ALHAJI KAYODE SALAMI V. WEMA BANK NIGERIA PLC & ORS.

In The Court of Appeal of Nigeria

On Friday, the 3rd day of July, 2009

CA/L/347/05

Before Their Lordships

RAPHAEL CHIKWE AGBOJustice of The Court of Appeal of Nigeria

REGINA OBIAGELI NWODOJustice of The Court of Appeal of Nigeria

ADAMU JAUROJustice of The Court of Appeal of Nigeria

Between

ALHAJI KAYODE SALAMI   Appellant

AND

1. WEMA BANK NIGERIA PLC
2. TAYO SOFOWORA) (Trading under the Name and Style of Tayo Sofowora & Co.)
3. ALHAJI HAFEEZ ADETUNJI WILLIAMSRespondent(s)

…………………….A…………………….RAPHAEL CHIKWE AGBO, JCA, (Delivering the Leading Judgment): Late Alhaja Amudat S. Salami was the mother of the appellant. She was the owner of a property situate at Plot 3, Daddy Adediran Street, Ire Akari Estate Isolo, Lagos State. She was a customer of the 1st respondent. She took overdraft facilities from the 1st respondent and secured same with a legal mortgage of her property statute at Plot 3 Daddy Adediran Street, Ire-Akari Estate Isolo, Lagos State. The mortgage Deed tendered at the trial as exhibit “D3” was executed on 27th November, 1989 while the contested document containing the Governor’s consent to mortgage property is dated 27th August, 1979. The sum secured ex-facie exhibit “D3” was N62,000.00. By a letter dated 22nd March, 1985 the 1st respondent foreclosed the mortgage subject only to Alhaja Salami paying within one month the sum of N118,809.41. Alhaja Salami proceeded against the 1st and 2nd respondents in suit No. ID/453/85 on their advertising the property for sale. She obtained an injunction against the 1st and 2nd respondents restraining them from selling the mortgage and property. She thereafter sought from the 1st respondent a further loan to complete her project to enable her defray her indebtedness to the 1st respondent from rent that would accrue from the mortgaged property after full development. The 1st respondent declined to negotiate with her unless she determined her suit against it. Alhaja Salami discontinued her suit. The 1st respondent did not extend further credit to her but instead proceeded to the sale of the mortgaged property the subject matter of this case. The sale was effected to the 3rd respondent on 27th July 1990. Not satisfied with the transaction Alhaja Salami proceeded to the High Court of Lagos State and filed the suit the subject matter of this appeal.
However, before the suit could proceed to hearing she died and was substituted by the appellant who is one of her children.
In his further amended statement of claim the appellant as plaintiff claimed of the respondents as follows:
“(a) A declaration that the purported sale by auction of the deceased’s landed property situate at Plot 3, Daddy Adediran Street, Ire-Akari Estate, Isolo is null and void being contrary to the provisions of the Land Use Act, 1978 and the Sale by Auction Law of Lagos State.
(b) AND ORDER setting aside the sale of the deceased’s landed property situate at Plot 3, Daddy Adediran Street Ire-Akari Street, Isolo on the ground inter alia that the alleged sale by auction was fraudulently contrived and carried out.
(c) AN ORDER OF INJUNCTION restraining the defendants, their servants, privies from executing in favour of the 3rd defendant or any person any document tending to pass title, give possession or transfer ownership of the said building to the buyer or any person.
ALTERNATIVELY
AN ORDER setting aside any document executed by the 1st defendant in favour of the 3rd defendant and the Registration of the 3rd defendant title in the Lands Registry, Lagos.
d. AND FOR SUCH relief as the Honourable Court may deem fit to make.”
All the parties filed and exchanged pleadings. The 3rd defendant now 3rd respondent counter-claimed against the plaintiff now appellant as follows:
“(i) Possession of the property lying and situate at Plot 3, Daddy Adediran Street, Ire-Akari Estate, Isolo.
(ii) The sum of N6 million as damages for trespass.
The alternative prayer against 1st and 2nd defendants was discontinued. The case went to trial. The plaintiff called evidence to prove his case. The 3rd defendant called evidence in defense and in proof of his counter-claim. The 1st and 2nd defendants did not call evidence. At the conclusion of evidence the parties filed written addresses. In a considered judgment the court below granted the 3rd defendant’s prayer in the counter claim for possession. Not being satisfied with the judgment the plaintiff filed this appeal.

…………………….B…………………….

In the notice of appeal the appellant set out the following Grounds of Appeal:
“1. The learned trial erred in law when she held that the legal mortgage in issue was valid having been consented to by the governor of Lagos State.
2. The learned trial judge erred in law when after having come to the determination and finding that there was no publication of the notice of the alleged intended public auction to sell the property in dispute to have turned around to hold the purported sale was valid.
3. The learned trial judge erred in law when she held that the 1st defendant’s right to foreclose had crystallized even when she had earlier held that there was no evidence that notice of demand for payment was tendered in evidence.
4. The learned trial judge erred in law when she held that there was no evidence of fraud or collusion proved before her.
5. The learned trial judge misdirected herself and consequently erred in law in holding that the remedy of the claimant lay only in damages against the mortgagee.
6. The learned trial judge erred in law in declaring the 3rd defendant/respondent entitled to judgment on the counterclaim and giving order for possession favour of the 3rd defendant.
7. The judgment is against the weight of evidence.”
Briefs of argument were filed and exchanged. From the 7 grounds of appeal the appellant distilled 5 issues for determination to wit:
“1. Whether the learned trial judge was right to have held that the legal mortgage therein was valid – (ground 1).
2. Whether the learned trial judge was right to have held that the right of the 1st respondent herein to foreclose the right of redemption had crystallized. (Ground 3).
3. Whether having held that the failure to comply with the strict requirement of law was sufficient to hold that there was no valid sale by public auction the learned trial judge was right not to have thereafter held the said sale not valid and thereupon set aside the alleged sale by public auction. (Ground 2).
4. Whether in view of evidence placed before her, the learned trial judge was right to have held that there was no evidence of fraud and collusion proved before her. (Ground 4 & 7).
5. Whether in the face of the copious evidence and fact of fraud and collusion tendered against the defendants/respondents the learned trial judge was right in granting possession to the 3rd respondent and in not setting aside the purported sale but holding thereon that the right of the appellant in consequence lay only in damage against the 1st respondent (Ground 5 & 6).”
From the said notice of appeal the 1st and 2nd respondents distilled six issues for determination to wit:
“A. Whether the learned trial judge was correct in holding that the legal mortgage exhibit D3 was valid – GROUND OF APPEAL NO. 1.
B. Whether the learned trial judge was correct in holding that the 3rd defendant/respondent was a bonafide purchaser for value without notice of any defect in the sale by public auction – GROUND OF APPEALNO.2.
C. Whether the learned trial judge was correct in holding that the 1st defendant/respondent’s power to sell the mortgaged property had crystallized – GROUND OF APPEAL NO.3.
D. Whether the learned trial judge was correct in holding that the allegations of fraud; forgery and/or collusion were not proved by the claimant/appellant – GROUND OF APPEAL NOS. 4 & 7
E. Whether the learned trial judge was correct in holding that the claimant/appellant’s remedy laid in damages not claimed by him – GROUND OF APPEAL NO.5.
F. Whether the learned trial judge was correct in granting an Order for possession to the 3rd defendant/counter-claimant –

…………………….C…………………….

