OBIENYI & ANOR v. POLARIS BANK LTD & ORS
(2020)LCN/15453(CA)
In The Court Of Appeal
(AWKA JUDICIAL DIVISION)
On Monday, November 16, 2020
CA/AW/7/2008
RATIO
DUTY OF COURT: EVALUATION OF EVIDENCE
Every Court, particularly trial Courts have a duty to painstakingly look at every evidence, documentary or oral placed before it prior to reaching a decision. PER CHIOMA EGONDU NWOSU-IHEME, J.C.A.
Before Our Lordships:
Chioma Egondu Nwosu-Iheme Justice of the Court of Appeal
Rita Nosakhare Pemu Justice of the Court of Appeal
Bitrus Gyarazama Sanga Justice of the Court of Appeal
Between
1. MR. BENJAMIN C. OBIENYI 2. YOUNG STAR BENCITY INDUSTRIES AND COMMERCIAL COMPANY LTD APPELANT(S)
And
1. POLARIS BANK LIMITED (Substituted By Order Of Court Of Appeal 14/9/2020) 2. PRINCE TUNDE ALADE 3. MR. FRANCIS ONYEKWUSI 4. SUNDAY MBAKWU RESPONDENT(S)
CHIOMA EGONDU NWOSU-IHEME, J.C.A. (Delivering the Leading Judgment): The Appellants in this appeal as Plaintiffs at the lower Court took a writ of summons against the Respondents herein as Defendants at the High Court of Anambra State Onitsha Judicial Division in the Amended Statement of Claim claimed against the Respondents jointly and severally as follows:
a. “A declaration that the purported Sale by Public auction on Wednesday 22/12/99 of the Land and Premises situate at No 9 Nkrumah/33 Owerri Street, Fegge, Onitsha and also known as Plot 5 Block 35 Nupe Layout Onitsha, Anambra State of Nigeria is null and void as the same has fundamental defects as pleaded above.
b. A declaration that the degree of fraud, collusion and manipulation that characterized the purported auction sale has vitiated the said auction sale.
c. Perpetual injunction restraining the 1st and 2nd Defendants, their agents and privies from proceeding to act on the said Public auction in transferring interest on the said property to the 3rd Defendant or to any other person at all who purported to have bought the same.
d. A declaration that the purported Sale by 3rd Defendant to the 4th Defendant of the 1st Plaintiff’s said premises as stated above is null and void as the same is defective and unsupportable.
e. An order setting aside the purported auction Sale same having been vitiated by collusion, fraud and unholy manipulations by the defendants acting in concert.
f. An order setting aside the purported Sale of the 1st Plaintiff’s property by the 3rd Defendant to the 4th Defendant as same is null and void and of no effect whatsoever.
g. An order on the 1st Defendant to disclose to the Plaintiffs the balance on the 2nd Plaintiff’s account as well as the accrued interest thereon up to the period of the purported auction on 22/12/99 and to accept same from the Plaintiffs as the discharge of their obligation to the 1st Defendant.”
The 1st – 3rd Respondents filed a joint statement of defence in opposition to the Appellants’ Claim as well as the 4th Respondent who joined later consequent upon the order of the trial Court.
The matter went into trial at the conclusion of trial, the learned trial Judge gave judgment in favour of the Respondents and dismissed the Claim of the Appellants.
SUMMARY OF RELEVANT FACTS:-
The 2nd Appellant was a Customer of the 1st Respondent having a current account with the 1st Respondent. The 1st Respondent granted the 2nd Appellant an interest yielding loan and overdraft facility totaling N2,000,000:00 (Two Million Naira). The loan was secured with the 1st Appellant’s property situate at No 9 Nkrumah/33 Owerri Street, Fegge, Onitsha also known as Plot 5, Block 35 Nupe Layout, Onitsha.
When the 1st Appellant couldn’t meet up in repaying the facility, the 1st Respondent put up the 1st Appellant’s said property for auction sale and advertised same in page 27 of the Guardian Newspaper of Wednesday, 15/12/99 for sale on 22/12/99 (See Exhibit B).
The auction sale was said to have taken place and the 3rd Respondent (the Caretaker of the Mortgaged building) informed PW2 the wife of the 1st Appellant that he, the Caretaker bought the said property at the auction sale. The said property was sold for N6.5 Million (Six Million Five Hundred Thousand Naira).
