (19891 3 NWLR (PART 108) page 118 at page 140: ONWUKA V. OMOGUI (1992) 3 SC page 89 at page 127. PER STANLEY SHENKO ALAGOA, J.C.A.
JUSTICES
STANLEY SHENKO ALAGOA Justice of The Court of Appeal of Nigeria
SIDI DAUDA BAGE Justice of The Court of Appeal of Nigeria
MODUPE FASANMI Justice of The Court of Appeal of Nigeria
Between
MR. ROBERT AYOADE OLALEYE Appellant(s)
AND
(1) WEMA BANK LIMITED
(2) ALHAJI GANIYU OLAYIWOLA KARIM Respondent(s)
STANLEY SHENKO ALAGOA, J.C.A. (Delivered the Leading Judgment): In the High Court of Justice Oyo, Oyo State of Nigeria, the present Appellant as Plaintiff had in Suit No. HOY/47/90 claimed as per paragraph 37 of the amended statement of claim against the 1st & 2nd Respondents as follows –
1. An order setting aside the purported sale of the Plaintiffs property situated at Ogbomosho Road, Opposite the State Hospital, Oyo subject matter of a Certificate of Statutory Right of Occupancy of 7/9/81 registered as 34/34/2393 of the Lands Registry Ibadan, carried out on 15/5/89 by the agents of the 1st Defendant to the 2nd Defendant (a tenant in a shop in a building on the said property) on the grounds that it was fraudulent, irregular, not in compliance with the law, grossly below the market value in that not all the developments on the land was disclosed, it was not made in good faith and premature in that the 1st Defendant did nothing to satisfy the debt owed it by the principal debtor from him whom the Plaintiff stood surety for and that the Plaintiff was not allowed time to make good his promise made on 12/5/89 to pay the money owed by instalmental payment
2. A declaration that the purported sale of the Plaintiffs property situate at Ogbomosho Road, Opposite the State Hospital, Oyo, Oyo State subject matter of a certificate of Statutory Right of Occupancy dated 7th September 1981 and registered as No. 34 on page 34 in Volume 2393 at the Lands Registry Ibadan to the 2nd Defendant on the instructions of the 1st Defendant carried out on 15th May 1989 is null and void and of no effect as the purported sale was carried out without the consent of the Military/Governor of Oyo State which consent ought to have been first had and obtained before the purported sale could be carried out.
3. A declaration that the purported Deed of Assignment made between the 1st Defendant and the 2nd Defendant dated 7th June 1989 and registered as No. 17, Page 17 Volume 2761 at the Lands Registry Ibadan is null and void and of no effect as the same was based on the said purported sale by the 1st Defendant and in respect of which no consent of the Military Governor of Oyo State was obtained before the assignment of the Plaintiff’s property.
4. An injunction restraining the 2nd Defendant from laying any claim of ownership to the Plaintiff’s property subject matter of this action by virtue of the purported sale to him by the 1st Defendant carried out on 15/5/89.
Briefly the Plaintiff’s case is that he was a member of the Oyo State House of Assembly between 1979 and 1983 when sometime in 1979 he opened a current account with the 1st Defendant Bank at its Adamasingba branch, Ibadan in order to facilitate the receipt of allowances from the Oyo State Government. Sometime in 1982, he deposited his statutory certificate of occupancy dated 7th September 1981 and registered as No. 34 at page 34 in volume 2393 at the Lands Registry Ibadan with the 1st Defendant Bank to secure a credit facility in the sum of N5,000.00. The Plaintiff’s certificate of occupancy was in respect of the land on which stood a one storey building located along Oyo/Ogbomosho Road, opposite the State Hospital Oyo. The Plaintiff stopped operating the account with the 1st Defendant Bank sometime in 1984 when following the military takeover of government of Nigeria all bank accounts of the then politicians, a class to which he belonged were frozen on the orders of the Federal Military Government. Plaintiff averred that sometime in 1985, he went into bread baking business and came into contact with one Alhaji Sheu Alatewu, who traded in bread baking flour and they became friends. Alhaji Sheu Alatewu sometime approached the Plaintiff and informed the Plaintiff of his inability to secure a loan facility from his bankers to further finance his business because he did not have the type of landed property documents in the form of a certificate of occupancy that his bankers needed to advance him a loan. Alhaji Sheu Alateowo asked Plaintiff if he had any such document which he could lend to’ him. The Plaintiff told Alhaji Sheu Alateowo that although he had such a title document, he had deposited it with his bankers at Ibadan to secure a loan of N5,000.00.
