Parties Are Bound By Their Agreements

“Where Parties Have Entered Into Agreement Voluntarily, And There Is Nothing To Show That Such Agreement Was Obtained By Fraud, Mistake, Deception Or Misrepresentation, They Are Bound By The Terms Of The Agreement’

In the Supreme Court of Nigeria
Holden at Abuja
On Friday, the 5th Day of May, 2017

Before Their Lordships
Olabode Rhodes-Vivour
Clara Bata Ogunbiyi
Chima Centus Nweze
Amiru Sanusi
Paul Adamu Galinje
Justices, Supreme Court
SC.122/2001

Between
Edilcon Nigeria Ltd ……… Appellant

And
United Bank for Africa __Respondent

Lead Judgement delivered by Hon. Paul Adamu
Galinje, JSC

Facts

The Appellant was granted an overdraft facility of N400,000.00 by the Respon­dent, to execute a contract it entered into with the University of Jos. The Respondent released the money to him, and after collecting some mobilisation fee from the University of Jos, the Appellant purchased materials including iron pipes. The University later experienced difficulty in securing funds for the construction of the sewage main line, for which the iron pipes were procured.

The Appellant and the University agreed to sell off the iron pipes, because the Appellant’s overdraft with the Respondent, had become due. The iron pipes were sold, and the proceeds were paid into the Appellant’s account with the Respondent. There were a series of meeting held, to determine how the proceeds of the sale would be shared. It was eventually agreed, that the proceeds be shared between the University and the Appellant, in the ratio 55% and 45% respectively. The Respondent paid the University its 55% and applied the balance in recovering the Appellant’s overdraft. The Appellant denied agreeing to the sharing formula, and insisted that the proceeds of the sale was enough to liquidate the debt, and also leave him a substantial balance. The Respondent on the other hand, insisted that the 45% share of the Appellant, only reduced the outstanding overdraft. The Respondent stated that, the Appellant’s debt stood at N1,418,076.10. The Appellant therefore, filed an action at the High Court of Plateau State, and the Respondent counter-claimed against the Appellant in that suit. The trial court dismissed the claims of the Appellant, and granted the claims sought by the Respondent in his counter- claim. The Appellant appealed unsuccessfully to the Court of Appeal. He further appealed to the Supreme Court.

Issues for determination

The Supreme Court adopted the following issues for the determination of the appeal.

1. Whether the Court of appeal was right, when it relied on Exhibit 16A on a different ground from that advanced by the learned trial judge, without a Respon­dent’s Notice to that effect
2. Whether the Court of Appeal was right when it held that the Appellant was bound by Exhibit 17A, even though the Appellant was not a party to the said document
3. Whether the Court of Appeal was right when it upheld the decision of the trial court, in dismissing the Appellant’s claims and entering judgement in favour of the Respondent.

Arguments

On Issue 1, the Appellant contended that the lower court agreed with the Appellant in the manner in which he challenged exhibit 16A in one breath, and in another, attempted to justify the treatment given to exhibit 16A by the trial judge. It argued that, the lower court had fallen into the error of substituting its own findings with that of the trial court, without being asked to by the Respondent by means of a Respondent’s Notice.

It argued that the lower court’s action amounted to making a case for the Respondent. It submitted that, a court has no duty to make a case for another party, as

a court must stand as an unbiased umpire in the course of proceedings. It relied on OSOLU v OSOLU (2003) 11 NWLR (Pt 832) 608 at 631; EBBA v OGODO (1984 (1 SCNLR) 372.

On issue 2, the Appellant contended again that the lower court was wrong, when it held that the Appellant was bound by the terms of Exhibit 17A, when it found that the Appellant was not a party to the said exhibit.

It argued that, a person is not under any obligation to bear the burden of a contract to which he is not a party, even though the contract is in his favour or benefit.

The Appellant relied on MAKWE v NWUKOR (2001) 14 NWLR (Pt. 733) 356. It told that the court that,there was no evidence that it agreed to be bound by the terms of exhibit 17A, which was executed by the Respondent and the University of Jos.