Exhibit F1 shows that the 3rd Respondent paid in the sum of N6.5 Million to the 1st Respondent on the 29th of December, 1999, a week after the auction sale as the purchase price for the 1st Appellant’s property.
The case as presented by the 1st – 3rd Respondents was that the Appellants were indebted to them to the tune of N2,678,637.60 (Two Million, Six Hundred and Seventy Eight Thousand, Six Hundred and Thirty Seven Naira, Sixty Kobo) and consequently the 1st Appellant’s property was sold by public auction. The 2nd Respondent (DW1) testified that he was instructed as a Licensed Auctioneer by the 1st Respondent to publicly auction the Appellants’ said property. There was however no letter on Record appointing the 2nd Respondent as an Auctioneer of the said property.
The case of the 4th Respondent DW5 was that he bought the property on the 27th of December, 1999 from the 3rd Respondent.
After listening to both parties, the learned trial Judge preferred the version of the Respondents and proceeded to dismiss the claim of the Appellants in its entirety. This Appeal is predicated on the said Judgment.
Learned Counsel for the Appellants, A. C. Anaenugwu SAN distilled four issues for determination as follows:
i. “Whether on the evidence, the learned trial Judge was not in error when he held that the collateral was sold by auction Sale.
ii. Whether in view of the various acts of fraud, fraudulent manipulations collusion and bad faith perpetrated by the Respondents in the case and learned trial Court’s finding that the property was truly undersold and the role of the Caretaker of the Mortgaged property was unbelievable; the learned trial Judge was right in law to have held that the Sale of the Mortgaged property remains valid.
iii. Whether in the light of the totality of the evidence adduced, the trial Judge was not in error in relying on extraneous matters not borne out of evidence on record to uphold the purported auction sale.
iv. Whether the learned trial Judge was not in error when he failed to consider the circumstances of the sale of the Mortgaged property to the 3rd and 4th Respondents and whether the doctrine of Lis Pendens did not in fact defeat the title of the 3rd and 4th Respondents.”
Learned Counsel for the 1st – 3rd Respondents Ighedosa Imadegbelo Esq formulated three issues for determinatus thus:
1. “Whether or not the alleged sale by under-value of the Mortgaged property will ipso facto vitiate the Auction sale without proof of fraud and collusion against the 3rd Respondent.
2. Whether or not there was a valid auction sale of the Mortgaged property by the 1st Respondent to 3rd Respondent to recover the debt owed the 1st Respondent by the Appellants.
3. Whether or not the auction sale is nullified by the doctrine of Lis Pendis.”
Learned Counsel for the 4th Respondent O. C. Iloanya Esq on the other hand distilled four issues for determination as follows:
i. “Whether learned trial Judge was not right when he held that the Mortgaged property was sold by auction sale.
ii. Whether the Appellants proved fraud to warrant invalidating the sale of the mortgaged property.
iii. Whether learned trial Judge relied on extraneous matters not borne out of evidence on record to uphold the purported auction sale and if the answer is in the affirmative did it result to miscarriage of justice.
iv. Whether the learned trial Judge did not arrive at the right decision having regard to the circumstances of the case, the totality of the evidence adduced and the operation of the doctrine of Lis Pendens.”
The issues formulated by the parties are similar. However in the determination of this appeal, I shall make use of the issues formulated by the Appellants.
Learned Counsel for the Appellants A. C. Anaenugwu SAN in his argument on the issues he raised, contended that the purported auction sale of the Appellants’ property was a sham and never held. Counsel argued that the two important documents, i.e Register of prospective bidders and Auctioneer’s book that could have proved whether or not there was a public auction was not tendered in evidence by the Respondents even after several adjournments were sought and granted for that purpose.
He submitted that the alleged sale was vitiated by fraudulent practices and manipulations, collusion and bad faith. Counsel posited that the fact that the property was sold at gross under value is itself indicative of collusion that smacks of fraud and bad faith. He referred to the finding of the trial Court that the mortgaged property was undersold and yet the learned trial Judge declined to nullify the sale.
Counsel further argued that the collusion of all the Respondents vitiated the purported sale of the property to the 3rd and 4th Respondents. He referred to Exhibit H as one of the instruments of collusion and fraudulent practices by the Respondents, which was not evaluated by the trial Court and opined that the trial Judge would have nullified the purported sale of the Appellants’ property if he had evaluated the said Exhibit H.
