Meaning and Effect of the Use of the Phrase “Subject to Contract”

CASE TITLE: AWONUGA v. DANIEL & ORS (2022) LPELR-58527(CA)

JUDGMENT DATE: 2ND SEPTEMBER, 2022

PRACTICE AREA: LAW OF CONTRACT

LEAD JUDGMENT: MOHAMMED BABA IDRIS, J.C.A.

SUMMARY OF JUDGMENT:

INTRODUCTION:

This appeal borders on Contract.

FACTS:

This appeal is against the judgment of the High Court of Justice sitting in Kaduna.

The Appellant as Plaintiff instituted a suit against the 1st and 2nd Respondents as Defendants claiming amongst other reliefs a declaratory order that the property No 4, Mukhar Muhammed Road, Nurayi-High Cost, Kaduna South, Kaduna have been sold to the Plaintiff at all times prior to an alleged sale to the 3rd Defendant.

The Appellant who is a doctor claimed that he was approached by the 1st Respondent and informed about a parcel of land which was for sale on the firm assurance that the land was free from all encumbrance. The Appellant agreed to purchase the land for the sum of N18,000,000. The Appellant then gave the sum of N3,000,000 as part payment and was to pay the balance of N15,000,000 on or before the 28th of August, 2010. A partial sale agreement was executed in his favour. However, due to several impediments, the Appellant was unable to pay up the remaining balance as at when due.

The Appellant claimed that on the 3rd day of May 2011, he signed a cheque and gave it to the 1st Respondent and that the 1st Respondent refused to accept it on the grounds that the contract had lapsed and he (the Appellant) has breached the contract. The 1st Respondent eventually sold the property to the 3rd Respondent for the sum of N27,000,000.

The 1st Respondent filed his statement of defence and contended that due to the failure of the Appellant to pay up the balance of the contract, he terminated the contract and consequently informed the Appellant that he had sold the property to another person.

The 3rd Respondent who was the person the property in dispute was sold to, was joined as a party. The 3rd Respondent filed his statement of defence wherein he averred that he did not know the Appellant and the 2nd Respondent and that he conducted a search on the property in issue at the Kaduna State Development and Property Company Limited (KSDPC) and he found that the title was clean and unencumbered. The 3rd Respondent said he paid the sum of N27,000,000 for the property and had taken possession of the property.

At the conclusion of the trial, the trial Court entered judgment against the Appellant holding that the 3rd Respondent was a bonafide purchaser for value without notice, having no knowledge of any prior transaction between the Appellant and the 1st and 2nd Respondents. The trial Court then ordered the 1st Respondent to refund the sum of N8,300,000 to the Appellant.

Dissatisfied, the Appellant filed an appeal at the Court of Appeal.

ISSUES FOR DETERMINATION:

The appeal was determined on the following issues thus:

“(1) Whether or not, in the circumstance of a default or an absence of appraisal or evaluation of Exhibit 8 by the trial Court, its finding or decision against the Appellant is either justifiable or sustainable?

(2) Whether or not, the trial Court misconceived the thrust of the case presented by the parties and thus, arrived at the conclusion that the awareness of the Appellant of the sale of the property to the 3rd Appellant exonerated the culpable acts of the 1st Respondent and validated his acts of a breach?

(3) Whether or not, upon a preponderance of evidence and balance of probability the Appellant proved his case before the trial Court?

(4) Whether, having regards to the laws, evidence and facts relevant to a fair and just determination of the case between the parties, the judgment of the trial Court occasioned a miscarriage of justice to the prejudice of the Appellant?”

DECISION/HELD:

In the final analysis, the Court dismissed the appeal.

RATIOS:

• CONTRACT – MISREPRESENTATION: What constitutes a misrepresentation
• CONTRACT – AGREEMENT: Whether extrinsic conduct or oral argument can be used to alter a written agreement
• CONTRACT – “SUBJECT TO CONTRACT”: Meaning and effect of the use of the phrase “subject to contract”
• CONTRACT – SPECIFIC PERFORMANCE: What the doctrine of specific performance entails
• EVIDENCE – ORAL/DOCUMENTARY EVIDENCE: Whether oral evidence can be allowed to discredit or contradict a documentary evidence
• INTERPRETATION OF DOCUMENT – CONSTRUCTION OF DOCUMENT(S)/INSTRUMENT(S): How a document should be read