PRINCE KAYODE OLOWU V. BUILDING STOCK LIMITED & ORS. (2017)

Background

Prince Kayode Olowu owned an uncompleted building at No. 3, Chris Alli Crescent, Ikoyi, Lagos. In 1999, needing funds to pay the school fees of his children studying in the United Kingdom, he approached Building Stock Limited after seeing its advertisement, “Need Cash: Got Property.” The parties entered into what the respondents described as a conditional sale and buy-back arrangement. Olowu offered the property for sale, Building Stock accepted the offer, and approximately N6,850,000 was paid to him in instalments. The written transaction documents described Building Stock as purchaser and provided Olowu with an opportunity to buy back the property for N8,700,000 on or before 4 October 1999.

Olowu failed to exercise the buy-back option within the stipulated period. Building Stock subsequently sold its interest to International Capital Resources Limited for approximately N23,257,874.40. Olowu later accepted a further N7,500,000 signing fee and executed documents intended to facilitate the transfer of the property to International Capital Resources. When construction began, however, he disrupted the workmen at the property, allegedly using thugs. Building Stock commenced proceedings for declarations, specific performance, damages for trespass and an injunction. International Capital Resources also commenced a separate action. The suits were consolidated.

The Lagos State High Court held that the transaction was a valid sale with a buy-back option, dismissed Olowu’s counter-claim, found him liable in trespass and granted specific performance. The Court of Appeal allowed the appeal in part but upheld the material findings, including an order compelling Olowu to provide documents required for obtaining the Governor’s consent to a transfer in favour of International Capital Resources. Olowu appealed to the Supreme Court.

Issues

1. Whether the transaction was a loan disguised as a sale and buy-back agreement.
2. Whether the transaction was illegal under the Money Lenders Law and whether that issue could properly be raised for the first time in the Supreme Court through a reply brief.
3. Whether the lower courts properly rejected the handwriting expert’s evidence concerning disputed signatures.
4. Whether specific performance was properly granted.
5. Whether Olowu was liable in trespass.
6. Whether the dismissal of his counter-claim was justified.

Ratio Decidendi

The Supreme Court, in the lead judgment delivered by Augie JSC, held that the transaction was a sale and buy-back arrangement, not a loan. The written documents were clear and unambiguous: Olowu offered to sell the property, Building Stock accepted the offer, consideration was paid, and Olowu subsequently made a written offer to repurchase by a specified date. The Court stressed that documentary evidence is the best evidence of the terms of a transaction. Oral evidence cannot be used to add to, vary, contradict or alter a written contract expressed in straightforward language.

The Court distinguished between a contract that is illegal on its face and one whose alleged illegality depends on surrounding circumstances. An ex facie illegal contract must not be enforced even where illegality has not been pleaded. However, where illegality is not apparent from the document and depends on facts—such as whether a party was an unlicensed money lender—the issue must be pleaded and proved. Olowu neither pleaded the alleged violation of the Money Lenders Law at trial nor obtained leave to raise it on appeal. Raising it for the first time in a reply brief was incompetent because a reply brief is not a device for repairing omissions in an appellant’s main brief.

The Court further held that the party asserting that a transaction was a loan bore the burden of proving that assertion. Olowu failed to produce convincing evidence of loan terms, including a defined interest rate, repayment structure or other characteristics of a loan agreement. His admission that he signed the relevant sale documents substantially weakened his case. The Supreme Court also accepted the concurrent factual findings of the lower courts, finding no perversity or miscarriage of justice warranting interference.

Court Findings

On the disputed signatures, the Court held that a handwriting expert may give an opinion, but the ultimate determination belongs to the judge. The trial judge was entitled to compare signatures under the Evidence Act and reject the expert’s evidence because of doubts about his qualifications and material contradictions between his written reports and testimony under cross-examination. The failure to cross-examine the principal witness on important aspects of his evidence amounted to tacit acceptance of those matters.

The Court found that Olowu had transferred an equitable interest in the property to Building Stock and had lost the right to repurchase after failing to pay the agreed amount by the deadline. His interference with International Capital Resources’ possession therefore constituted trespass. His counter-claim could not succeed, and arguments based on the alleged illegality of the transaction were not available to him.

Specific performance was recognized as an equitable and discretionary remedy, particularly appropriate in contracts for the sale of land because damages may not adequately compensate for the loss of a particular property. Nevertheless, the remedy requires a valid and concluded contract, mutuality and proper privity between the parties. The Supreme Court held that there was no privity of contract between Olowu and International Capital Resources. The lower courts therefore erred by directing specific performance directly in favour of the third respondent and by allowing considerations of fairness or sentiment to override the contractual structure.

Conclusion

The appeal was substantially dismissed but formally allowed in part. The Supreme Court set aside and replaced the specific-performance order made in favour of International Capital Resources. The substituted order compelled Olowu to execute and provide all tax receipts and requirements necessary to obtain the Governor’s consent to the deed of assignment transferring title to Building Stock Limited, the party with whom he had the relevant contract. The findings on validity of the sale, trespass and dismissal of the counter-claim were maintained. Building Stock Limited was awarded N500,000 costs against Olowu, with no order as to costs in favour of the third respondent.

Significance

The decision reinforces the primacy of written contractual documents in Nigerian commercial litigation, the need to plead and prove illegality, and the restrictions on raising fresh issues on appeal. It also clarifies that specific performance cannot ordinarily be granted in favour of a person who lacks contractual privity with the defendant, even where that person is a subsequent purchaser or nominee. Equity remains discretionary, but it must operate within established legal principles rather than sentiment, convenience or an attempt to bypass statutory requirements for perfecting title to land.