Counsel further contended that at the time of the purported sale of the mortgaged property to the 4th Respondent, the 3rd Respondent had no title to pass to the 4th Respondent and also that the 3rd and 4th Respondents purported titles to the property are caught up by the doctrine of Lis Pendens and therefore null and void.
He cited numerous authorities to drive home the above assertions.
Reacting to the foregoing, learned Counsel for the 1st – 3rd Respondents Ighedosa Imadegbelo Esq argued that even though without conceding, that under value sale of a Mortgaged property cannot impeach the sale without proof of fraud against the 1st – 3rd Respondents. He cited EKAETE V. NIG HOUSING DEV. SOCIETY LTD (1973) ALL N.L.R. PG. 555. etc.
He submitted that having proved that the Appellants were indebted to the 1st Respondent, the 1st Respondent was at liberty to recover the debt from the Appellants.
On the issue of the auction sale being caught by the doctrine of Lis Pendens, Counsel posited that the suit was filed by the Appellants on the 28/12/99. He referred to the writ of summons dated 28/12/99 at page 23 of the Records and opined that the said auction sale was not in any way caught by the doctrine of Lis Pendens.
Learned Counsel for the 4th Respondent argued in line with the submissions of learned Counsel for the 1st – 3rd Respondents already summarized above and added that the 3rd & 4th Respondents were bona fide purchasers for value without the knowledge of any irregularity in the Sale of the Mortgaged property and each bought the property before the institution of the case and service of any process on them.
There is a further Amended Appellants’ Reply to the 1st – 3rd Respondents’ brief, a further Amended Appellants’ Reply to the 4th Respondent’s brief as well as a further Amended Cross Appeal filed by the 4th Respondent.
This Appeal revolves round the auction sale of the Mortgaged property and therefore in determining this Appeal the way and manner the said auction sale was conducted has to be x-rayed to ascertain whether or not there was an auction sale properly so called.
In EKA-ETEH V. NIGERIA HOUSING DEVELOPMENT SOCIETY LTD & ANOR (1973) NSCC, 373 at 381, this Court stated:
“The only obligation incumbent on a Mortgagee selling under and in pursuance of a power of Sale in the Mortgage deed is that he should act in good faith.
(underlining mine for emphasis)
It is on Record (See page 323) that before the 3rd Respondent paid for the property on the 29th of December, 1999, he had assigned the said property to the 4th Respondent on the 27th of December, 1999.
The 4th Respondent who testified as DW5 and who purchased the Mortgaged property provided the 3rd Respondent with the sum of N6.5 Million with which the said 3rd Respondent paid for the Mortgaged property.
Prince Tunde Alade, the 2nd Respondent who testified as DW1, in his testimony stated that he was instructed as a Licensed Auctioneer by the 1st Respondent to publicly auction the mortgaged property. There was no document on record to show that the 1st Respondent appointed the 2nd Respondent to perform such a serious function as an Auctioneer in respect of the Mortgaged property.
The same 2nd Respondent stated in his testimony as DW1 that the 3rd Respondent was not assigned the Mortgaged property immediately. 2nd Respondent stated that one of the conditions of sale was that 50% of the purchase price must be paid on the spot, on the contrary Exhibit F1, the Bank teller shows that the 3rd Respondent paid the whole amount of N6.5 Million to the 1st Respondent on the 29th of December, 1999 days after the auction Sale.
The 4th Respondent in his testimony as DW5 stated that he bought the property on the 27th of December, 1999 from the 3rd Respondent. Going by Exhibit F1, the Bank Teller, by the said 27th of December, 1999 the said property has not legally passed to the 3rd Respondent since it was on the 29/12/99 that the 3rd Respondent paid the purchase price to the Bank (1st Respondent).
No where on Record was any mention made of the Register of Prospective bidders as well as the Auctioneer’s book. These are vital documents sine qua non and among the ingredients of a Public Auction properly so called.
There is no doubt that the Appellants were granted loan facility and that they defaulted in payment of the debt. The 1st Respondent was entitled to recover the debt through the Sale of the Mortgaged property. The Law provides that in recovering the debt, he must conform to certain Principles laid down which must be followed by a Mortgagee in the disposal of the Mortgaged property. If those laid down principles are jettisoned, the Mortgagee is said to have ran foul of the law and seen as making a caricature of a serious business such as Sale of the Mortgaged property.
