Whether Consideration Needs To Be Adequate

Alhaji Mukhtar Ahmed Mohammed

Vs.

1.Mouktar Mohammed

2.Usman Dantata Jnr.

Court of Appeal (Lagos Division)

CA/L/172A/08

Issues:

1.Whether the trial court was right to have held that the agreement dated 28th November 1980 between the 1st and 2nd respondents is invalid and ineffectual.

2.         whether the trial court was right when it granted the 1st respondent’s claim for possession and declaration that he is the person entitled to the premises and certificate of occupancy covering property known as Plot C, Turnbull Road, now No. 1, Jabita Close, Ikoyi, lagos.

3.whether the trial court was right when it refused to grant the appellant’s counter-claim.

Facts:

The 1st respondent sued the 2nd respondent and the appellant, as the 1st and 2nd defendants respectively, at the High Court of Lagos State claiming a declaration that he is the person entitled to the certificate of occupancy dated 26th September 1979 registered as No.24 at page 24 in Volume 1875 of the Lands registry of Lagos State; a declaration that he is the person entitled to all the premises known as Plot C, Turnbull Road (now No. 1 Jabita Close), Ikoyi, Lagos; and declaration that the contract between him and the 2nd respondent entered into on 28th November 1980 was not longer binding by reason of serious breach by the end respondent and fraudulent misrepresentation. The 1st respondent also claimed an order rescinding the contract on the ground of fraudulent misrepresentation and breach of contract; possession of the said premises; general damages for breach of contract; and an order of perpetual injunction.

The 2nd respondent in respose filed an amended statement of defence and counter-claim wherein he claimed a declaration that the appellant is entitled to be registeed as the owner of the property; and order directing the Registrar of Titles of Lagos State on being served with the order of the court to effect a change of title to the name of the appellant. Alternatively, the 2nd respondent claimed a declaration that the 1st respondent ought to execute a beed of assignment in respect of Plot C, Turnbull Road, Ikoyi in favour of the appellant; and an order directing the Chief Registrar of the court to execute a deed of assignment in respect of Plot C, Turnbull Road, Ikoyi in favour of the appellant.

The appellant on his part also filed an amended statement of defence and counter-claim. He claimed an order directing the 1st respondent to execute a deed of assignment of the property in the name of the 2nd respondent or at his option in the name of the appellant as his nominee or, alternatively, I the 1st respondent refuses and/or neglects to execute the deed of assignment within 30 days of the date of the order of court, the Registrar of Title of Lagos State shall on being served with the order of the court effect a change of title to the name of the 1st respondent or at his option in the name of the appellant as his nominee. He also claimed an order directing both the 2nd respondent and one counting Limited on the 1st respondent to execute a deed of assignment of the portion of a property at Sharada Industrial Estate, Kano covering two acres of factory and office buildings and two acres of virgin land out of the whole portion covered by Kano State certificate of occupancy No. LKN.IND/RC/82/111 in accordance with the agreement dated 28th November 1980 or, alternatively, if the 2nd respondent and/or the said Counting Limited refuses and/or neglects to execute the deed of assignment within thirty days of the date of the court order, the registrar of Titles of kano State shall on being served with the order of the court cause a survey to be made of the portion to be assigned at the cost of the 2nd respondent and Counting Limited and effect a change in the name of the 1st respondent or at his option in the name of his nominee, Delfam Nigeria Limited.

On 28th November, 1980, the 1st and 2nd respondents entered into an agreement, exhibit “MM2”. By the agreement, the 1st respondent for a consideration of fifty thousand Naira agreed to transfer his title to and ownership of a plot of land at Ikoyi to the 2nd respondent and the 2nd respondent in turn agreed to transfer his title to and ownership over a piece of land at Sharad, Kano State to the 1st respondent. In clauses 3 and 4 of the agreement, the parties further agreed that the deed o assignment in respect of the piece of land at Sharada, Kano shall be executed between Counting Limited from whom the 2nd respondent drew title and Dalfam Nigeria Limited in whose favour and on whose behalf the 1st respondent purchased the property. The deed of assignment in respect of the land at Ikoyi, Lagos belonging to the 1st respondent was to be executed between the 1st respondent and the 2nd respondent at such timeas the 2nd respondent may so desire, although possession of the property may pass to him immediately. Thus, Counting Limited, a nominee of the 2nd respondent, was to execute the deed of assignment of the Sharada, Kano property to Dalfam Nigeria Limited, a nominee of the 1st respondent. The 2nd respondent undertook to pursue and obtain permission from the Kano State Ministry of Lands and Survey for the assignment of the land at Sharada, Kano.

The 2nd respondent paid the consideration of fity thousand Naira and immediately took possession of the Ikoyi, lagos property.

He then paid off the indebtedness of the 1st respondent in order to secure the title deeds from the bank. Thereafter, he took a plan to improve the property with the co-operation of the 1st respondent.