GROUND OF APPEAL NO. 6.”
The 3rd respondent distilled 4 issues for determination to wit:
“1. Whether the learned trial judge was right to have held that the deed of legal mortgage, Exhibit D3 was valid.
2. Whether the 3rd respondent has acquired valid legal title to the property from the 1st respondent.
3. Whether the learned trial judge was correct in holding that the sale of the appellant’s property to the 3rd respondent was valid having found that the provisions of Section 19 of the Sale by Auction Law of Lagos State 1999 was not proved.
4. Whether the learned trial judge was correct in holding that the appellant had failed to establish evidence of fraud and collusion in the manner in which the 1st & 2nd respondents sold the mortgage property to the 3rd respondent.
The issue raised by the appellant encompasses all the issues raised by the respondents and shall therefore bench mark the format used in determining this appeal.
It is necessary to emphasis right from the onset that the issues before a trial court are circumscribed by the claims before the court which claims are constituted by the prayers before the court. All arguments not related to those prayers are irrelevant and findings and conclusions by the court arising there from constitute mere obiter dicta which should not be made subject of appeal. The court shall also not consider issues of non compliance where such non-compliance was not raised in the pleadings and agitated at the trial.
Appellant’s issue 1 questions whether the learned trial judge was right to have held that the legal mortgage was valid. He challenged that conclusion on the ground that the consent of the Governor must be endorsed on the instrument itself. He relied on Iragunima vs RSHPDA (2003) FWLR (PT 169) 1233 and Awojugbagbe Light Industries Ltd vs Chinukwe & ors (1995) 4 NWLR 390 in his argument that s. 22(2) of the Land Use Act can only be complied with by placing the Governor’s consent on the mortgage instrument. The appellant misconstrues the law. S. 22 (2) of the Land Use Act provides as follows:
“22(2) It shall not be lawful for the holder of a statutory right of occupancy granted by the Military Governor to alienate his right of occupancy or any part thereof by assignment, mortgage, transfer of possession, sublease or otherwise howsoever without the consent of the Military Governor first had and obtained.”
The language is quite clear. The alienation cannot be made without the consent of the Governor first had and obtained. The courts have ameliorated the harsh provision contained in the said provision by holding that endorsing the Governor’s consent on the instrument was enough compliance. In fact the party who obtains the Governor’s consent before executing the deed of mortgage complies with the law in its purest form. Counsel further argued that the nexus between the document containing Governor’s consent and the mortgage instrument into which it was inserted was not established. The document was made in 1979 while the mortgage was executed in 1980 and that having led evidence denying that the document related to the transaction secured by the mortgage and not any other transaction the onus was on the 1st respondent to lead evidence to establish the nexus, an onus the 1st respondent did not discharge. He argued that it was therefore wrong of the trial court to conclude as it did that the plaintiff failed to establish that the said document was infact in relation to another mortgage transaction between the parties. The appellant as plaintiff pleaded in paragraph 9. of his Statement of Claim that his deceased mother was in 1979 granted a loan of N62,000.00 by the 1st defendant. He pleaded further that in 1980 the said loan was secured by the deed of legal mortgage the subject matter of this dispute. The document conveying consent was “inserted” in the mortgage instrument exh. “D3”. He pleaded in paragraph 27 of his statement of claim that the mortgage instrument was not consented to, but was confronted in court with the document containing the Governor’s consent. Counsel argues that having given evidence of non consent, it was incumbent on the 1st respondent to establish consent. I have scoured the evidence placed before the court by the appellant. Nowhere did he lead evidence to show that the mortgage was not consented to by the Governor. All what is there is his ipsi dixit repeating the allegation that there was no consent. He was not a party to the transaction. He played no role in the transaction. The allegation he made in open court is of no evidential value. The mortgage deed exh. D3 clearly shows it was to secure a loan transaction of N62,000.00. The trial court was right to conclude as she did that the Governor did infact consent to the mortgage the subject matter of this dispute.

…………………….D…………………….

Still on the validity of the mortgage deed the appellant attacked the conclusion by the trial judge that even if consent of the Governor had infact not been obtained, the plaintiff’s mother having benefited from the transaction, the plaintiff would not be allowed to challenge the transaction on the basis of the illegality as set out in S.26 of the Land Use Act. He argued that that was not canvassed by the parties and the trial court ought not to have so concluded. The facts founding that statement of the law made by the trial judge were never disputed. It is not in dispute that monies were advanced by the 1st respondent to the appellant’s mother. It is also not disputed that the transaction was secured with the mortgage Deed exhibit “D3”. All what the trial judge did was to apply the law to the set of facts placed before her by the parties. The appellant is not contesting the law as expounded and applied by the trial court. It is not the argument of appellant’s counsel that the law is not as expounded by the trial court. It is the function of the court in determining any dispute to apply the law to the set of facts placed before it. It is immaterial that the parties did not proffer any arguments relating thereto. The primary function of the parties in a trial is to place the facts before the court while it is the duty of the court to apply the law to the facts. There is no merit in this issue.
Issue 2 is on whether the learned trial judge was right to have held that the right of the 1st respondent herein to foreclose the right of redemption had crystallized. Both parties to the dispute wasted a lot of verbiage on whether or not it was established, as concluded by the trial court that the right of 1st respondent to foreclose the right of redemption had crystallized. The appellant is right in arguing that the issue of the foreclosure of the right of redemption was not joined on the pleading. It was not infact raised in any of the pleadings. The plaintiff’s case is limited to his prayers. His prayers have already been set out above. The prayers are (a) That the sale by auction was null and void for being contrary to the Land Use Act and Sale by Auction Law of Lagos State (b) setting aside the sale on the ground that it was fraudulently construed and carried out and (c) order of injunction restraining the parties from executing in favour of 3rd defendant document tending to pass title. In a mortgage transaction crystallization of the right of the mortgage to foreclose the right of redemption simply means that the mortgagee’s right to realize the mortgage has arisen. That was never in issue in this case. The plaintiff’s first and 2nd prayers challenged the validity of the actual sale. Nowhere in the plaintiff’s pleadings was the issue of the non-accrual of the mortgagee’s right to realize the mortgage raised. The issue of non-crystallization of the right of the 1st respondent to foreclose the mortgagor’s right of redemption does not arise as it does not form part of the basis of the plaintiff’s claim before the court of trial. An appellant in setting out his grounds of appeal must confine himself to the rationes decidendi of the judgment being appealed against. See Dalek (Nig) Ltd. V.O.M.P.A.D. SC2007 ALL FWLR (Pt.364) 204 at 226. Honika Sawmill (Nig) Ltd. v. Hoff 1994 2 NWLR (Pt.326) 252, Osinupebi v. Saibu 1982 7 SC 104 at 110 – 111.
He cannot go challenging every conclusion or observation that is infact an obiter dictum. Nor can he join issues where none was raised. This issue does not avail the appellant.
In issue 3 the appellant is querying whether the trial court, having held that the failure to comply with the strict requirements of law was sufficient to hold that there was no valid sale by public auction, the learned trial judge was right not to have thereafter held the said sale not valid and thereupon set aside the alleged sale by public auction. To appreciate this issue, it is necessary to revisit the relevant portion of the judgment of the trial court. The trial court found that the 3rd respondent did not establish that the notice informing the public of the auction sale was published in the Vanguard Newspaper as pleaded by him. Having found that the 3rd respondent could not establish the publication of the notice of auction sale, the court found at page 139 of the record as follows:- “This non compliance is sufficient to hold that there was no valid sale by auction due to the irregularities in the sale as a result of non-compliance with the requirement of CAP 173. What then is the legal effect of these irregularities in the sale?”