Alhaji Sheu Alateowo said he banked in the same bank as the Plaintiff at its Orile Iganmu branch Lagos and requested that the Plaintiff should assist him by arranging for the transfer of the title documents to Lagos to enable him enjoy the loan facility and return same after the loan must have been paid back in a year’s time. The Plaintiff agreed to do so but upon being informed that he would be required to depose to an affidavit authorizing the bank to transfer the documents to Lagos, the Plaintiff refused to be drawn into such a deposition. Alhaji Sheu Alateowo then requested that Plaintiff act as guarantor in respect of the loan to which the Plaintiff agreed. Sometime in 1986 the Plaintiff was invited to the Orile Iganmu branch of the 1st Defendant Bank by Alhaji Sheu Alateowo to sign the loan agreement as a guarantor. Plaintiff averred that although he signed the loan agreement as a guarantor, a copy was not given to him. Plaintiff averred that after signing the agreement as guarantor he heard nothing on the issue again until the 10th May 1989 when his attention was drawn to an auction notice dated 25th April 1989 pasted on the house the subject matter of this suit stating that the house would be sold on the 15th May 1989. On the 12th May 1989, Plaintiff went to the head office of the 1st Defendant Bank, where on inquiry he was informed that the said property was mortgaged by the said Alhaji Sheu Alateowo to the 1st Defendant Bank to secure a loan of N25,000.00 granted him by the bank and which money he had failed to pay back.
Plaintiff averred that he learnt same day that Alhaji Sheu Alateowo had earlier on represented an affidavit authorizing the transfer of his (Plaintiff’s) title documents from the Adamasingba branch Ibadan to the Orile Iganmu branch of the 1st Defendant purporting same to be sworn to by the Plaintiff. Plaintiff also averred that the 1st Defendant should have known that that affidavit was a forgery, and informed the legal officer of the 1st Defendant who requested him to make a proposal for the payment of the debt now incurred on the loan by Alhaji Sheu Alateowo which second or alternative proposal by him (Plaintiff) was acceptable to the legal officer of the 1st Defendant; but surprisingly the sale of the Plaintiffs house the subject matter of the suit was effected on the 15th May 1989 as planned. Plaintiff averred that he thereupon approached the 1st Defendant who informed him that the sale was in error. It was later he understood that the house was purchased by the 2nd Defendant who is one of the tenants in the house subject matter of this suit.
The 2nd Defendant carries on business as a dealer in pharmaceutical products under the name and style of Oloyin Pharmaceutical Chemists and Plaintiff averred that he bought the house worth over N450,000.00 for N27,300.00. Plaintiff averred that before the purported sale the Plaintiff received no demand note from the 1st Defendant and was never informed that Alhaji Sheu Alateowo had defaulted in the payment of the money he borrowed. Plaintiff averred that by accepting the proposals made by the Plaintiff, the effect of which was that the house would not be sold, the 1st Defendant was estopped from selling the Plaintiff’s house and the purported sale was in bad faith. The Plaintiff further averred that the purported sale of the property to the 2nd Defendant was without the consent of the Governor of Oyo State whose consent ought to have
been first had and obtained before the purported sale as required by the Land Use Act.
Plaintiff went on to further aver that the purported sale carried out on the instructions of the 1st Defendant to the 2nd Defendant is the basis of a purported Deed of Assignment between the 1st and 2nd Defendants dated 7th June 1989 and registered as No. 17 at page 17 in Volume 2761 at the Lands Registry without the consent of the Military Governor of Oyo State which ought to have been first had and obtained. It is the Plaintiff’s further averment that unless restrained, the 2nd Defendant will take further steps to eject all the other tenants who are not owing the Plaintiff any rent arrears from the house and take possession of it.
In its further amended statement of defence the 1st Defendant averred that the Plaintiff sometime in 1982 borrowed the sum of N5,000,000.00 (Five million Naira) from the 1st Defendant bank and mortgaged his house earlier referred to, to secure the said loan which by the 1st October 1985 had reached N8,559.63 since the loan was not being serviced or repaid by the Plaintiff. 1st Defendant averred that it did not act on any affidavit to transfer the property of the Plaintiff from Adamasingba branch to Orile Iganmu branch but rather acted throughout on other documents executed by the Plaintiff which include inter alia guarantee form and mortgage deed. It was further averred by the 1st Defendant that the Plaintiff apart from signing the guarantee form and mortgage deed insisted that the sum of N8,559.63 being his prior indebtedness to the 1st Defendant be deducted from the amount approved for Mr. Sheu Alateowo, the principal debtor. 1st Defendant averred that the mortgage deed was a further security on the Plaintiff’s property which had hitherto been mortgaged to the 1st Defendant in 1982 for a loan of N5,000.00 and that while the Plaintiff’s debt ought to have been paid sometime in 1983, the further mortgage which he guaranteed ought to have been paid on or before the 30th December 1986. 1st Defendant denied ever making a proposal to the Plaintiff on how the incurred debt was to be paid with respect to a house that was already slated for sale. 1st Defendant averred that the Plaintiffs property was mortgaged to the 1st Defendant bank with the consent of the Governor and there is no law including the Land Use Act that stipulates that the Defendant mortgagee must seek the consent of the Governor before the Plaintiff’s mortgaged property could be sold. 1st Defendant averred that the claim of the Plaintiff was not brought in time and also that the sale was done in good faith to the highest bidder which proceeds did not cover the indebtedness of the Plaintiff to the 1st Defendant bank as a result of the general depression in the property market arid the location of the property.
