CASE TITLE: SAVANNAH BANK PLC V. FAMAKINWA & ANOR LPELR-80721(CA)
JUDGMENT DATE: 10TH JANUARY, 2025
JUSTICES: PAUL AHMED BASSI, J.C.A.
NGOZIKA UWAZURUNONYE OKAISABOR, J.C.A.
ABDULAZEEZ MUHAMMED ANKA, J.C.A.
DIVISION: LAGOS
PRACTICE AREA: MORTGAGE
FACTS:
This appeal borders on Mortgage.
This is an appeal against the decision of the High Court of Lagos State.
In this action, the 1st respondent sued the appellant before the trial Court, over her property, which she mortgaged with the appellant in order to secure a loan. The appellant, during the pendency of an action they filed in suit no. LD/2282/91, Savannah Bank Plc vs. Mrs. Risikatu Famakinwa, decided to sell the said property to the 2nd respondent. This conduct of the appellant irked the 1st respondent, who then subsequently filed the action at the trial Court, in suit no. LD/4390/1995, challenging the purported sale of her property to the 2nd respondent.
At a stage, the learned trial judge suo motu stated a case as to whether or not the sale of the mortgaged property in the aforesaid circumstances was null and void and of no effect while parties were directed to further address the Court on the issue. The trial Court ruled that such sale of the property was null and void and of no effect and that the title of the property remained with the 1st respondent/claimant.
It is against the above holding of the Court that the appellant filed the instant appeal.
ISSUES FOR DETERMINATION:
The Court adopted the issues formulated by the Appellant, thus:
1. Whether the pronouncement of the learned trial judge that the sale by the appellant in the circumstances of suit no. ID/2282/91 was null and void and of no effect has not occasioned a miscarriage of justice particularly in view of the appellant’s right as a mortgagee whose power of sale has crystallized?
2. Whether considering the facts before the learned trial judge particularly the positive admission by the defendant in suit no. LD/2282/91 that it borrowed the sum of N150,000 at an interest rate of 13% from the appellant but repaid only the sum of N100,000, the ruling of the learned trial judge that the sale by the appellant was null and void, thus foreclosing its right of sale as a legal mortgagee, has not unduly overreached the 1st respondent and occasioned a miscarriage of justice?
3. Whether in the circumstance of suit no. LD/4390/95 the learned trial judge was not wrong in holding (as he did) that the sale of the mortgaged property of the appellant was caught by the doctrine of lis pendens?
4. Whether, in the circumstance of this case, the learned trial judge was right to determine the substantive matter at the interlocutory stage pursuant to the case stated by him suo motu?
COUNSEL SUBMISSIONS:
Counsel to the appellant in his brief opted to argue issues 1 and 2 together. Counsel argued that a legal mortgagee whose power of sale has crystallized can indeed exercise the right to outright sale of the mortgaged property. See AIB LTD. vs. LEE & TEE IND. LTD. (2003) 7 NWLR (Pt. 819) 366. That the whole essence of a legal mortgage is to invest in the mortgagee an express and unaltered right of sale on a mortgaged property once the the same becomes due and unpaid, in the event of failure on the part of the mortgagor to redeem its property. See INTERCITY BANK PLC vs. FSFF (NIG) LTD (2001) 17 NWLR (Pt. 742).. Reliance was had to Section 125 of the property and conveyance law (a received English Law) that a mortgagee should have an unaltered power to exercise the power of sale conferred by law once the following events occur:
(a) Notice requiring payment of the mortgaged money served on the mortgagor and default in payment made of the mortgaged money or the part thereof for three months after such service.
(b) Some interest under the mortgage is in arrears and unpaid for two months after becoming due.
