MOUSSALLATI & 3 ORS V. KNIGHT FRANK ESTATE AGENCY (2017)

Background

The appeal arose from a dispute over agency fees allegedly owed to Knight Frank Estate Agency in connection with the sale of a property at No. 308 Ikorodu Road, Anthony Village, Lagos. The first and second appellants were the owners of the property and had instructed the respondent, an estate agency, to market it for sale. The respondent introduced a prospective purchaser, but negotiations initially broke down. Approximately one year later, the purchaser resumed negotiations directly with the property owners and eventually bought the property without the respondent’s knowledge. Before the transaction was completed, the first and second appellants had authorised the third appellant to represent them.

The respondent subsequently sued in the Lagos State High Court for N12,600,000, representing a claimed 7.5% agency commission on an alleged sale price of N160,000,000, together with interest. During efforts to resolve the demand, a solicitor acting for Nigerian Braiding Manufacturers Limited, the fourth appellant, wrote to the respondent offering N7,400,000, comprising N7,000,000 as a concessionary fee and N400,000 as VAT, in full and final settlement. The respondent treated the letter as an admission and applied for judgment on admission under the Lagos State High Court Civil Procedure Rules. The trial court entered part judgment against all four appellants for N7,400,000 while leaving the balance of the claim for later determination.

The appellants challenged that decision, arguing that the letter was merely a settlement proposal, was not an unequivocal admission, had been retracted in their pleadings and affidavit evidence, and could not bind parties who were not the owners of the property or principals in the agency relationship.

Issues

1. Whether the trial court was correct to regard the solicitor’s letter, Exhibit A, as an admission of the agency fees due to the respondent and to enter judgment upon it.
2. Whether the third appellant, who acted as an agent for the first and second appellants, and the fourth appellant, a separate incorporated company, could be held personally liable for the alleged debt of the property owners.
3. Whether the appeal was competent, particularly whether the decision appealed from was interlocutory or final and whether the appellants required leave to appeal on grounds of fact or mixed law and fact.

Ratio Decidendi

The Court of Appeal held that the character of an order depends on its practical effect. A final decision is one that finally determines the rights of the parties concerning the issue decided, even if it arises from an interlocutory application. Since the part judgment conclusively determined the appellants’ liability for N7,400,000 and the trial court became functus officio in respect of that sum, the order was final as to that issue. Consequently, the constitutional right of appeal from a final decision applied, the appeal was filed within the applicable three-month period, and no leave was required merely because the grounds involved facts or mixed law and fact.

The court further reaffirmed that an admission must be clear, unequivocal and directly related to the relief claimed before it can support judgment. Although counsel may, in appropriate circumstances, make an admission binding on a client, the court must consider the purpose and circumstances of the statement. An admission made in correspondence may not justify immediate judgment where it is a conditional settlement offer, where its scope is uncertain, or where it is subsequently retracted before judgment. Retraction means recanting or taking back what was previously said.

On agency, the court applied the principle that the act of an agent, performed within the scope of authority, is legally the act of the principal. Where the principal is disclosed, the agent ordinarily is not personally liable for the principal’s obligations. The court also recognised that agency may arise by express or implied agreement, subsequent ratification, operation of law, necessity or estoppel.

Court Findings

The solicitor’s letter expressly stated that the solicitor acted for Nigerian Braiding Manufacturers Limited. It did not establish that the company acted as agent for the first and second appellants, who owned the property, nor did it show that the owners had instructed the company to negotiate or admit liability on their behalf. The fact that the first, second and third appellants were allegedly connected with or were directors of the fourth appellant did not, without evidence, establish the company’s legal liability for the agency fee.

The third appellant’s role was different. The evidence showed that he had been authorised in writing to act for the first and second appellants. Therefore, any liability arising from acts properly done within that authority belonged to the disclosed principals, not to him personally. The court criticised the trial judge for entering judgment jointly and severally against all appellants on the basis of a letter written for only the fourth appellant. Legal personality, agency and liability were matters requiring evidence and could not properly be resolved by speculation or by relying on an admission of uncertain application.

Although Exhibit A contained language capable of being understood as an offer of N7,400,000, the appellants had denied authorising it and had expressly retracted or disputed the alleged admission in their statement of defence and counter-affidavit. The retraction removed the conclusiveness that might otherwise have attached to the solicitor’s statement. The court held that the trial court had acted prematurely and should have considered the pleadings and affidavit evidence as a whole before deciding whether judgment on admission was appropriate.

Conclusion

The appeal was allowed. The part judgment of the Lagos State High Court delivered on 13 January 2010, awarding N7,400,000 against the appellants, was set aside. Suit No. LD/2277/2005 was restored and remitted to the Chief Judge of Lagos State for reassignment to another judge and trial on the merits, with an order for accelerated hearing. There was no order as to costs, each party being directed to bear its own costs.

Significance

The decision is important for civil procedure, evidence and agency law. It confirms that a part judgment may be final and appealable as of right where it conclusively determines a distinct portion of the parties’ rights. It also cautions courts against entering judgment on correspondence that is equivocal, conditional or later withdrawn. A settlement proposal should not automatically be treated as a binding judicial admission. Finally, the judgment protects the distinction between a disclosed principal and an authorised agent, and emphasises that a company’s separate legal personality and liability must be established by evidence rather than inferred from the identity or relationship of its directors.