The 2nd Defendant by his further amended statement of defence and Counterclaim dated 22nd October 1997 averred that he was a former tenant in the house subject of this suit before buying the said house from the 1st Defendant in a public auction notice of which sale was advertised in a national newspaper. 2nd Defendant further averred that he had been carrying on with his Pharmaceutical business for ten years in the house subject matter of this suit and had acquired the goodwill of the public and had become embarrassed that the house was to be sold as people did not appear to differentiate between the sale pf the house subject matter of the suit and his business which was being carried on in the said house. He explained to the Plaintiff how he reliably learnt that some people in the pharmaceutical trade in Oyo town were already making moves to bid for and buy the house in order to set up a branch of their pharmacies therein. 2nd Defendant averred that he could not wait idly and watch his business and goodwill built over the years through hard work swept away by rivals who could throw him out of the house. Plaintiff assured him (2nd Defendant) that the house would be redeemed and would not be sold. When it became clear that the debt had not been settled by the Plaintiff after earlier assurances to him (2nd Defendant), he took steps to bid for the house and subsequently purchased same at a public auction. 2nd Defendant averred that he is a purchaser for value in good faith and that he had assurances from the 1st Defendant bank that the consent had been obtained on the mortgage transaction that culminated in the sale of the property subject of this suit. 2nd Defendant further averred that he was a purchaser for value without notice of any irregularity. He went on to contend that having not bought from a holder of a certificate of statutory right of occupancy he has no duty in law to obtain the consent of the Military Governor of Oyo State before buying 2nd Defendant further contended that the Plaintiff is estopped from challenging the sale and purchase of the house subject matter of this suit by reason of the fact that he had actual notice of the mortgage on the house and consented to it. It was the further averment of the 2nd Defendant that the Plaintiff had adequate notice of and every opportunity to stop the auction if he had good reasons but did not. The 2nd Defendant went further to contend that the sale to him (2nd Defendant) of the house the subject matter of this suit was lawful and valid. The 2nd Defendant therefore contended that the Plaintiff’s action in instituting this action is an afterthought, in bad faith and belated and therefore Counterclaimed against the Plaintiff as follows –
(a) A Declaration that the 2nd Defendant is entitled to possession of all that piece or parcel of land situate, lying and being at Ogbomoso Road, Opposite the State Hospital, Oyo subject matter of a Statutory Right of Occupancy dated 7th September 1981 registered as No. 34 at page 34 in volume 2393 of the Lands Registry in the office at Ibadan.
(b) AN ORDER for possession of the said v piece or parcel of land together with the building thereon.
(c) Injunction retraining the Plaintiff, his servants, agents, privies or any person or otherwise howsoever from remaining on or continuing in occupation of the said land and the building thereon.
(d) General damages from withholding possession to the 2nd Defendant.
The case went on to be fully heard during which a number of exhibits were tendered and admitted. After addresses of Counsel the case was adjourned for judgment and in his considered judgment delivered on the 22nd March 1999, A. A. Sanda J. held as follows –
Having considered the Plaintiff’s claim, the Defendants’ defence and Counterclaim and all relevant evidence adduced by parties to prove and defend their case I find as follows –
(1) That the Plaintiff has failed to prove his claims as contained in his writ of summons highlighted in his 37 paragraphs of the amended statement of claim and are hereby dismissed in their entirety.
(2) The 2nd Defendant succeeds in his Counterclaim and I hereby
(a) Declare that the 2nd Defendant is entitled to possession of all that piece of land situate lying and being at Owode Ogbomoso Road opposite the State Hospital, Oyo subject matter of Certificate of Occupancy dated the 7th day of September 1981 registered as No. 34 at page 34 in volume 2393 of the Lands Registry office at Ibadan.
(b) Possession of the said piece or parcel of land together with the buildings thereon.
(c) Injunction retraining the Plaintiff, his servants, agents, privies or any person or otherwise
however from remaining in occupation of the said land and the building thereon.
(d) N5,000.00 Damages for withholding possession from the 2nd Defendant.
Aggrieved by this judgment the Plaintiff hereinafter referred to as Appellant filed a Notice of appeal dated the 18th June 1999 contained at pages 63-65 of the Record of Appeal which consists of four grounds of appeal. By an order made on the 6th May 2003, the lower court granted the Appellant leave to file three more additional grounds of appeal to wit grounds 5, 6 and 7. The amended grounds of appeal are reproduced herein under shorn of particulars –
GROUND 1-
The learned trial Judge erred in law in holding as follows:
“From the totality of the piece of evidence y above I hold that the 2nd Defendant bought the property through due process of law because there was evidence of notice of Auction previously pasted on the property as per Exhibit “B” before sale”.
GROUND 2-
The learned trial Judge erred in law in holding that the 1st Defendant was right in law to have exercised the power of Sale vested in it despite the fact that there was no prior demand for payment either to the Plaintiff or to Alateowo.
GROUND 3 –
The learned trial Judge was wrong in law to have held that the 2nd Defendant’s Counterclaim in this case was uncontested merely because the Plaintiff did not file a specific defence to the same.
