BANK OF AGRICULTURE LTD. V. ALHAJI TAJUDEEN ODUOLA & ORS

Legalpedia Citation: (2025-02) Legalpedia 12623 (CA)

In the Court of Appeal

Holden at Ibadan

Mon Feb 17, 2025

Suit Number: CA/IB/306/2013

CORAM

Gabriel Omoniyi Kolawole Justice of the Court of Appeal

Binta Fatima Zubairu Justice of the Court of Appeal

Uwabunkeonye Onwosi Justice of the Court of Appeal

PARTIES

BANK OF AGRICULTURE LTD.

APPELLANTS

ALHAJI TAJUDEEN ODUOLA
MR. EZEKIEL ADIO
ALHAJI KOLA OLADIPO

RESPONDENTS

AREA(S) OF LAW

BANKING LAW, CONTRACT LAW, MORTGAGE LAW, PROPERTY LAW, CIVIL PROCEDURE, LAND LAW, INTERPRETATION OF DOCUMENTS, INTEREST RATES, DOCTRINE OF EQUITY, STATUTORY INTERPRETATION

SUMMARY OF FACTS

This case arises from a loan facility granted by the Appellant (Bank of Agriculture Ltd.) to the 1st Respondent (Alhaji Tajudeen Oduola) in 1993 for agricultural purposes. The 1st Respondent obtained a loan of N231,786.20k for cultivation of 15 hectares of maize plantation and 30 hectares of maize mixed cassava intercropping. The 2nd Respondent (Mr. Ezekiel Adio) served as guarantor, providing his property as collateral. The parties agreed that the loan would be repaid within four years, with the repayment period ending in December 1997.

When the 1st and 2nd Respondents failed to fully repay the loan by its expiration date, the Appellant attempted to sell the mortgaged property. In response, the Respondents initiated court proceedings (Suit No. I/946/97) to restrain the Appellant from selling the property to a third party. This earlier suit was ultimately dismissed for lack of diligent prosecution on December 4, 2003.

As of January 1998, the Appellant claimed the 1st Respondent owed N483,741.49. Between January 1998 and April 2003, the Respondents made payments totaling N520,000.00 (N270,000.00 plus N250,000.00), which they believed had fully discharged their debt. Despite these payments, the Appellant proceeded to sell the mortgaged property in April 2004, prompting the Respondents to file a new action (Suit No. I/355/2004) seeking various declarations, including the invalidity of the mortgage deed and an order setting aside the sale.

The High Court of Oyo State ruled in favor of the Respondents, prompting the Appellant to appeal to the Court of Appeal.

HELD

The appeal was partially allowed on the issue of the validity of the mortgage deed.

However, on the substantive matter concerning the loan repayment, the appeal was dismissed.

The Court held that the Appellant was not entitled to continue charging interest on the loan after its expiration date in December 1997 or after litigation commenced.

The Court determined that the total payments of N520,000.00 made by the Respondents adequately discharged their debt to the Appellant.

The Court ruled that the issue of the mortgage’s validity was properly before the trial Court and not raised suo motu.

The judgment of the Oyo State High Court in suit No. I/355/2004 delivered by Hon. Justice A.A. Aderemi on March 15, 2013, was affirmed, with the exception of the finding on the validity of the mortgage deed.

ISSUES

Whether the trial Court was right in concluding, based on the facts and evidence presented, that judgment should be given in favor of the 1st and 2nd Respondents.

Whether the trial Court erred by raising issues suo motu regarding the validity of the legal mortgage without giving the Appellant an opportunity to address them.

RATIONES DECIDENDI

FIXED-TERM LOAN AGREEMENTS – LIMITATION ON INTEREST CHARGES AFTER EXPIRATION

From the foregoing clause, it is not in doubt that the loan facility was for a fixed period of time from May 1993 to December 1997 a period of four years. The position of the law is where there is a fixed expiry date for repayment of loan facility, the agreed rate of interest payable on the loan would only be applicable up to the date the facility expired. In other words the payment of charges to a bank in respect of loan facility is not absolute in a situation where there is a fixed date for payment of the loan facility… – Per BINTA FATIMA ZUBAIRU, J.C.A.

INTEREST CHARGES – EFFECT OF PENDING LITIGATION ON BANK’S ENTITLEMENT TO CHARGE INTEREST

In other words, the sum of N483, 741.49 shown in the statement of 1998 in exhibit A2 should not have been increased to the sum of N838.000.00 reflecting accrued interest. The interest charged between 1997 to 2003 was wrong in law. – Per BINTA FATIMA ZUBAIRU, J.C.A.