On Issue 3, the Appellant argued that there was no evidence before the trial court, that contradicted the fact that the Appellant had paid the sum of N780,823.57 into its account domiciled with the Respondent. It further argued that, the stated sum was paid with the intention to liquidate the Appellant’s indebtedness to the Respondent for the overdraft facility, which stood at N540,181.83 at the time. It further contended that, the payment made by the Respondent to the University of Jos was a unilateral action, because the Appellant was not privy to any agreement to pay same. It submitted that, the lower court ought to have given judgement in its favour. The Appellant finally urged the Supreme Court, to set aside the concurrent decisions of the Court of Appeal and trial court.

Court’s Judgement and Rationale

On issue 1, the Supreme Court did not agree with the Appellant, that the lower court made a new case for the Respondent, the court stated that even though Exhibit 16A was unsigned and had no evidential value, it re­mains a document that was before the lower court. The Court stated that, even though a Respondent in an Appeal who wishes to contend that the decision of the court should

be affirmed on grounds other than those relied on by the trial court, could do so by way of _is Respondent’s notice, however, the lower court by its rules, is not excluded from affirming or varying a decision of a trial court on grounds other than those relied upon by the trial court, provided that the decision is taken on the basis of the evidence before the trial court. The Court referred to Order 51 Rule 20(4) and (5) of the Court of Appeal Rules 1981, which was the applicable rules at the material time. The court stated

that, although the lower court was right in finding that the trial court was wrong in ascribing some weight to exhibit 16A, it was right when it used the exhibit as evidence, that there was a meeting where the exhibit itself was created. The Supreme Court held that an incompetent Exhibit 16A, is evidence that there was a meeting, just as an incompetent proceeding or decision of a court, is an evidence of the fact that the court sat and conducted proceeding that is incompetent. The content of exhibit 16A, shows clearly that the Appellant was represented at the meeting by Alhaji Isa Hanna and its Engineer Mr. Uche Onjuka, the court held that this piece of evidence cannot be supplanted by the oral evidence of PW1 who claimed that the Appellant was not represented at the meeting.

On issue 2, the Supreme Court quoted parts of exhibits 19, 20 and 21 as follows:

Exhibit 19

“…therefore we are applying as agreed to the branch manager to give us N35, 000 out of N147,612.50 should be paid to Edilcon account ‘and the University as per agreement”

Exhibit 20

“We wish to draw your attention during our previous meetings with University Authority and the former Bank Manager, that Edilcon Nig. Ltd will be given some percentage for the transaction… But to our surprise, this verbal agree­ment was not fully implemented.’

Exhibit 20

“that out of the aforesaid the sum of N40,000.00 was paid to the company to enable it settle salaries of watchmen who took care of the pipes, that the balance of N745,000.00 was lodged in favour of Edilcon and Jos University

The Supreme Court held that, the Appellant was the author of exhibits 19, 20 and 21 and that the lower court was therefore, right to come to the conclusion that there was a sharing formula agreed to between the Appellant and the Uni­versity of Jos. The Court held that, the Appellant impliedly adopted the agreement contained in the exhibits, its subsequent conduct in dealing with the Respondent The Court stated that where that happens, the parties would be bound by the terms of the agreement as if they executed it. The court referred to McDONALD v JOHN TWINAME Ltd (1953) 2 QB 304 at 314. Where parties have entered into agreement voluntarily,and there is nothing to show that such agreement was obtained by fraud, mistake, deception or misrepresentation they are bound by the terms of the  agreement . AG  RIVERS STATE v AG AKWA IBOM STATE (2011) NWLR (Pt 1248) 31 at 81.

On issue 3, the Supreme Court held that the trial court had no reason to give judgement to the Appellant, having regard to the overwhelming evidence against it. It held that, the Appellant’s account was always shown to be in debit balance and this is consistent with the findings of the trial court. It further held that, evidence showed that of the total sum of N780,523.57 that was paid into the Appellant’s account as agreed, 45% accruing to the Appellant was used to reduce its indebtedness to the Respondent.

The three issues for determination were resolved against the Appellant.

Appeal Dismissed.

Representation:

Solomon. Umoh SAN, with Chidinma Dioji (Miss) and Felix Abiodun Esq for the Appellant.

G. Ofodile Okafor SAN, with Philemon Tunyang Esq., D. A Dalong Esq., Joy Onyekwuluje and Ngozi Ofodile-Okafor for the Respondents