UNION BANK OF NIGERIA PLC V. AWMAR PROPERTIES LTD (2018)

Background

Union Bank of Nigeria Plc granted various loan facilities to Yaman Nigeria Limited, secured by a mortgage over a fuel filling station at Plot 499, Tafawa Balewa Way, Area 3, Garki, Abuja. After Yaman defaulted, the bank exercised its power of sale and instructed a licensed auctioneer to offer the property for sale. Awmar Properties Ltd negotiated the purchase and agreed to pay N300,000,000. The respondent paid the price in four instalments into an account specified by the bank, and relevant title documents were subsequently delivered.

Awmar Properties then requested physical and vacant possession of the filling station. The bank was unable to deliver possession because Yaman Nigeria Limited, which remained in occupation, resisted the sale and commenced separate proceedings challenging the bank’s authority to sell the property. Despite the failure to obtain possession, the bank retained the N300,000,000 purchase price. Awmar therefore commenced proceedings at the High Court of the Federal Capital Territory under the undefended list procedure, seeking recovery of the purchase money and interest.

The bank filed a notice of intention to defend, asserting that the respondent knew the bank’s title derived from a legal mortgage, had conducted due diligence, and was aware that Yaman remained in possession. The bank also contended that it had not expressly covenanted to deliver vacant possession and that the contract remained valid. The trial High Court refused leave to defend and entered judgment for Awmar. The Court of Appeal affirmed that decision, leading to the appeal to the Supreme Court.

Issues

1. Whether the trial court violated the bank’s constitutional right to fair hearing by referring to the respondent’s possible “forfeiture” of the purchase price without inviting argument on that expression.
2. Whether transfer of the property and physical possession were essential aspects of the sale agreement.
3. Whether alleged conflicts in the affidavit evidence required the matter to be removed from the undefended list and tried on the general cause list.

Ratio Decidendi

The Supreme Court dismissed the appeal and held that the trial court did not raise or determine a new issue suo motu. “Suo motu” means on the court’s own motion, generally referring to a judge deciding an issue without giving the parties an opportunity to address it. In context, however, the trial judge’s reference to forfeiture merely explained the injustice of allowing the bank to retain the purchase price when the respondent had not received the property. The real issue throughout was the respondent’s claim for a refund following failure of consideration. There was therefore no breach of section 36 of the 1999 Constitution or of the audi alteram partem principle.

The Court further held that physical possession was an implied term of the transaction. An implied term is one that arises from the presumed intention of the parties, the language of the agreement and surrounding circumstances; it must be necessary to give the contract business efficacy and be a term that goes without saying. A purchaser does not ordinarily pay N300,000,000 for a filling station merely to receive title documents while being denied the ability to possess and use the property. The bank’s unsuccessful attempt to obtain possession from Yaman reinforced the conclusion that delivery of possession formed part of the contractual understanding.

On affidavit evidence, the Court restated that the undefended list procedure is intended for clear claims where the defendant has no genuine defence. If the defendant discloses a substantial defence, leave to defend should be granted. Where affidavits contain a material and irreconcilable conflict on a crucial fact, the case should be transferred to the general cause list for oral evidence. Nevertheless, not every apparent inconsistency requires oral testimony. Documentary evidence and the parties’ conduct may resolve a narrow conflict. Here, the bank’s denials were largely bare and were contradicted by its conduct, including its attempt to deliver possession. The documentary evidence established payment, the bank’s receipt of the money, the failure of possession and the pending challenge by Yaman.

Court Findings

The Supreme Court found that the respondent’s payment of N300,000,000 was undisputed and that the bank continued to hold the money. The bank failed to justify why it should retain the purchase price while its customer challenged the sale and remained in possession. The consideration for the contract had failed. A buyer who has paid the price but does not receive the goods or property may seek damages or restitution of the money paid, subject to ordinary principles governing damages, including remoteness and mitigation where damages are claimed.

The Court also affirmed the award of interest. The basis of interest is that the defendant has kept the claimant out of money which the defendant has had the use of. Because the transaction was commercial and the respondent had sourced funds from banks and related companies, compensation was appropriate. Interest at 10% per annum from the date of the trial judgment was held reasonable.

The Supreme Court additionally emphasised its reluctance to disturb concurrent findings of fact by the trial court and Court of Appeal unless those findings are perverse, unsupported by credible evidence, occasion a miscarriage of justice, or result from an error of law or procedure. No such exception was established in this case.

Conclusion

The appeal was dismissed. The judgment of the Court of Appeal was affirmed. Union Bank was ordered to pay Awmar Properties N300,000,000, together with interest at 10% per annum from 2016-05-12 until final liquidation. Upon receiving the judgment debt and interest, Awmar was required to return the title documents received in respect of the filling station to the bank.

Significance

The decision reinforces the protective function of the undefended list procedure while preserving the defendant’s right to a trial where a genuine material dispute exists. It also confirms that a seller who receives the price for immovable property cannot ordinarily retain the money after failing to provide the purchaser with the promised or necessarily implied benefit of possession. The case is significant for commercial property transactions, mortgage sales, restitution for failure of consideration, implied contractual terms, interest on withheld funds and the constitutional requirement of fair hearing.