…………………….E…………………….

The learned trial judge thereafter held that by the provisions of S.21 of the Conveyancing Act 1881 the auction sale could not be impeached on the basis of the wrongful exercise of the mortgagor’s power of sale provided the purchaser purchased bonafide and that the only remedy availing the plaintiff was in damages. Looking at the issue as formulated and on the ground of appeal from which it was distilled (Ground 2), one would have concluded that the appellant is challenging the effect of the provisions of S.21 of the Conveyancing Act 1881 on the breach of S. 19 of the Public Auctions Law of Lagos State. That is the import of the particulars of error set out in ground 2 of the grounds of appeal from which this issue is distilled. The particulars set out in a notice of appeal circumscribes the issues that can be raised there from. The particulars of ground 2 of the ground of appeal are set out hereunder:
“Particulars of Error
i. Section 19 of the Sale by Public Auction Laws of Lagos State, 1994 applicable to these transactions, provided that there shall be no sale by public auction, unless 7 days prior to the proposed date of sale, public notice of the intended sale had been given to the public.
ii. The learned trial judge found as a fact that there was no evidence any such notice was given and that such failure was sufficient to hold that there was no sale, yet went ahead to declare the purported sale valid.
iii. The learned trial judge held since there was no notice of publication there was no way the 3rd defendant could have become aware there was an intended sale, and yet held that 3rd defendant had purchased by a purported public auction sale.
iv. The learned trial judge held that compliance with the statutory provision is strict, and yet having held there was no such compliance, was wrong to have held the purported sale valid.”
The issue of fraud or collusion does not arise from these particulars and ought not to be treated under this issue as formulated. The appellant has argued that S.19 of the Public Auction Law of Lagos State ought to be strictly applied. The section reads thus “19(1) of the sale by Auction law Cap 173 laws of Lagos State 1994 states as follows:
“No sale by auction of any level shall take place until after at least seven days public notice thereof has even given in the city of Lagos and also at the place of the intended sale.
The notice shall be made not only by printed or written document but also by beat of drum or such other method intelligible to uneducated persons as may be prescribed, or if not prescribed as the state commissioner may direct and shall state the name and place of residence of the seller.”
To the extent that sale by public auction is not limited to land matters, the appellant’s contention is right. But where such a sale relates to property to which the Conveyancing Act 1881 applies, the Public Auction Law of Lagos State must be read subject to the provisions of the Act. S.21 of the Conveyancing Act 1881 provides as follows – “21(1) Where a conveyance is made in professed exercise of the power of sale conferred by this Act the title of the purchaser shall not be impeached on the ground that no case has arisen to authorize the sale, or that due notice was not given or that the power was otherwise improperly or irregularly exercised, but any person damnified by an unauthorized or improper or irregular exercise of power shall have his remedy in damages against the person exercising the power,”
The interplay between the provisions of S.21(1) of the Conveyancing Act and the provisions of Auction Law in most states which are all similar to S.19 of the Public Auctions Law of Lagos State and their effect on each other have been so dealt with in a long line of cases as to become trite. They include SANUSI VS. DANIEL (1956) SCNLR 288, OKONKWO VS. C.C.B. (NIG) PLC (2003) 8 NWLR (PT. 822) 237, ACB LTD VS. IHEKWOABA (2003) 16 NWLR (PT 846) 249; WEMA BANK PLC VS. ABIODUN (2006) 9 NWLR (PT. 984) 1 and IBIYEYE VS. FOJULE (2006) 3 NWLR (PT.968) 641. In all these cases both this court and the Supreme Court have held that S.21(1) of the Conveyancing Act is applicable to property purchased through auction sale. The strict provisions of S.19 of the Public Auction Law of Lagos State do not apply to auction sales involving property to which 5.21 of the Conveyancing Act applies. Issue 3 does not avail the appellant.
Issues 4 & 5 are interwoven and will be taken together. Issue 4 is whether in view of evidence placed before her the learned trial judge was right to have held that there was no evidence of fraud and collusion proved before her; while issue 5 is whether in the face of copious evidence and the fact of fraud and collusion tendered against the defendants/respondents the learned trial judge was right in granting possession to the 3rd respondent and in not setting aside the purported sale but holding thereon that the right of the appellant in consequence lay only in damage against the 1st respondent. In arguing these issues the appellant through counsel reiterated that he had established the averments in paragraph 28 of his pleadings and therefore was entitled to judgment. To appreciate his argument therefore it is necessary to set out paragraph 28 of plaintiff’s’ pleadings.

…………………….F…………………….

