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NIGERIAN ADVERTISING SERVICES LTD. V. U.B.A. PLC. (2005)

case summary

Supreme Court of Nigeria

Before Their Lordships:

  • Salihu Modibbo Alfa Belgore JSC
  • Sylvester Umaru Onu JSC
  • Akintola Olufemi Ejiwunmi JSC
  • Dennis Onyejife Edozie JSC
  • Sunday Akinola Akintan JSC (Lead Judgment)

Parties:

Appellants:

  • Nigerian Advertising Services Ltd.
  • Chief Anyibuofu Megafu
  • Mrs. Bridget Okwesa

Respondent:

  • U.B.A. Plc.
Suit number: SC.18/2000

Background

This case involves a dispute between the appellants, Nigerian Advertising Services Ltd. and specific individuals, and the first respondent, U.B.A. Plc, over the mortgage of a property. The appellants had mortgaged their property at 52 Norman Williams Street, Ikoyi, Lagos as collateral for an overdraft facility granted by the bank. When the appellants defaulted on their payments, U.B.A. Plc issued notices of sale, indicating its intention to sell the mortgaged property to recover its dues. The key date revolves around May 11, 1989, when the appellants presented a bank draft of N1.3 million to the bank, claiming it as a settlement of their outstanding mortgage debt. However, the bank alleged the property had already been sold on April 28, 1989.

Issues

The main issues in this case include:

  1. Whether the sale of the mortgaged property was valid given the appellants’ claim of a better offer made prior to the sale.
  2. Whether the bank adhered to the principles of good faith when conducting the sale of the mortgaged property.
  3. The implications of the bank’s failure to provide sufficient evidence supporting its claim of having completed the sale before the payment was made by the appellants.

Ratio Decidendi

The Supreme Court concluded that the mortgagee (U.B.A. Plc) failed to exercise its right of sale in good faith and that the sale was null and void. The court highlighted that for a mortgagee's power of sale to be valid, it must not only adhere to procedural correctness but also execute the sale transparently and in good faith.

Court Findings

Among the key findings, the court determined:

  1. The defense's failure to provide compelling evidence regarding the sale dated April 28, 1989, weakened U.B.A. Plc's position. The sole witness for the bank did not present substantial proof to support the assertion that the property was indeed sold before the appellants presented their draft.
  2. Effective communication regarding the alleged sale was not made to the appellants, further straining the bank’s argument.
  3. The court referenced that the presumption under section 149(d) of the Evidence Act would weigh against the bank for not producing the best evidence when it had previously claimed the funds payment into the plaintiffs’ account.

Conclusion

In light of these findings, the Supreme Court held that the actions of U.B.A. Plc were not only procedurally flawed but also lacked the essence of good faith, rendering the sale null and void. The appeal by the appellants was upheld, and judgment was entered in their favor, nullifying the sale and granting them restitution.

Significance

This case underscores the importance of good faith in mortgage transactions, highlighting that mortgagees must not only follow procedural requirements but must also ensure that actions taken do not compromise the values of transparency and fairness fundamental to such contractual relationships. It serves as a legal precedent for mortgage operations in Nigeria, indicating the standards expected from financial institutions in exercising their rights.