CALCULATION OF INTEREST – SUSPENSION UPON COMMENCEMENT OF LITIGATION

Generally a claim before the Court is ascertained and when the claim is for a definite sum with interests particularly in banking cases, the expectation of the law is that the claims of the plaintiff having been placed before the Court as an independent arbiter to determine the usual calculation of interest will be as the Court in its judgment will determine. In other words, the claimant will not continue to calculate the interest in his records and thereby be a judge in its own cause. It seems to me that once the case is filed in a Court of law, the bank’s calculation of interest on the agreed rate should be stayed and the matter left for determination by the Court according to the law in the matter before the Court… – Per BINTA FATIMA ZUBAIRU, J.C.A. (quoting Omage JCA in Nuba Commercial Farms Ltd Vs. NAL Merchant Bank Ltd)

CONTRACTUAL AGREEMENTS – BINDING NATURE OF VOLUNTARILY ENTERED AGREEMENTS

When parties enter into contract, they are bound by the terms set out therein. It is not the business of the Court to re-write the contract for the parties.– Per BINTA FATIMA ZUBAIRU, J.C.A. (citing FIDELITY BANK VS MARCITY CHEMICAL INDUSTRIES LTD & ORS)

VALIDITY OF MORTGAGE – REQUIREMENTS FOR GOVERNOR’S CONSENT UNDER LAND USE ACT

It shall not be lawful for the holder of a statutory right of occupancy granted by the Government to alienate his right of occupancy or any part thereof by assignment, mortgage, transfer of possession, sublease or otherwise however without the consent of the Governor first had and obtained. – Per BINTA FATIMA ZUBAIRU, J.C.A. (quoting Section 22 of the Land Use Act)

BENEFITTING FROM ONE’S OWN WRONG – MORTGAGOR’S INABILITY TO CHALLENGE VALIDITY OF MORTGAGE AFTER BENEFITTING FROM IT

Nonetheless, it is my candid view that the Respondents who benefited from the mortgage knowing same has been created in violation of the above provision cannot now turn around and claim that the mortgage is without the requisite consent. It is not the requirement of the law that the responsibility of obtaining the Governor’s consent squarely rests with the Appellant in this case. To allow the Respondent who benefitted from the mortgage agreement to escape liability on this ground will amount to injustice and a miscarriage of justice.– Per BINTA FATIMA ZUBAIRU, J.C.A.

INTEREST RATES – LIMITATION TO AGREED TERM OF LOAN FACILITY

Although I have already held above that banks can continue to charge interest on any un-liquidated loan or overdraft until the customer pays up, this is not absolute. Whereas in this case, there is a fixed expiry date for an overdraft, the agreed interest rate will only be applicable from the date the agreement came into effect up to the date the facility expired as the indebtedness cannot be treated as an overdraft after the expiry date. – Per BINTA FATIMA ZUBAIRU, J.C.A. (quoting U.B.A & ANOR VS LAWAL)

COURT’S DUTY TO CONSIDER ALL ISSUES – OBLIGATION TO ADDRESS ALL PROPERLY RAISED ISSUES

It is the duty of the Court whether of first instance and Appellate Court to considered all the issues that have been joined by the parties and raised before it for determination.”– Per BINTA FATIMA ZUBAIRU, J.C.A. (citing MMA ANOR VS NMA)

EQUITABLE PRINCIPLE – PERSON CANNOT BENEFIT FROM OWN WRONG

……… the applicable equitable principle being that a person cannot benefit from his own wrong. In its adjudicatory functions, the Court has a duty to prevent injustice in any given circumstances and avoid rendering a decision which enables a party to escape from his obligation under a contract by his own wrongful act or otherwise profit his own wrongful act. – Per BINTA FATIMA ZUBAIRU, J.C.A. (citing TERIBA VS ADEYEMI)

AWARD OF INTEREST – COURT’S AUTHORITY TO DETERMINE INTEREST AFTER FACILITY EXPIRATION

Thus, what the bank will be entitled to after the debt is become due is damages for award the applicable interest rate per annum to cover from the day the overdraft facilities became due up to the day of judgment of the Court. – Per BINTA FATIMA ZUBAIRU, J.C.A. (quoting U.B.A & ANOR VS LAWAL)

COURT’S JURISDICTION – DETERMINATION OF INTEREST AFTER LITIGATION COMMENCES

Now the issue is this. Is the bank having filed a claim in Court entitled to continue to calculate the sum due, or claimed from the Court according to its own calculated interest in its office, or is the claimant entitled only to the sum claimed on the statement of claim as filed in the Court. As I recorded above, unless the statement of the claim is amended before judgment, and evidence exists in Court on the claim, before it, a Court of law will not and should not award more than the sum stated on the statement of claim of the party claiming.” – Per BINTA FATIMA ZUBAIRU, J.C.A. (quoting Omage JCA in Nuba Commercial Farms Ltd Vs. NAL Merchant Bank Ltd)

CLEAN HANDS DOCTRINE – REQUIREMENT FOR SEEKING EQUITABLE RELIEF

I must also add here that the Appellant’s hands are not clean but soiled with dirt and cannot be allowed to drink from the fountain of justice. As he who comes to equity must come with clean hands and he who seeks equity must do equity. – Per BINTA FATIMA ZUBAIRU, J.C.A.

RAISING ISSUES SUO MOTU – COURT’S LIMITATION WHEN ADDRESSING UNPLEADED ISSUES

From the above, it will be wrong to accuse the learned trial Judge of raising the issue of validity of the deed suo moto as the said issue was pleaded and both oral and documentary evidence were adduced before the learned trial Judge regarding the validity or otherwise of the deed. Therefore, the learned trial Judge was under the obligation to consider all issues placed before him for determination and make a pronouncement… – Per BINTA FATIMA ZUBAIRU, J.C.A.