“28 The plaintiff avers further that the 1st and 2nd defendants contrived with themselves and with the 3rd defendant and fraudulently sold the property in dispute to the 3rd defendant and that the 3rd defendant fraudulently bought same from them.
PARTICULARS OF FRAUD
a. Notice of intention to sell was neither given to the deceased nor the public by the 1st and 2nd defendant.
b. The 1st and 2nd defendant never advertised in any Newspaper their intention to sell.
c. The purported auction notice was invalid, a forgery and deliberately prepared in a manner capable of and indeed misleading with an intention to perpetrate fraud.
d. The purported sale was carried out at the time when the deceased and the 1st defendant were negotiating how the firm of Dada Investment Company Limited would complete the building in question.
e. The 1st and 2nd defendants deliberately perpetrated the particulars referred to in paragraphs a, b, c and d above.
f. The deceased had earlier in Suit No. ID/453785 attempted to prevent the 1st defendant from selling the building but was advised by the 1st defendant to withdraw the said suit on the condition that the 1st defendant would undertake to provide additional credit facilities for the completion of the building.
g. The deceased based on this reason in paragraph f above withdrawn the suit from court but the 1st defendant never fulfilled its obligation of providing additional credit facilities even though it was the 1st defendant that introduced Dada Investment Company Limited, as a known financier to the deceased.
h. The 3rd defendant was not present at the place of the alleged sale on the 27th of July, 1990.
i. The 3rd defendant 1st and 2nd defendants with connivance grossly under-valued and purported sold the building for N320,000.00 knowing full well that the value of the said building in July 1990 was well above :N1,700,000.00. Valuation Report of the building prepared by Estate Valuers shall be relied upon at the trial.”
It must be borne in mind that the judgment of the trial court was predicated on S.21 of the Conveyancing Act 1881 i.e. to say the purchaser, having purchased in an auction property to which the Conveyancing Act applies, the sale cannot be avoided by any irregularity that may have attended the process of sale. Where however there is established mala fides against the purchaser in the form of fraud or collusion, the sale shall be avoided See Ibiyeye vs Fojule supra, Okonkwo vs. C.C.B. Nig. Plc supra and A.C.B. vs. Ihekwoaba supra. Sub paragraph (e) of paragraph 28 of the plaintiff’s pleadings clearly excluded the 3rd defendant, now 3rd respondent from the allegations contained in sub paragraphs a, b, c and d. In fact the only allegations in the particulars set out in paragraph 28 of plaintiff’s pleadings are in sub-paragraphs (h) and (i). Sub paragraph (h) alleges that the 3rd defendant was not present at the venue of the auction sale on 27th July 1990, while sub-paragraph (i) alleges that the 1st, 2nd and 3rd respondents connived to grossly undervalue the property the subject matter of the sale transaction. The effect is that the appellant can only succeed in this appeal if he establishes any or both of these allegations and also establishes that any or both allegations when proved amounts to fraud or collusion. Niki Tobi JSC said this of fraud in Onwudiwe vs Federal Republic of Nigeria (2006) 10 NWLR (PT 988) 383 at 429 – 430
“A fraudulent action or conduct conveys an element of deceit to obtain some advantage from the owner of the fraudulent action or conduct or another person or to cause loss to any other person. In fraud, there must be a deceit or an intention to deceive flowing from the fraudulent action or conduct to the victim of that action or conduct.”

…………………….G…………………….

The trial court had found as a fact that the 3rd respondent was at the venue of the auction on 27th July 1990. This finding the appellant argues is perverse as the court had earlier held that the publication of the notice of the auction was not established. He argued most persuasively that if the notice of the auction was not published, then the 3rd respondent would not have known of the auction. But this ingenious argument is punctured by the evidence led by the appellant as plaintiff. He tendered before the court exhibit P.6. Exhibit P.6 is a leaflet inviting the whole community to the auction sale of the property in dispute on 27th July 1990. Appellant’s quarrel with exhibit “P.6” is that there is an alteration on the face of it of the date of the auction which was altered from 25th to 27th July 1990. The trial court had said it was reluctant to accept the 3rd respondent’s evidence that he read of the auction in the Vanguard Newspaper, a newspaper he was unable to produce nor remember the date of publication. The court also rightly held that it was the responsibility of the 1st and 2nd respondents, not the 3rd, to establish due notice. Exhibit “P.6” is proof positive that outside the pleaded newspaper publication, people were still aware of the auction sale. In the circumstance of this case, I do not see any perversion in the finding by the trial court that the 3rd respondent was in fact at the venue of the auction.
The appellant has alleged that the property was sold at gross under value to the 3rd respondent. A mortgagee is not a fiduciary of the mortgagor. The only obligation a mortgagee owes a mortgagor is to act in good faith. It is irrelevant that a better price could be obtained. The law relating to this form of transaction was established in Warner vs Jacob (1881-82) 20 Ch.D 220 and it is that if a mortgagee exercises his power of sale bona fide for the purpose of realizing his debt and without collusion with the purchaser, the court will not interfere even though the sale be very disadvantageous unless the price is so low as in itself be evidence of fraud. This principle has been entrenched by the Nigerian courts in a string of decisions commencing from Ekaete vs. Nigeria Housing Development Society ltd (1973) 6 SC 183 and subsequently followed by a plethora of others. It was established at the trial court that the value of the property in 1985 was N450,000.00. The value at the time of sale was not established. The property was sold for N320,000.00. The trial court did not find this figure as gross under valuation especially as there was no valuation at the time of sale to guide the court. I had earlier stated that a mortgagee is neither a fiduciary nor a trustee of a mortgagor. In Okonkwo vs. C.C.B. Nig. Plc (2003) 8 NWLR (PT.822) 344 AT 422-423 Niki Tobi JSC had this to say on auction sale-
“In an auction sale, the mortgagee who has a major interest in the property is entitled to promote and take care of his interest in the sale. In an auction sale, the interest of the mortgagee is paramount and as long as the sale is conducted bona fide, a mortgagor has no legal basis to complain in respect of, or about a low price. Auction sale by its very commercial nature presupposes some reduction of the market price value as dictated by the price index. The auctioneer, in order to dispose of the goods, should attract the public by a lower price. As long as the price is not ridiculously low or grossly undervalued as to suggest a possible fraud or collusion amongst the mortgagee, the auctioneer and the buyer, the mortgager has no legal ground to complain…….. A price for the goods in an auction cannot compete favourably with the correct market value of the goods.”

…………………….H…………………….

I cannot but agree more with Niki Tobi JSC. The purchaser led evidence to show that he was the highest bidder at the auction. While the purchase price is below the only assessed value, it cannot be said to be ridiculously low. The appellant as plaintiff did not establish the fraud and collusion pleaded in paragraph 28(i) of the Statement of Claim. The appellant, having not established mala fides on the part of the purchaser, the trial court could not have avoided the sale. With the sale, property passed to the purchaser. At that point the plaintiff lost all legal and equitable interests in the disputed property. He was thereafter not in a position to challenge the purchaser’s possessory interest in the property.
I find no merit in this appeal. It is hereby dismissed with N50,000.00 costs to the 3rd respondent.

REGINA OBIAGELI NWODO J.C.A.: I read before now the lead judgment of my learned brother, Agbo JCA, just delivered and I agree with his reasoning and conclusion thereat that the Appellant failed to establish fraud and collusion pleaded in paragraph 28 (1) of the Statement of Claim in the lower court. When the property passed to the purchaser by the sale, the right of the plaintiff both legal and equitable extinguished. I also find that this appeal is devoid of merit. It is dismissed and I abide by the order as to cost.

ADAMU JAURO, JCA: I have had the advantage of reading in draft the lead judgment of my learned brother, Agbo JCA, just delivered. I agree with his reasoning and conclusion that the appeal is without merit and should be dismissed.
In the circumstance I too dismiss the appeal and abide by consequential orders contained in the lead judgment, including the order as to costs.

Appearances

Jide Olawepo;For Appellant

AND

A. OkupeFor Respondent

Citation: LOR(3/7/2009)CA

ALHAJI KAYODE SALAMI V. WEMA BANK NIGERIA PLC & ORS.