GROUND 4-
The judgment is against the weight of evidence.
GROUND 5-
The learned trial Judge erred in law when he held as follows –
“Fraud in English parlance implies some base conduct and moral turpitude. It is a term that should be reserved for something dishonest and morally wrong. It is a wilful act of the part of anyone whereby another is sought to be deprived by illegal or inequitable means of what he is entitled. See: EGBO VS. NWELE 1998 6 NWLR part 553 page 200”.
GROUND 6-
The learned trial judge misdirected himself on the facts when he failed to hold that the 2nd Defendant “a tenant of the Plaintiff/Appellant” was present at the auction but did not bid for the purchase of the house in the presence of the auctioneer, the Plaintiff, the mechanic “MUFUTAU OYELADE” and the photographer.
GROUND 7-
The learned trial judge erred in law to have held that the 2nd Defendant succeeded on the Counterclaim when the 2nd Defendant did not file any Statement of Claim on his Counterclaim.
From the 7 grounds of appeal the appellant in paragraphs 4.01 – 4.05 at page 11 of the appellant’s Brief of Argument dated the 30th May 2003 and filed on the 2nd June 2003 formulated the following five (5) issues for determination by the Court of Appeal viz –
4.01 – Whether the sale of the Plaintiff’s house was in compliance with the provisions of sections 19(1) and 20(1) of the auctioneers law cap 10 Laws of Oyo State of Nigeria. 4.02- Whether the 1st Defendant’s exclusion of section 125 cap 99 volume IV, Property and Conveyancing Laws of Oyo State from applying to the Mortgage deed is not sufficient to estop the 1st Defendant from exercising its power of sale of the mortgaged Property without prior notice of demand to the Plaintiff and/or mortgagor.
4.03 – Whether the admission of Exhibit “G” a forged affidavit is not sufficient to vitiate the transaction between the Plaintiff and the 1st Defendant and to be sufficient enough to declare the whole transaction null and void.
4.04 Whether with regards to the evidence so far adduced the learned trial judge has not wrongly held that the 2nndd Defendant was the highest bidder and that the sale was valid.
4.05 – Whether the trial Judge can give judgment on the Counterclaim that was not specifically pleaded.
The 1st Respondent’s formulated the following seven issues in its un-paginated brief of Argument dated the 26th November 2003 and filed on the 27th November 2003 but deemed ‘properly filea1 and served on the 1st December 2003 –
(1) Whether the learned trial Judge was right in holding that the 2nd Defendant bought the property through due process of law.
(2) Was the learned trial Judge right in holding that the 1st Defendant was right in law to have exercised the power of sale vested in it?
(3) Was the learned trial Judge wrong in holding that the 2nd Defendant’s Counterclaim was uncontested by the Plaintiff?
(4) Was the Judgment against the weight of evidence?
(5) Was the learned trial Judge’s definition of fraud wrong?
(6) Whether the learned trial Judge erred in not holding that the 2nd Defendant did not bid for the purchase of the Plaintiff’s house in the presence of the auctioneer, the Plaintiff, the mechanic, Mufutau Oyelade and the photographer.
(7) Did the learned trial judge err in holding that the 2nd Defendant succeeded in his Counterclaim and whether the 2nd Defendant’s counter claim was not backed by a statement of claim.
The 2nd Respondent on his part distilled the following four issues at page 10 paragraphs 3.01 – 3.04 of his Brief of Argument which is undated but filed on the 16th December 2003 but deemed properly filed on the 24th November 2004 –
3.01 Whether the trial court was right in holding the title in the property covered by Certificate of Statutory Right of Occupancy dated 7/9/81 and registered as No. 34 at page 34 in volume 2393 of the Lands Registry, Ibadan sold to the 2nd Defendant by the 1st Defendant at a public auction Exhibit ‘C’ on 15/5/89 in the circumstance of the Plaintiff’s claim followed due process of law and
impeachable.
3.02- Whether the Defence of a Bona fide purchaser for value in good faith in public auction and without notice of any irregularity will avail the 2nd Defendant who purchased the house in a public auction from the 1st Defendant.
3.03 Whether from the circumstances of this case and the issuance and pasting of Auction Notice Exhibit “C” the Plaintiff is estopped in law and fact from challenging the sale and purchase of the house subject matter of this suit by the Defendant.
3.04- Whether failure of the 2nd Defendant to separately file and counter claim and lead same in the manner of counter claim in his further Amended statement of defence is fatal and whether this
has occasioned a miscarriage of justice or could have affected the findings of the trial court.
This appeal came up for hearing on the 17th March 2010 with Counsel for the parties adopting and relying on the respective Briefs of argument filed on behalf of the parties.
O. Akinyele Counsel for the Appellant urged this court to allow the appeal while Kolawole Esan with him Lanre Ogundare for the 1st Respondent who also held the Brief of O. Ogunlade Counsel for the 2nd Respondent urged this Court to dismiss the appeal.
After a careful consideration of the issues formulated by the, parties I think that the issues that will properly determine this appeal are as follows –
1. Was the learned trial Judge right in holding that the 1st Respondent was right in law to have exercised the power of sale over the appellant’s property (house) subject matter of this appeal?
