UNION BANK OF NIG. PLC. V. ASTRA BUILDERS (W.A.) LTD (2010)

Background

This was an interlocutory appeal arising from a dispute over a parcel of land in Lagos. Astra Builders (W.A.) Ltd. claimed that it had acquired an interest in the property through a written sublease granted by Union Bank of Nigeria Plc. The sublease covered approximately 3,025.17 square metres for a term of 40 years, with an option to renew for a further 10 years. Astra alleged that it had performed its obligations under the transaction and had erected a fence on the land. It commenced proceedings in the High Court of Lagos State seeking a declaration that it was entitled to a statutory right of occupancy for the unexpired residue of the sublease and an injunction restraining Union Bank from entering or occupying the property.

Union Bank maintained that it possessed a subsisting statutory right of occupancy evidenced by a certificate of occupancy covering the land. It contended that the sublease was invalid because the prior consent of the Governor required by section 22(1) of the Land Use Act had not been obtained. On that basis, the Bank filed a motion under Order 23, rules 2 and 3 of the Lagos State High Court (Civil Procedure) Rules 1994, asking the trial court to dismiss Astra’s suit in limine as illegal, unlawful, null and void, unenforceable and disclosing no reasonable cause of action.

The trial court dismissed the application, holding that the issues could not properly be determined at that preliminary stage. The Court of Appeal affirmed that decision. Union Bank then appealed to the Supreme Court.

Issues

1. Whether the Court of Appeal was right to affirm the trial court’s exercise of discretion in refusing to dismiss the suit summarily.
2. Whether the alleged absence of the Governor’s consent rendered the sublease automatically unlawful, null and void, and required the dismissal of the respondent’s action.
3. Whether the Court of Appeal’s treatment of the appellant’s issue concerning the competence of continuing the case denied the appellant fair hearing.

Ratio Decidendi

The Supreme Court dismissed the appeal and affirmed the decisions of the two lower courts. The Court held that Order 23, rules 2 and 3 gave the trial judge discretion as to whether a point of law should be determined before trial, at trial or after trial. Although the rules permitted the court to dismiss an action where a legal point substantially disposed of it, they did not require dismissal in every case where such a point was raised.

Judicial discretion must be exercised judicially and judiciously, on the basis of relevant, established and sufficiently disclosed facts. In this case, the affidavits and counter-affidavit contained conflicting assertions concerning the transaction, the payment of consideration, the parties’ respective obligations and the steps taken towards obtaining the Governor’s consent. Such conflicts could not fairly be resolved solely on affidavit evidence without the benefit of oral and documentary evidence at trial.

The Court recognised that sections 22(1) and 26 of the Land Use Act impose an important statutory requirement: a holder of a statutory right of occupancy cannot alienate the right by assignment, mortgage, sublease or other disposition without the Governor’s prior consent, and a transaction purporting to create an interest contrary to the Act may be null and void. However, the existence and legal effect of that requirement did not justify prematurely determining all disputed factual and legal questions before trial.

Court Findings

The Court explained that pleadings merely identify the facts in dispute; they do not prove those facts unless admitted. Where a case is presented through affidavit evidence, depositions must likewise be established and treated as evidence. Because the appellant’s affidavit was materially challenged by the respondent’s counter-affidavit, the trial court was entitled to conclude that oral evidence was necessary.

The Supreme Court further held that appellate courts may interfere with a discretionary decision where the discretion was exercised arbitrarily, illegally, on wrong principles or without giving proper weight to relevant considerations. No such defect was demonstrated here. The trial judge considered the pleadings, affidavits and exhibits and reasonably concluded that terminating the action at that stage would be premature.

The Court also rejected the complaint of denial of fair hearing. Fair hearing is primarily concerned with whether a party was afforded a reasonable opportunity to present its case, not whether the court ultimately accepted that party’s argument. The Court of Appeal had considered the substance of the appellant’s complaints and agreed that the case should proceed to full trial. The procedure adopted did not violate section 36(1) of the 1999 Constitution.

Finally, the Supreme Court emphasised its restraint in disturbing concurrent findings of fact by the trial court and Court of Appeal. Interference requires proof of a substantial error in law or procedure, perversity or miscarriage of justice. Union Bank failed to establish any such special circumstance.

Conclusion

The appeal was dismissed as lacking merit. The judgment of the Court of Appeal, which affirmed the trial court’s refusal to dismiss Astra Builders’ suit in limine, was upheld. Costs of N50,000 were awarded in favour of Astra Builders. The decision did not finally determine whether the sublease was valid or whether the Governor’s consent had legally been obtained; those matters were left for determination after a full trial.

Significance

The case illustrates the limits of summary dismissal applications founded on alleged illegality in land transactions. It confirms that the statutory requirement of Governor’s consent under the Land Use Act is substantial, but also makes clear that its application may depend on disputed facts that cannot be resolved prematurely. The judgment is equally significant for its treatment of judicial discretion, affidavit evidence, fair hearing and concurrent findings. Courts must avoid deciding the substantive merits of an interlocutory dispute where the evidence is incomplete, while appellate courts should respect a properly exercised trial-court discretion.