In The Court of Appeal of Nigeria

On Friday, the 3rd day of July, 2009

CA/L/347/05

Before Their Lordships

RAPHAEL CHIKWE AGBOJustice of The Court of Appeal of Nigeria

REGINA OBIAGELI NWODOJustice of The Court of Appeal of Nigeria

ADAMU JAUROJustice of The Court of Appeal of Nigeria

Between

ALHAJI KAYODE SALAMIAppellant(s)

AND

1. WEMA BANK NIGERIA PLC
2. TAYO SOFOWORA) (Trading under the Name and Style of Tayo Sofowora & Co.)
3. ALHAJI HAFEEZ ADETUNJI WILLIAMSRespondent(s)

…………………….A…………………….RAPHAEL CHIKWE AGBO, JCA, (Delivering the Leading Judgment): Late Alhaja Amudat S. Salami was the mother of the appellant. She was the owner of a property situate at Plot 3, Daddy Adediran Street, Ire Akari Estate Isolo, Lagos State. She was a customer of the 1st respondent. She took overdraft facilities from the 1st respondent and secured same with a legal mortgage of her property statute at Plot 3 Daddy Adediran Street, Ire-Akari Estate Isolo, Lagos State. The mortgage Deed tendered at the trial as exhibit “D3” was executed on 27th November, 1989 while the contested document containing the Governor’s consent to mortgage property is dated 27th August, 1979. The sum secured ex-facie exhibit “D3” was N62,000.00. By a letter dated 22nd March, 1985 the 1st respondent foreclosed the mortgage subject only to Alhaja Salami paying within one month the sum of N118,809.41. Alhaja Salami proceeded against the 1st and 2nd respondents in suit No. ID/453/85 on their advertising the property for sale. She obtained an injunction against the 1st and 2nd respondents restraining them from selling the mortgage and property. She thereafter sought from the 1st respondent a further loan to complete her project to enable her defray her indebtedness to the 1st respondent from rent that would accrue from the mortgaged property after full development. The 1st respondent declined to negotiate with her unless she determined her suit against it. Alhaja Salami discontinued her suit. The 1st respondent did not extend further credit to her but instead proceeded to the sale of the mortgaged property the subject matter of this case. The sale was effected to the 3rd respondent on 27th July 1990. Not satisfied with the transaction Alhaja Salami proceeded to the High Court of Lagos State and filed the suit the subject matter of this appeal.
However, before the suit could proceed to hearing she died and was substituted by the appellant who is one of her children.
In his further amended statement of claim the appellant as plaintiff claimed of the respondents as follows:
“(a) A declaration that the purported sale by auction of the deceased’s landed property situate at Plot 3, Daddy Adediran Street, Ire-Akari Estate, Isolo is null and void being contrary to the provisions of the Land Use Act, 1978 and the Sale by Auction Law of Lagos State.
(b) AND ORDER setting aside the sale of the deceased’s landed property situate at Plot 3, Daddy Adediran Street Ire-Akari Street, Isolo on the ground inter alia that the alleged sale by auction was fraudulently contrived and carried out.
(c) AN ORDER OF UNJUNCTION restraining the defendants, their servants, privies from executing in favour of the 3rd defendant or any person any document tending to pass title, give possession or transfer ownership of the said building to the buyer or any person.
ALTERNATIVELY
AN ORDER setting aside any document executed by the 1st defendant in favour of the 3rd defendant and the Registration of the 3rd defendant title in the Lands Registry, Lagos.
d. AND FOR SUCH relief as the Honourable Court may deem fit to make.”
All the parties filed and exchanged pleadings. The 3rd defendant now 3rd respondent counter-claimed against the plaintiff now appellant as follows:
“(i) Possession of the property lying and situate at Plot 3, Daddy Adediran Street, Ire-Akari Estate, Isolo.
(ii) The sum of N6 million as damages for trespass.
The alternative prayer against 1st and 2nd defendants was discontinued. The case went to trial. The plaintiff called evidence to prove his case. The 3rd defendant called evidence in defense and in proof of his counter-claim. The 1st and 2nd defendants did not call evidence. At the conclusion of evidence the parties filed written addresses. In a considered judgment the court below granted the 3rd defendant’s prayer in the counter claim for possession. Not being satisfied with the judgment the plaintiff filed this appeal.

…………………….B…………………….

In the notice of appeal the appellant set out the following Grounds of Appeal:
“1. The learned trial erred in law when she held that the legal mortgage in issue was valid having been consented to by the governor of Lagos State.
2. The learned trial judge erred in law when after having come to the determination and finding that there was no publication of the notice of the alleged intended public auction to sell the property in dispute to have turned around to hold the purported sale was valid.
3. The learned trial judge erred in law when she held that the 1st defendant’s right to foreclose had crystallized even when she had earlier held that there was no evidence that notice of demand for payment was tendered in evidence.
4. The learned trial judge erred in law when she held that there was no evidence of fraud or collusion proved before her.
5. The learned trial judge misdirected herself and consequently erred in law in holding that the remedy of the claimant lay only in damages against the mortgagee.
6. The learned trial judge erred in law in declaring the 3rd defendant/respondent entitled to judgment on the counterclaim and giving order for possession favour of the 3rd defendant.
7. The judgment is against the weight of evidence.”
Briefs of argument were filed and exchanged. From the 7 grounds of appeal the appellant distilled 5 issues for determination to wit:
“1. Whether the learned trial judge was right to have held that the legal mortgage therein was valid – (ground 1).
2. Whether the learned trial judge was right to have held that the right of the 1st respondent herein to foreclose the right of redemption had crystallized. (Ground 3).
3. Whether having held that the failure to comply with the strict requirement of law was sufficient to hold that there was no valid sale by public auction the learned trial judge was right not to have thereafter held the said sale not valid and thereupon set aside the alleged sale by public auction. (Ground 2).
4. Whether in view of evidence placed before her, the learned trial judge was right to have held that there was no evidence of fraud and collusion proved before her. (Ground 4 & 7).
5. Whether in the face of the copious evidence and fact of fraud and collusion tendered against the defendants/respondents the learned trial judge was right in granting possession to the 3rd respondent and in not setting aside the purported sale but holding thereon that the right of the appellant in consequence lay only in damage against the 1st respondent (Ground 5 & 6).”
From the said notice of appeal the 1st and 2nd respondents distilled six issues for determination to wit:
“A. Whether the learned trial judge was correct in holding that the legal mortgage exhibit D3 was valid – GROUND OF APPEAL NO. 1.
B. Whether the learned trial judge was correct in holding that the 3rd defendant/respondent was a bonafide purchaser for value without notice of any defect in the sale by public auction – GROUND OF APPEALNO.2.
C. Whether the learned trial judge was correct in holding that the 1st defendant/respondent’s power to sell the mortgaged property had crystallized – GROUND OF APPEAL NO.3.  Â
D. Whether the learned trial judge was correct in holding that the allegations of fraud; forgery and/or collusion were not proved by the claimant/appellant – GROUND OF APPEAL NOS. 4 & 7
E. Whether the learned trial judge was correct in holding that the claimant/appellant’s remedy laid in damages not claimed by him – GROUND OF APPEAL NO.5.
F. Whether the learned trial judge was correct in granting an Order for possession to the 3rd defendant/counter-claimant –

…………………….C…………………….