From all that has been x-rayed above, it is clear that the auction Sale of the Appellants’ Mortgaged property was vitiated by fraud, collusion, manipulations unfortunately involving all the Respondents.
In OKONKWO V. C.C.B NIG. PLC (2003) 8 NWLR (PT. 822) 347, at 388 the Apex Court held:
“… there are certain acts which will affect the proper conduct of an auction Sale. These are improper or fraudulent acts which are likely to prevent the property put up from realizing its fair value. Collusion or want of good faith is an obvious one.”
In the instant case, it was obvious that the Auctioneer threw all the known Principles and ingredients of a proper Public Auction to the marines.
The Mortgaged property was glaringly undersold as found by the trial Court. The lower Court even added that the role of the Caretaker of the Mortgaged property was unbelievable.
It should be noted that the Caretaker whose role was described by the trial Court as “unbelievable” is the 3rd Respondent herein and it was the same Caretaker that was said to have purchased the Mortgaged property. If the role of the main person who purchased the Mortgaged property was so bad as to be described as “unbelievable” by the trial Court, one then wonders what was then believable in the entire auction Sale.
If the property was undersold and the role of the Caretaker of the Mortgaged property unbelievable, could it still be said that there was a valid Auction Sale? I think not.
Having found that the Mortgaged property was undersold and the conduct of the Caretaker unbelievable, there was only one safe option for the trial Court and that was to nullify the purported auction Sale.
It was erroneous for the learned trial Judge to make a somersault after these very weighty findings. It is therefore my humble but firm view that there was no valid auction Sale properly so called as the conditions precedent were jettisoned.
Every Court, particularly trial Courts have a duty to painstakingly look at every evidence, documentary or oral placed before it prior to reaching a decision. In the instant case, the lower Court in its Judgment completely ignored relevant facts clearly made available to it including jettisoning its own findings. The trial Court found that the Mortgaged property was so grossly undersold that it resorted to ordering the 4th defendant (4th Respondent herein) to pay additional N1.5 Million Naira to the Plaintiffs (Appellants) which the Appellants did not ask for. This clear evidence that the property was grossly under valued is indicative of collusion and fraud.
In dismissing the claim of the Appellants (Plaintiffs at the lower Court) the learned trial Judge stated as follows:
“The Sale remains valid. The 4th defendant must forget the counter Claim. The role of the Caretaker is unbelievable, but that is not in the issue. The property was truly undersold, but it is late in time to make a disastrous order. Let the 4th defendant make up in the interest of Justice by paying extra N1.5 Million to the Plaintiffs. This money must be paid to the 1st Plaintiff on or before August 31st, 2007.”
The above is clearly perverse and a miscarriage of justice. This Court therefore has every reason or justification to intervene.
In the circumstance, the four issues are resolved in favour of the Appellants against the Respondents. There is merit in this Appeal and it is hereby allowed.
The Judgment of the lower Court in Suit No O/851/99, delivered on the 16th day of July, 2007 by G. N. Mbanugo J, sitting in the Onitsha Judicial Division of the High Court of Anambra State is hereby set aside.
Even though there is a Cross Appeal, having set aside the Judgment of the lower Court in its entirety, it automatically takes good care of the Cross Appeal.
I award Two Hundred Thousand Naira costs in favour of the Appellants.
RITA NOSAKHARE PEMU, J.C.A.: I had read before now, the lead judgment just delivered by my brother C. E. NWOSU-IHEME (Ph.D) J.C.A.
I agree with her reasoning and conclusions.
I allow the appeal.
The Judgment of the Court below is set aside.
I abide by the consequential order made as to costs.
BITRUS GYARAZAMA SANGA, J.C.A.: I have the privilege of reading a draft of the judgment just delivered by my learned brother Nwosu-Iheme JCA, I have carefully considered the analysis of the facts and circumstances that gave rise to filing this suit, the evaluation of the evidence adduced during trial and the erudite finding arid conclusion by my learned brother in the lead judgment and I adopt same as mine as it was impeccable and painstakingly analysed.
I also abide by the order as to cost.
Appearances:
A. C. Anaenugwu SAN, with him, C. C. Anyachebelu and J. N. Maduechesi For Appellant(s)
Ighedosa Imadegbelo, with him, N. Asemota. – for the 1st – 3rd Respondents and 3rd – 5th Cross Respondents.
A. O. Ufondu – for the 4th Respondent in the Main Appeal and for 4th Appellant in the Cross Appeal. For Respondent(s)