2. Was the learned trial Judge right to have held that the 2nd Respondent bought the property (house) through due process of law?
3. Was the 2 Respondent’s counter claim pleaded and was the trial court right in holding that the 2nd Respondent had succeeded on his counterclaim.
4. Was the judgment against the weight of evidence?
Issues 1 and 2 are interwoven and can be conveniently and are hereby treated together. Appellant has in his Brief of Argument relied heavily on sections 19 and 20 of the Auctioneers Law Cap 10 Laws of Oyo State that the sale of his property through the instrumentality of the 1st Respondent Bank to the 2nd appellant was illegal, null and void. These provisions i.e. sections 19 & 20 of the Auctioneers Law of Oyo State deal with such matters as the period within which public notice of an auction sale should be made, where and what form such notices should take, place and time at which such sale begins etc. Appellant went on to say that these provisions are mandatory and were never complied with before the auction sale of his property was carried out. Counsel went on to say that apart fro/n the auction notice Exhibit “C”, the learned trial Judge made no findings as to whether the secretary of the Local Government of the area was informed before the sale or thereafter as required by section 20 of the Auctioneers Law of Oyo State. There was also no evidence that the auction notice was pasted. Appellant further submitted in his Brief that his assertion that the auction notice was pasted on the 10th May 1989 while the sale was carried out on the 15th May 1989 shows that the lower court did not hold that a period of seven days required by section 19 of the auctioneer’s law has not elapsed before the sale of the Appellant’s house. It was further submitted that the observance of 7 days after pasting of the auction notice before the sale could be effected had not been complied with.
Counsel drew a distinction between contracts that are merely declared void and those that are declared illegal and submitted that if the provision of the law require certain formalities to be performed as condition precedent for the validity of the transaction without imposing a penalty for non-compliance the result of failure to comply with the formalities merely renders the transaction void, but if a penalty is imposed, the transaction is not only void but illegal unless the circumstances are such that the provision of the statute stipulate otherwise. Reliance was placed on the following cases – PAN BISBUILDER (NIG.) V. FIRST BANK (2000) 74 LRCN 109 at 122 and 123; SOLANKE V. ABED & ANOR 1962 NRNLR page 92; KASUMU & ORS V. BABA EGBE 14 WACA 444. Counsel submitted that the auction sale was illegal, null and void and should be so declared.
Appellant has also submitted that the 1st Appellant excluded section 125 Cap 99 volume IV of the Property and Conveyancing Laws of Oyo State from applying to the mortgage deed which is an attempt to erode the jurisdiction of the court and therefore unconstitutional. He relied on OFFOR v. OSAGIE (1998 1 SCNJ 122 at 177-128; (1998) 55 LRCN page 2978. Appellant submitted that the 1st Respondent expressly excluded the provisions of sections 115 and 125 of the Property and Conveyancing Laws of Oyo State from applying to the Mortgage deed between Sheu Alateowo and the 1st Defendant by the Deed of Legal Mortgage dated the 11th February 1980 which was admitted as Exhibit “L”. Appellant submitted that the absence of a formal demand for the debt either from the Appellant or the Mortgagor (Sheu Alateowo) is unconstitutional, illegal and should be declared null and void. It was submitted for the Appellant that since no prior demand was made by the 1st Respondent Bank to the appellant and/or the Mortgagor (Sheu Alateowo), the lower court departed from the decision of the Supreme Court in – AMINA v. SAVANNAH BANK OF NIGERIA (1995) 2 NWLR PART 377 page 320 at 339; TEMPO ENGINEERING CO. LTD. V. SAVANNAH BANK OF NIG. LTD. (1995) 5 NWLR PART 397 page 607 at 629.
Appellant therefore submitted that the exclusion of section 125 of the Property and Conveyancing Law of Oyo State from Exhibit “L” by the 1st Respondent rendered the Mortgage Deed null and void as no power is conferred on the 1st Respondent to exclude the provisions of an enactment which can only be done by an act of Parliament. It was further submitted for the appellant that since the precondition to be satisfied by the 1st Respondent before the sale of the Appellant’s house had not been fulfilled due to the exclusion of section 125 of the Property vand Conveyancing Law of Oyo State the sale of the appellant’s house was premature and ought to be set aside.
Reliance was placed on the following cases – FASINA V. ODEDINA (19571 WNLR 45; ABESIN V. IYA EGBE (1958) NWLR Page 67: PAN BISBUILDER (NTG.) V. FIRST BANK (2000) 74 LRCN 109 at 125 & 126.