GROUND OF APPEAL NO. 6.”
The 3rd respondent distilled 4 issues for determination to wit:
“1. Whether the learned trial judge was right to have held that the deed of legal mortgage, Exhibit D3 was valid.
2. Whether the 3rd respondent has acquired valid legal title to the property from the 1st respondent.
3. Whether the learned trial judge was correct in holding that the sale of the appellant’s property to the 3rd respondent was valid having found that the provisions of Section 19 of the Sale by Auction Law of Lagos State 1999 was not proved.
4. Whether the learned trial judge was correct in holding that the appellant had failed to establish evidence of fraud and collusion in the manner in which the 1st & 2nd respondents sold the mortgage property to the 3rd respondent.
The issue raised by the appellant encompasses all the issues raised by the respondents and shall therefore bench mark the format used in determining this appeal.
It is necessary to emphasis right from the onset that the issues before a trial court are circumscribed by the claims before the court which claims are constituted by the prayers before the court. All arguments not related to those prayers are irrelevant and findings and conclusions by the court arising there from constitute mere obiter dicta which should not be made subject of appeal. The court shall also not consider issues of non compliance where such non-compliance was not raised in the pleadings and agitated at the trial.
Appellant’s issue 1 questions whether the learned trial judge was right to have held that the legal mortgage was valid. He challenged that conclusion on the ground that the consent of the Governor must be endorsed on the instrument itself. He relied on Iragunima vs RSHPDA (2003) FWLR (PT 169) 1233 and Awojugbagbe Light Industries Ltd vs Chinukwe & ors (1995) 4 NWLR 390 in his argument that s. 22(2) of the Land Use Act can only be complied with by placing the Governor’s consent on the mortgage instrument. The appellant misconstrues the law. S. 22 (2) of the Land Use Act provides as follows:
“22(2) It shall not be lawful for the holder of a statutory right of occupancy granted by the Military Governor to alienate his right of occupancy or any part thereof by assignment, mortgage, transfer of possession, sublease or otherwise howsoever without the consent of the Military Governor first had and obtained.”
The language is quite clear. The alienation cannot be made without the consent of the Governor first had and obtained. The courts have ameliorated the harsh provision contained in the said provision by holding that endorsing the Governor’s consent on the instrument was enough compliance. In fact the party who obtains the Governor’s consent before executing the deed of mortgage complies with the law in its purest form. Counsel further argued that the nexus between the document containing Governor’s consent and the mortgage instrument into which it was inserted was not established. The document was made in 1979 while the mortgage was executed in 1980 and that having led evidence denying that the document related to the transaction secured by the mortgage and not any other transaction the onus was on the 1st respondent to lead evidence to establish the nexus, an onus the 1st respondent did not discharge. He argued that it was therefore wrong of the trial court to conclude as it did that the plaintiff failed to establish that the said document was infact in relation to another mortgage transaction between the parties. The appellant as plaintiff pleaded in paragraph 9. of his Statement of Claim that his deceased mother was in 1979 granted a loan of N62,000.00 by the 1st defendant. He pleaded further that in 1980 the said loan was secured by the deed of legal mortgage the subject matter of this dispute. The document conveying consent was “inserted” in the mortgage instrument exh. “D3”. He pleaded in paragraph 27 of his statement of claim that the mortgage instrument was not consented to, but was confronted in court with the document containing the Governor’s consent. Counsel argues that having given evidence of non consent, it was incumbent on the 1st respondent to establish consent. I have scoured the evidence placed before the court by the appellant. Nowhere did he lead evidence to show that the mortgage was not consented to by the Governor. All what is there is his ipsi dixit repeating the allegation that there was no consent. He was not a party to the transaction. He played no role in the transaction. The allegation he made in open court is of no evidential value. The mortgage deed exh. D3 clearly shows it was to secure a loan transaction of N62,000.00. The trial court was right to conclude as she did that the Governor did infact consent to the mortgage the subject matter of this dispute.

…………………….D…………………….

Still on the validity of the mortgage deed the appellant attacked the conclusion by the trial judge that even if consent of the Governor had infact not been obtained, the plaintiff’s mother having benefited from the transaction, the plaintiff would not be allowed to challenge the transaction on the basis of the illegality as set out in S.26 of the Land Use Act. He argued that that was not canvassed by the parties    and the trial court ought not to have so concluded. The facts founding that statement of the law made by the trial judge were never disputed. It is not in dispute that monies were advanced by the 1st respondent to the appellant’s mother. It is also not disputed that the transaction was secured with the mortgage Deed exhibit “D3”. All what the trial judge did was to apply the law to the set of facts placed before her by the parties. The appellant is not contesting the law as expounded and applied by the trial court. It is not the argument of appellant’s counsel that the law is not as expounded by the trial court. It is the function of the court in determining any dispute to apply the law to the set of facts placed before it. It is immaterial that the parties did not proffer any arguments relating thereto. The primary function of the parties in a trial is to place the facts before the court while it is the duty of the court to apply the law to the facts. There is no merit in this issue.
Issue 2 is on whether the learned trial judge was right to have held that the right of the 1st respondent herein to foreclose the right of redemption had crystallized. Both parties to the dispute wasted a lot of verbiage on whether or not it was established, as concluded by the trial court that the right of 1st respondent to foreclose the right of redemption had crystallized. The appellant is right in arguing that the issue of the foreclosure of the right of redemption was not joined on the pleading. It was not infact raised in any of the pleadings. The plaintiff’s case is limited to his prayers. His prayers have already been set out above. The prayers are (a) That the sale by auction was null and void for being contrary to the Land Use Act and Sale by Auction Law of Lagos State (b) setting aside the sale on the ground that it was fraudulently construed and carried out and (c) order of injunction restraining the parties from executing in favour of 3rd defendant document tending to pass title. In a mortgage transaction crystallization of the right of the mortgage to foreclose the right of redemption simply means that the mortgagee’s right to realize the mortgage has arisen. That was never in issue in this case. The plaintiff’s first and 2nd prayers challenged the validity of the actual sale. Nowhere in the plaintiff’s pleadings was the issue of the non-accrual of the mortgagee’s right to realize the mortgage raised. The issue of non-crystallization of the right of the 1st respondent to foreclose the mortgagor’s right of redemption does not arise as it does not form part of the basis of the plaintiff’s claim before the court of trial. An appellant in setting out his grounds of appeal must confine himself to the rationes decidendi of the judgment being appealed against. See Dalek (Nig) Ltd. V.O.M.P.A.D. SC2007 ALL FWLR (Pt.364) 204 at 226. Honika Sawmill (Nig) Ltd. v. Hoff 1994 2 NWLR (Pt.326) 252, Osinupebi v. Saibu 1982 7 SC 104 at 110 – 111.
He cannot go challenging every conclusion or observation that is infact an obiter dictum. Nor can he join issues where none was raised. This issue does not avail the appellant.
In issue 3 the appellant is querying whether the trial court, having held that the failure to comply with the strict requirements of law was sufficient to hold that there was no valid sale by public auction, the learned trial judge was right not to have thereafter held the said sale not valid and thereupon set aside the alleged sale by public auction. To appreciate this issue, it is necessary to revisit the relevant portion of the judgment of the trial court. The trial court found that the 3rd respondent did not establish that the notice informing the public of the auction sale was published in the Vanguard Newspaper as pleaded by him. Having found that the 3rd respondent could not establish the publication of the notice of auction sale, the court found at page 139 of the record as follows:- “This non compliance is sufficient to hold that there was no valid sale by auction due to the irregularities in the sale as a result of non-compliance with the requirement of CAP 173. What then is the legal effect of these irregularities in the sale?”