Some years later, he sold the property to the appellant when he needed money to take care of himself after he was shot by armed robbers. However, due to the initial indifference, the parties neither passed leal estate or title to the other as stipulated in clauses 3 and 4 of exhibit “MM2”. Counting Limited got title by way of certificate of occupancy from the Kano State Government in 1986 vide exhibit “MM10”.

The basis of the 1st respondent’s claim was the non-performance of the relevant clauses of the agreement to assign. The 1st respondent based his complaint on the fact that the 2nd respondent did not put him in possession of the Sharada, Kano property inspite of repeated demands and this was because the 2nd respondent was legally incapable of doing so as the 2nd respondent had no rights in Counting Limited and he had falsely and fraudulently represented that he had the power to do so. He claimed that the 2nd respondent misrepresented the fact of his title to the Sharada, Kano property.

During trial, the 1st respondent gave copious evidence in support of his claim on the Ikoyi, Lagos property. He tendered his certificate of occupancy in respect of the property and it was admitted as exhibit “MM1”. Under cross-examination, the 1st respondent first conceded that he did not give the appellant consideration of N50,000.00 but later said that he gave him the N50,000.00. he further stated that when he was taken to the Sharada, Kano property, it was not in occupation at the time of the transaction.

At the conclusion of trial, the trial court found it favour of the 1st respondent and dismissed the counter-claims of the appellant and the 2nd respondent. The trial court found that the agreement, exhibit “MM2”, did not contain details and particulars of the properties in dispute and that for that reason the agreement was invalid. Consequently, the court held that it was unable to find in the document an agreement to assign any land and it resuded to interprete the provisions of the agreement. It held that since the claimant was in possession of the certificate of offuapny in respect of the Ikoyi, Lagos property which was still in his name, he had legal rights which were enforceable and therefore he was entitled to the declaration sought.

Aggrieved, the appellant appealed to the Court of Appeal.

In determining the appeal, the Court of Appeal considered the provision of section 75 of the Evidence Act which states thus:

“75. No feact need be provide in any civil proceedings which the parties thereto or their agents agree to admit at the hearing, or which, before the hearing, they agree to admit by any writing under their hands, or which by any rule of pleading in force at the time they are deemed to have admitted by their pleadings”.

Held (Unanimously allowing the appeal in part):

1.On Duty on court in interpretation of written agreement-

In the interpretation of a written agreement, the court must confine itself to the plain words used therein. In the instand case, paragraphs 3 and 4 of exhibit “MM2” clearly showed the intention of each proposed assignor to pass legal title in the property so indicated to the proposed assignee. (Abalogu v. SPDC (Nig.) Ltd. (2003) 13 NWLR (Pt. 837) 308 referred to . )PP. 31 -32, paras. F-A)

2.On principles governing interpretation document -\the question of the interpretation of a document is a matter of law. Once of the canons of interpretation is that the words used in a document must be given effect and that no word must be added or substracted or ignored. The whole document must be considered in totality and not in isolation so as to ascertain the intention of the parties. (Afrotech Tech Services (Nig.) Ltd V. M.I.A. & Sons Ltd, (2000) 15 NWLR (Pt. 1027) 415 referred to ) (PP. 34-35, paras G-A).

Per Ogunwumiju, J.C.A. at page 35, paras. A-D:

I have considered exhibit MM2 and the record of proceedings at the lower court particularly the evidence of the appellant on page 258-272 of the record and the evidence of the 1st respondent on pg 202-226 of the records.

My own humble understanding upon a construction of the various terms of exhibit MM2 is that it encapsulates who separate agreements each with its own conditions but embodied in one document. The testimonium clauses 1,4 7 relate exclusively to the Ikoyi property while clauses 2, 3,5 6 relate exclusively to the Kano property. I did not glean an intention by the parties to barter or exchange one property for the other. Rather, it was two separate property transactions each with its own incidents and conditions. Since we cannot import the word ‘exchange’ into the agreement and there is a clear distinction between the terms of both contracts, I hold fast to the view that there are two agreements”

3. On whether consideration need be adequate –

Consideration must be sufficient and it need not be adequate. In the instant case, the 1st respondent prevariecated on the issue of consideration. The prevarication supported the evidence of the 2nd respondent that the 1st respondent did not pay consideration for the Sharada, Kano property.

(P.36, para. B).

4. On meaning of “barter” –

Barter means to exhange goods or services against something else without using money. In the instant case, the prarties each sold their property for consideration with different attendant consitions.

It was not trade by barter. (P.35, paras. D-E).

5.On Obligation of contracting parties in respect of disclosure  of information –

In terms of disclosing information during the process of contractual negotiation, there are essentially two types of obligation which could be imposed by the courts upon contracting parties.

The first is to disclose all known materials facts to the othr contracting party. The second is a duty to refrain making active misrepresentations, that is to say, a contracting party is not compelled to disclose all information, but once he does disclose, he must do so truthfully. (P.36, paras. …).