(c) There has been a breach of some provision contained in the mortgage deed or in the property and conveyance law or in an enactment replaced by law on the part of the mortgagor to observe or perform. See AIB LTD. vs. LEE & TEE (Supra). Learned senior counsel submits the chain of events culminating in and giving birth to the power of sale had sufficed. See OGORU VS IGBINOVIS (1998) 13 NWLR (Pt. 582) 426. Counsel insisted they have the right to sell the property,, the power of sale having crystallized. See ACB LTD vs. IHEKWOABA (2003) 16 NWLR (Pt. 846) 249 and GBADAMOSI vs. KABO TRAVELS LTD (2000) 8 NWLR (Pt. 668) 243 to the effect that:
“The sale of a mortgaged property is not vitiated merely on the ground that no case has arisen to authorize the sale or that due notice was not given or that the power was otherwise improperly or irregularly exercised…”
It is submitted that a mortgagee’s power of sale is sacrosanct and is not subject to any restraint. See OMIDIJI vs. FMB (2001) 13 NWLR (Pt. 731) 646 to the effect that even where there is a dispute in Court in respect of the property or the amount owed, the mortgagee’s power of sale is different, distinct, and strictly governed by the property and conveyance law. See INTERCITY BANK PLC Vs F and FF NIG. LTD. (Supra) that—
“The Court will not inquire into the motives of a mortgagee for exercising his power of sale… If a mortgagee exercises the power of sale bona fide, without corruption or collusion with the purchaser or with reckless impropriety as to be tantamount to fraud, the Court will not interfere.”
See NIG. ADVERT SERVICE LTD. vs. UBA PLC (1999) 8 NWLR (Pt. 546. The Court was urged to hold the sale as valid.
The respondent’s counsel submitted that though a legal mortgagee has the power to sell a mortgaged property when the borrower is in default of repayment, what is in issue is the rightness or correctness of the appellant’s act in selling the property at a time when the power of sale was the subject of litigation instituted by the mortgagee itself particularly when the indebtedness of the mortgagor was disputed. That in spite of its self-acclaimed power of sale without recourse to the Courts, the appellant none the less, of its own volition took advantage of Section 6(6)(b) of the Constitution and submitted the dispute between it and the 1st respondent for adjudication and was therefore bound to await the outcome one way or the other before resorting to self-help and therefore approbating and reprobating.
DECISION/HELD:
In conclusion, the Court allowed the appeal.
RATIO:
MORTGAGE- POWER OF SALE: Whether a Mortgagee will be restrained from exercising his power of sale merely because the amount due is in dispute/uncertain: “Now the main issue is whether the trial Court was right in holding that the sale at the time was null and void. Authorities cited by the appellant are to the effect that the mortgagee has the right to sell the mortgaged property and this right cannot be affected merely because the amount due under the mortgage agreement is in dispute. See AIB LTD. Vs LEE & TEE IND. LTD. (2003) 7 NWLR Pt. 819 Per Augie JCA (as she then was) to the effect that: “… a mortgagee will not be restrained nor can his power of foreclosure be affected by the exercise of the power of sale merely because the amount due is in dispute or the mortgagor has commenced a redemptive action in Court.” Underlining is mine for emphasis. The above holding of the appellate Court as underlined shows that even where the action is in Court the mortgagee has the right to sell the property. This now brings me to the issue of lis pendis as argued by the 1st respondent. By the decision of the Court above the mortgagee can still exercise his power of sale despite the pendency of an action in Court. In a recent decision of this Court is 2024 in CHIEF SAMUEL OKWARA Vs FIRST BANK OF NIGERIA PLC (2024) LPELR 62859 (CA). The Court held thus: – “It a settled that a dispute to volume of indebtedness is not a valid ground in law to prohibit a mortgagee from exercising his right of sale. See ATTIOGBEY Vs UBA PLC (2013) LPELR 20326 CA. at 33-34 (F-F) where this Court Per Abiru JCA (now JSC) held that:- “It is settled law that a mortgagee will not be restrained nor can his power of sale be affected merely because the amount due is in dispute or because the mortgagor objects to the manner in which the sale is being arranged or because the mortgagor has commenced a redemption action in Court.” From the above decision of this Court which I am bound to abide by as precedent established, the issue of lis pendis raised by the 1st respondent at the trial Court and this Honourable Court cannot succeed and same is accordingly discountenanced and overruled. The appellant herein has the right as mortgagee in terms of their mortgage agreement to sell the said property in issue and such right of sale cannot be challenge and I so hold.” Per ABDULAZEEZ MUHAMMED ANKA, J.C.A.
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