…………………….E…………………….

The learned trial judge thereafter held that by the provisions of S.21 of the Conveyancing Act 1881 the auction sale could not be impeached on the basis of the wrongful exercise of the mortgagor’s power of sale provided the purchaser purchased bonafide and that the only remedy availing the plaintiff was in damages. Looking at the issue as formulated and on the ground of appeal from which it was distilled (Ground 2), one would have concluded that the appellant is challenging the effect of the provisions of S.21 of the Conveyancing Act 1881 on the breach of S. 19 of the Public Auctions Law of Lagos State. That is the import of the particulars of error set out in ground 2 of the grounds of appeal from which this issue is distilled. The particulars set out in a notice of appeal circumscribes the issues that can be raised there from. The particulars of ground 2 of the ground of appeal are set out hereunder:
“Particulars of Error
i. Section 19 of the Sale by Public Auction Laws of Lagos State, 1994 applicable to these transactions, provided that there shall be no sale by public auction, unless 7 days prior to the proposed date of sale, public notice of the intended sale had been given to the public.
ii. The learned trial judge found as a fact that there was no evidence any such notice was given and that such failure was sufficient to hold that there was no sale, yet went ahead to declare the purported sale valid.
iii. The learned trial judge held since there was no notice of publication there was no way the 3rd defendant could have become aware there was an intended sale, and yet held that 3rd defendant had purchased by a purported public auction sale.
iv. The learned trial judge held that compliance with the statutory provision is strict, and yet having held there was no such compliance, was wrong to have held the purported sale valid.”
The issue of fraud or collusion does not arise from these particulars and ought not to be treated under this issue as formulated. The appellant has argued that S.19 of the Public Auction Law of Lagos State ought to be strictly applied. The section reads thus “19(1) of the sale by Auction law Cap 173 laws of Lagos State 1994 states as follows:
“No sale by auction of any level shall take place until after at least seven days public notice thereof has even given in the city of Lagos and also at the place of the intended sale.
The notice shall be made not only by printed or written document but also by beat of drum or such other method intelligible to uneducated persons as may be prescribed, or if not prescribed as the state commissioner may direct and shall state the name and place of residence of the seller.”
To the extent that sale by public auction is not limited to land matters, the appellant’s contention is right. But where such a sale relates to property to which the Conveyancing Act 1881 applies, the Public Auction Law of Lagos State must be read subject to the provisions of the Act. S.21 of the Conveyancing Act 1881 provides as follows – “21(1) Where a conveyance is made in professed exercise of the power of sale conferred by this Act the title of the purchaser shall not be impeached on the ground that no case has arisen to authorize the sale, or that due notice was not given or that the power was otherwise improperly or irregularly exercised, but any person damnified by an unauthorized or improper or irregular exercise of power shall have his remedy in damages against the person exercising the power,”
The interplay between the provisions of S.21(1) of the Conveyancing Act and the provisions of Auction Law in most states which are all similar to S.19 of the Public Auctions Law of Lagos State and their effect on each other have been so dealt with in a long line of cases as to become trite. They include SANUSI VS. DANIEL (1956) SCNLR 288, OKONKWO VS. C.C.B. (NIG) PLC (2003) 8 NWLR (PT. 822) 237, ACB LTD VS. IHEKWOABA (2003) 16 NWLR (PT 846) 249; WEMA BANK PLC VS. ABIODUN (2006) 9 NWLR (PT. 984) 1 and IBIYEYE VS. FOJULE (2006) 3 NWLR (PT.968) 641. In all these cases both this court and the Supreme Court have held that S.21(1) of the Conveyancing Act is applicable to property purchased through auction sale. The strict provisions of S.19 of the Public Auction Law of Lagos State do not apply to auction sales involving property to which 5.21 of the Conveyancing Act applies. Issue 3 does not avail the appellant.
Issues 4 & 5 are interwoven and will be taken together. Issue 4 is whether in view of evidence placed before her the learned trial judge was right to have held that there was no evidence of fraud and collusion proved before her; while issue 5 is whether in the face of copious evidence and the fact of fraud and collusion tendered against the defendants/respondents the learned trial judge was right in granting possession to the 3rd respondent and in not setting aside the purported sale but holding thereon that the right of the appellant in consequence lay only in damage against the 1st respondent. In arguing these issues the appellant through counsel reiterated that he had established the averments in paragraph 28 of his pleadings and therefore was entitled to judgment. To appreciate his argument therefore it is necessary to set out paragraph 28 of plaintiff’s’ pleadings.

…………………….F…………………….