The evidence of 1st PW1 Robert Ayoade Olaleye is contained at pages 42-45 of the Record of Appeal. He referred to his certificate of occupancy on his property at Owode dated 7th September 1981 registered as No. 34 at page 34 in volume 2393 at the Lands Registry in Ibadan – Exhibit “A” which he pledged to the 1st Respondent bank for the sum of N5,000.00 in 1982. In 1986 he also signed as guarantor for Sheu Alateowo with respect to the deed of mortgage – Exhibit “L”. As at the time he guaranteed Alhaji Sheu Alateowo, the initial indebtedness to the 1st Respondent bank of the sum of N5,000.00 had not been repaid. He had still not paid the sum of N27,300.00 on the first debt and the guaranteed amount on Exhibit “L” to Alhaji Sheu Alateowo. Under cross-examination he said at the time of the guarantee of the loan to Alhaji Sheu Alateowo, he did not know the consequences if the guaranteed amount was not repaid and now knew that the consequence is that his house will be sold. This evidence is in line with the 1st Respondent’s position that the mortgage dated 11th February 1986 – Exhibit “L” was a further security on the appellant’s property which had been mortgaged to the. 1st Respondent bank in 1982 for a loan of N5,000.00, and that while the Appellant’s debt ought to have been paid sometime in 1983, the further mortgage which he guaranteed ought to have been paid on or before the 30th December 1986. It is necessary to state all this because there was never any doubt that the appellant was indebted to the 1st Respondent bank as Appellant himself never denied this fact, however alleging fraud between the 1st Respondent and Alhaji Alateowo which was never substantiated. The importance of the legal mortgage – Exhibit “L” to the contracting parties cannot be over-emphasised and it is worthwhile going into some greater detail of some of its provisions that are germane to this discourse. The Deed of Legal Mortgage – Exhibit “L” is made on the 11th February 1986 between Alhaji Sheu Alateowo – “the borrower”, Mr. Robert Ayoade Olaleye – “the surety” and Wema Bank Ltd. – “the BANK”. Paragraph 7 of Exhibit “L” reads as follows –
7. “The statutory power of sale conferred on a borrower by the Conveyancing and Law of property Act of 1978 shall take full effect as regards these presents.”
7(a) “The statutory power of sale shall be exercisable at any time after the money owing on this security shall have become payable without regard to sections 115 and 125 of the Conveyancing and Law of property Act of 1978 which sections shall not apply to this security or any sale made thereunder.”
(Underlining mine for emphasis.)
Section 125 of the 1978 Act referred to provides as follows,
“A mortgagor shall not exercise the power of sale conferred by this law unless and until –
(a) Notice requiring payment of the mortgage money has been served on the mortgagor or one or two mortgagors and default has been made in payment of the mortgage money or of part thereof for three months after such service.”
This provision is in no way ambiguous. Thus the contractual relationship between the Appellant, 1st Respondent bank and the borrower Alhaji Sheu Alateowo is governed by Exhibit “L” to the exclusion of whatever sections 115 and 125 of the Conveyancing and Law of Property Act 1978 provide as to Notice or whatever. The provision breached no provision of the 1999 Constitution. Appellant has certainly not said how it did. It is in the light of the foregoing that the learned trial Judge held and in my view rightly too that the 1st Respondent properly exercised its Right of Sale of the appellant’s property.
With respect to the non-compliance with the Auctioneers Law of Oyo State sections 135, 136 and 137 of the Evidence Act place the burden of proof of such non-compliance on the appellant. Evidence led by the Appellant and his witness 2nd PW are not indicative of any such non-compliance but what I think is worthy of consideration is the effect of such noncompliance if any. Does such non-compliance if any vitiate the sale of the property to the 2nd Respondent? Relevant laws and decided cases do not indicate so. Section 126(2) of the Property and Conveyancing Law Cap 99, Laws of Oyo State 1978 provides as follows –
“Where a conveyance is made in exercise of the power of sale conferred by this law, the title of the purchaser shall not be impeachable on the ground –
(a) That no case had arisen to authorize the sale; or
(b) That due notice was not given; or
(c) Whether the mortgage was made before or after the commencement of this law, that the power was otherwise improperly or irregularly exercised; and a purchaser is not either before or on conveyance, concerned to see or inquire whether a case has arisen to authorize the sale, or due notice has been given, or the power is otherwise properly and regularly exercised; but any person damnified by an unauthorized, improper, or irregular exercise of the power shall have his remedy in damages against the person exercising the power.”
In OKONKWO V. C.C.B. (NIG) PLC (2003) 8 NWLR (PART 822) page 347 the Supreme Court arrived at the same finding when it considered section 21(1) of the Conveyancing Act 1881 alongside section 19 of the Auctioneers Law Cap 21, Laws of Eastern Nigeria which is in pari material with section 19 of the Auctioneers Law Cap 10, Laws of Oyo State 1978. The rationale appears to be to protect a bona fide purchaser for value who may not have had notice of any irregularity attendant to the sale of the property which he has purchased. I therefore think issues 1 and 2 should be resolved in favour of the Respondents against the Appellant and I so hold.
Issue 3 is – “Was the 2nd Respondent’s Counterclaim pleaded and was the trial court right in holding that the 2nd respondent had succeeded on his Counterclaim?”
Appellant has submitted that a proper Counterclaim apart from the writ of summons specifying the claim must be accompanied with the statement of claim on the Counterclaim stating thus:
“BY WAY OF COUNTERCLAIM the Defendant repeats paragraphs……….. to paragraphs……….. of the statement of defence and state in his pleadings those facts of the Counterclaim.