“28 The plaintiff avers further that the 1st and 2nd defendants contrived with themselves and with the 3rd defendant and fraudulently sold the property in dispute to the 3rd defendant and that the 3rd defendant fraudulently bought same from them.
PARTICULARS OF FRAUD
a. Notice of intention to sell was neither given to the deceased nor the public by the 1st and 2nd defendant.
b. The 1st and 2nd defendant never advertised in any Newspaper their intention to sell.
c. The purported auction notice was invalid, a forgery and deliberately prepared in a manner capable of and indeed misleading with an intention to perpetrate fraud.
d. The purported sale was carried out at the time when the deceased and the 1st defendant were negotiating how the firm of Dada Investment Company Limited would complete the building in question.
e. The 1st and 2nd defendants deliberately perpetrated the particulars referred to in paragraphs a, b, c and d above.
f. The deceased had earlier in Suit No. ID/453785 attempted to prevent the 1st defendant from selling the building but was advised by the 1st defendant to withdraw the said suit on the condition that the 1st defendant would undertake to provide additional credit facilities for the completion of the building.
g. The deceased based on this reason in paragraph f above withdrawn the suit from court but the 1st defendant never fulfilled its obligation of providing additional credit facilities even though it was the 1st defendant that introduced Dada Investment Company Limited, as a known financier to the deceased.
h. The 3rd defendant was not present at the place of the alleged sale on the 27th of July, 1990.
i. The 3rd defendant 1st and 2nd defendants with connivance grossly under-valued and purported sold the building for N320,000.00 knowing full well that the value of the said building in July 1990 was well above :N1,700,000.00. Valuation Report of the building prepared by Estate Valuers shall be relied upon at the trial.”
It must be borne in mind that the judgment of the trial court was predicated on S.21 of the Conveyancing Act 1881 i.e. to say the purchaser, having purchased in an auction property to which the Conveyancing Act applies, the sale cannot be avoided by any irregularity that may have attended the process of sale. Where however there is established mala fides against the purchaser in the form of fraud or collusion, the sale shall be avoided See Ibiyeye vs Fojule supra, Okonkwo vs. C.C.B. Nig. Plc supra and A.C.B. vs. Ihekwoaba supra. Sub paragraph (e) of paragraph 28 of the plaintiff’s pleadings clearly excluded the 3rd defendant, now 3rd respondent from the allegations contained in sub paragraphs a, b, c and d. In fact the only allegations in the particulars set out in paragraph 28 of plaintiff’s pleadings are in sub-paragraphs (h) and (i). Sub paragraph (h) alleges that the 3rd defendant was not present at the venue of the auction sale on 27th July 1990, while sub-paragraph (i) alleges that the 1st, 2nd and 3rd respondents connived to grossly undervalue the property the subject matter of the sale transaction. The effect is that the appellant can only succeed in this appeal if he establishes any or both of these allegations and also establishes that any or both allegations when proved amounts to fraud or collusion. Niki Tobi JSC said this of fraud in Onwudiwe vs Federal Republic of Nigeria (2006) 10 NWLR (PT 988) 383 at 429 – 430
“A fraudulent action or conduct conveys an element of deceit to obtain some advantage from the owner of the fraudulent action or conduct or another person or to cause loss to any other person. In fraud, there must be a deceit or an intention to deceive flowing from the fraudulent action or conduct to the victim of that action or conduct.”

…………………….G…………………….

The trial court had found as a fact that the 3rd respondent was at the venue of the auction on 27th July 1990. This finding the appellant argues is perverse as the court had earlier held that the publication of the notice of the auction was not established. He argued most persuasively that if the notice of the auction was not published, then the 3rd respondent would not have known of the auction. But this ingenious argument is punctured by the evidence led by the appellant as plaintiff. He tendered before the court exhibit P.6. Exhibit P.6 is a leaflet inviting the whole community to the auction sale of the property in dispute on 27th July 1990. Appellant’s quarrel with exhibit “P.6” is that there is an alteration on the face of it of the date of the auction which was altered from 25th to 27th July 1990. The trial court had said it was reluctant to accept the 3rd respondent’s evidence that he read of the auction in the Vanguard Newspaper, a newspaper he was unable to produce nor remember the date of publication. The court also rightly held that it was the responsibility of the 1st and 2nd respondents, not the 3rd, to establish due notice. Exhibit “P.6” is proof positive that outside the pleaded newspaper publication, people were still aware of the auction sale. In the circumstance of this case, I do not see any perversion in the finding by the trial court that the 3rd respondent was in fact at the venue of the auction.
The appellant has alleged that the property was sold at gross under value to the 3rd respondent. A mortgagee is not a fiduciary of the mortgagor. The only obligation a mortgagee owes a mortgagor is to act in good faith. It is irrelevant that a better price could be obtained. The law relating to this form of transaction was established in Warner vs Jacob (1881-82) 20 Ch.D 220 and it is that if a mortgagee exercises his power of sale bona fide for the purpose of realizing his debt and without collusion with the purchaser, the court will not interfere even though the sale be very disadvantageous unless the price is so low as in itself be evidence of fraud. This principle has been entrenched by the Nigerian courts in a string of decisions commencing from Ekaete vs. Nigeria Housing Development Society ltd (1973) 6 SC 183 and subsequently followed by a plethora of others. It was established at the trial court that the value of the property in 1985 was N450,000.00. The value at the time of sale was not established. The property was sold for N320,000.00. The trial court did not find this figure as gross under valuation especially as there was no valuation at the time of sale to guide the court. I had earlier stated that a mortgagee is neither a fiduciary nor a trustee of a mortgagor. In Okonkwo vs. C.C.B. Nig. Plc (2003) 8 NWLR (PT.822) 344 AT 422-423 Niki Tobi JSC had this to say on auction sale-
“In an auction sale, the mortgagee who has a major interest in the property is entitled to promote and take care of his interest in the sale. In an auction sale, the interest of the mortgagee is paramount and as long as the sale is conducted bona fide, a mortgagor has no legal basis to complain in respect of, or about a low price. Auction sale by its very commercial nature presupposes some reduction of the market price value as dictated by the price index. The auctioneer, in order to dispose of the goods, should attract the public by a lower price. As long as the price is not ridiculously low or grossly undervalued as to suggest a possible fraud or collusion amongst the mortgagee, the auctioneer and the buyer, the mortgager has no legal ground to complain…….. A price for the goods in an auction cannot compete favourably with the correct market value of the goods.”

…………………….H…………………….

I cannot but agree more with Niki Tobi JSC. The purchaser led evidence to show that he was the highest bidder at the auction. While the purchase price is below the only assessed value, it cannot be said to be ridiculously low. The appellant as plaintiff did not establish the fraud and collusion pleaded in paragraph 28(i) of the Statement of Claim. The appellant, having not established mala fides on the part of the purchaser, the trial court could not have avoided the sale. With the sale, property passed to the purchaser. At that point the plaintiff lost all legal and equitable interests in the disputed property. He was thereafter not in a position to challenge the purchaser’s possessory interest in the property.
I find no merit in this appeal. It is hereby dismissed with N50,000.00 costs to the 3rd respondent.

REGINA OBIAGELI NWODO J.C.A.: I read before now the lead judgment of my learned brother, Agbo JCA, just delivered and I agree with his reasoning and conclusion thereat that the Appellant failed to establish fraud and collusion pleaded in paragraph 28 (1) of the Statement of Claim in the lower court. When the property passed to the purchaser by the sale, the right of the plaintiff both legal and equitable extinguished. I also find that this appeal is devoid of merit. It is dismissed and I abide by the order as to cost.

ADAMU JAURO, JCA: I have had the advantage of reading in draft the lead judgment of my learned brother, Agbo JCA, just delivered. I agree with his reasoning and conclusion that the appeal is without merit and should be dismissed.
In the circumstance I too dismiss the appeal and abide by consequential orders contained in the lead judgment, including the order as to costs.
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Appearances

Jide Olawepo;For Appellant

AND

A. OkupeFor Respondent

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