Appellant submitted that the 2nd Respondent’s claim in the court below was not accompanied with a statement of claim on the Counterclaim. Appellant’s counsel referred this Court to “Odgers on Pleading and Practice Nineteenth Edition at page 217 which states as follows –
“A Counterclaim is governed by the same rules of pleadings as a statement of claim and reply to it by the same rules as a defence. All the facts relied on By way of COUNTER CLAIM” must be stated in numbered paragraphs (following on in the same serial from those of the defence NOT starting a fresh series) under the heading:
COUNTER CLAIM so as to distinguish them from the fact alleged by way of defence.”
If any of those facts on which the Counterclaim is founded have already been stated in the defence they need not be restated in the Counterclaim but may be incorporated by reference thus:
“AND BY WAY OF COUNTERCLAIM the defence repeats the allegations contained in paragraphs…….of the defence.
(Underlining mine for emphasis).
Appellant’s Counsel referred to Aguda’s “Practice and Procedure” 1980 edition pages 257-258 which states as follows:
“A Counterclaim from the point of view of pleading is like a statement of claim and is governed by the same rules of pleadings. A counter claim should for all practical purpose be regarded and treated as an independent action per Brown L. J. in AMON V. BABBAT 22 QBD 543 at 548. See also the case of STUMORE V. CAMPBELL 1892 1 QB 314, 317. Where any Defendant seeks to rely upon any facts supporting a right to set off and counter claim he must by his statement of defence state specifically that he does so by way of set off or Counterclaim.”
Counsel went on to say that the learned Author Aguda in his Practice and Procedure 1980 Edition at pages 257-258 repeated the same procedure to be adopted by a Defendant on the counterclaim in order to separate it from the statement of Defence since it is an independent action. Counsel referred to Odgers on Pleadings and Practice Nineteenth Edition at page 493 precedent No. 64 which sets out the form to be adopted by the Defendant setting up a Counterclaim against the Plaintiff’s claim and which reads thus:
“And by way off set (sic) and counter claim the Defendant repeats the allegation contained in paragraphs above and claim alternatively damages for the Plaintiff (sic) breaches of warranty.”
It was further submitted for the Appellant that a Counterclaim is substantially a cross action not merely a defence to the Plaintiff’s claim and it must be of such a nature that the court would have jurisdiction to entertain it as a separate action. Reliance was placed on the following cases –
BON MACLACHIOU & CO. V. THE CAMOSUN 1909 AC 597; WILLIAMS V. AGIUS 1914 AC 522. Counsel went on to say that by the contents of the writ and claim of the Defendant on the Counterclaim the lower court has jurisdiction to the claim against the Plaintiff but the claim was not supported by a statement of claim on the Counterclaim to show that it is an independent action. It was further submitted that the lower court having held that there were two independent actions before the court, failed to hold that there was no statement of claim on the Counterclaim of the 2nd Defendant.
Appellant submitted that it was wrong for the trial Judge to hold that there was a proper Counterclaim before him when the Counterclaim cannot be separated from the 2nd Defendant’s statement of defence as required by the rules of court.
Reference was made to Order 25 Rule 16 of the High Court (Civil Procedure) Relies of Oyo State of Nigeria which provides as follows –
“Where any Defendant seeks to rely upon any facts as supporting a right of set off or counterclaim he shall in his statement of defence state specifically that he does so by way of set off or counterclaim as the case may be and the particulars of set off or Counterclaim shall be given.”
Counsel submitted that no particulars of the Counterclaim was given by the 2nd Defendant so as to distinguish them from the facts alleged by way of defence. Paragraph 22 of the 2nd Defendant’s statement of defence, Counsel submitted only contained the claim against the Plaintiff and no particulars of the claim in form of a statement of claim was ever filed or furnished. Appellant therefore submitted that the 2nd Defendant having not complied with the rules of court and having failed to file any statement of claim on his Counterclaim, the learned trial Judge without any pleading on the Counterclaim before him was in error to have held that the 2nd Defendant succeeded on his counterclaim as rules of court are meant to be obeyed. Reliance was placed on OLUSOLANKE v. SOMEFUN & ANOR (1974) 1 SC page 141 at 148.
Counsel went on to submit further that parties un-pleaded facts go to no issue. Similarly evidence led at the trial which is not anchored on the parties’ pleadings must be discountenanced. He relied on pan BISLIDER NIG. LTD. V. FIRST BANK NIG. LDT. (2000) 74 LRCN 109 at 113 and 127; NWAKA V. SPDC (7003) 105 LRCN Page 336 at 357. He concluded by saying that the learned trial Judge could have dismissed the 2nd Defendant’s Counterclaim.
At pages 27-29 of the Record of appeal is the document captioned “2nd DEFENDANT’S FURTHER AMENDED STATEMENT OF DEFENCE AND COUNTERCLAIM”. From that heading there is no doubt that it is the defence of the 2nd Defendant on the claim of the Plaintiff as well as a claim being made by the 2nd Defendant against the Plaintiff. From that perspective a Counterclaim is as rightly pointed out by the Appellant in his Brief of Argument in the nature of a Statement of Claim. It is indeed a cross action and is subject to the rules governing pleadings being in itself an independent action. Appellant has stated and rightly too in paragraph 9.04 at page 22 of his Brief of Argument that if any of those facts on which the Counterclaim is founded have already been stated in the defence they need not be restated in the Counterclaim but may be incorporated by reference thus:- AND BY WAY OF COUNTERCLAIM the defence……………
That is the exact position in this case. The facts and evidence relied upon by the 2nd Respondent in defence of the Appellant’s claim are exactly the same as are relied upon by the 2nd Respondent in proof of his Counterclaim and these have been incorporated by reference. There is nothing sacrosanct about the use of the words “AND BY WAY OF COUNTERCLAIM” provided words which convey the same meaning are used.
Modern legal thinking is that the Courts will not be hampered by technicalities in their quest to do substantial justice. In the present case the 2nd Respondent as 2nd Defendant in paragraph 22 of his “2nd DEFENDANT’S FURTHER AMENDED STATEMENT OF DEFENCE AND COUNTERCLAIM” stated as follows,
“WHEREOF the 2nd Defendant Counterclaims against the Plaintiff:
(a) A DECLARATION that the 2nd Defendant is entitled to possession of all that piece or parcel of land situate, lying and being at Ogbomoso Road, opposite the State Hospital, Oyo i subject matter of a Certificate of Statutory Right of Occupancy dated 7th September 1981 registered as no. 34 at page 34 in volume 2393 of the Lands Registry at Ibadan.
(b) AN ORDER for possession of the said piece or parcel of land together’ with the buildings thereon.
(c) INJUNCTION restraining the Defendant, his servants, agents, privies or any person, or otherwise howsoever from remaining on or continuing in occupation of the said land and the building thereon.
(d) General damages from withholding possession to the 2nd Defendant.
As it has therefore been seen it is not true that the 2nd Respondent’s further amended statement of defence was not separated from the Counterclaim. No discerning person would arrive at that conclusion. No separate particulars need be given on the Counterclaim since the same piece of evidence was given with respect to both separate actions. The Counterclaim contains enough facts necessary to put the
Plaintiff on notice and let it be emphasised that the same facts as contained in the further amended statement of defence of the 2n Respondent were relied on in proof of the Counterclaim.
Appellant on his part being clearly aware of a Counterclaim ought to have but failed to file a defence to the Counterclaim.
Since a Counterclaim is a separate action, the effect of failure to so file a defence to Counterclaim is exactly the same as that of a Defendant in a normal action commenced by writ of summons who having been served with a statement of claim fails to file a statement of defence in challenge of the statement of claim. Even where a statement of defence has been filed and no evidence is led on it the Defendant is deemed in law to have abandoned his defence and admitted as true the Averments in the statement of claim and the onus placed on the Plaintiff to prove his case becomes minimal. See OKE V. AIYEDUN (1986) 2 NWLR (PART 23) page 548 at Pages 560-565; BELLO AKANBI V. MAMUDU ALAO & ORS (19891 3 NWLR (PART 108) page 118 at page 140: ONWUKA V. OMOGUI (1992) 3 SC page 89 at page 127.
In the present case where the appellant neither filed a defence to the Counterclaim of the 2nd Respondent nor led any separate evidence on the said Counterclaim, the Counterclaim succeeds and this issue is therefore resolved in favour of the 2nd Respondent against the Appellant.
Issue 4 is as to whether the judgment is against the weight of evidence.
A recourse to Issues 1 and 2 shows that the judgment could not have been said to be against the weight of evidence.
The evidence was properly evaluated and the Court came to the right conclusion that the 1st Respondent properly exercised its right of sale of the Appellant’s property and that the sale to the 2nd Respondent in a public auction followed due process.
This issue is also resolved in favour of the Respondents against the Appellant.
All issues having been resolved in favour of the Respondents, the Appeal fails and is accordingly dismissed.
The judgment of A. A. Sanda J. delivered on the 22nd March 1999 is hereby affirmed. Parties are however to bear their own costs.
SIDI DAUDA BAGE, J.C.A.: I had the privilege of reading in draft the judgment of my learned brother, S. S. Alagoa, J.C.A.
I agree with the reasoning contained therein and the conclusion arrived thereat. The appeal is unmeritorious and should be dismissed as it lacks merit. I abide with the consequential orders made. I also abide by the no costs order contained therein.
MODUPE FASANMI, J.C.A: I have read before now the Judgment of my learned brother S. S. Alagoa J.C.A. just delivered. I agree with his reasoning and conclusion that the appeal should be dismissed for want of any merit. I also dismiss it and endorse the order as to no cost in the lead judgment.
Appearances
O. Akinyele Esq.For Appellant
AND
Kolawole Esan Esq., with him Lanre Ogundare Esq.
O. Ogunlade Esq.For Respondent
