When Award of Damages in Lieu of an order for specific performance will suffice

In the Supreme Court of Nigeria

Holden at Abuja

On Friday, the 8th day of March 2024

Before Their Lordships

Kudirat Motonmori Olatokunbo Kekere-Ekun

Mohammed Lawal Garba

Helen Moronkeji Ogunwumiju

Adamu Jauro

Tijjani Abubakar

Justices, Supreme Court

SC.38/2009

Between

MR. OLUSOLA ORIOKE                          APPELLANT

And

1. ALHAJI FATAI KUNLE ONAYEMI
2. MR. GBADEBO IDOWU
3. MR E. B. EKUNSEITAN
4. MRS ELSIE FOLUDO AKINTOYE                                      RESPONDENTS
5. MRS. ALAKE ASIWAJU DADA
6. ATTORNEY-GENERAL & COMMISSIONER

FOR JUSTICE, OYO STATE

(Lead Judgement delivered by Honourable Kudirat Motonmori Olatokunbo Kekere-Ekun, JSC)

Facts

The 1st Respondent instituted an action at the High Court of Lagos State against the 2nd and 3rd Respondent as 1st and 2nd Defendant. The 3rd, 4th and 5th Respondent were subsequently joined as co-Defendants in the suit. The case of the 1st Respondent was that he had entered into a contract with the 3rd, 4th and 5th Respondent on July 10, 1995, for the sale of a property at Oke-Bola, Ibadan, which they inherited from their late father. His complaint was that he fulfilled his own obligations under the said contract of sale by paying the full purchase price in two instalments as agreed; however, the 3rd, 4th and 5th Respondent breached the contract by the 3rd Respondent’s sale of the property to the Appellant.

The 1st Respondent sought an order of specific performance of the contract of sale between him and the 3rd, 4th and 5th Respondents for the sale of the said property, or, in the alternative, the sum of Nl.5 million as damages, jointly and severally against the Appellant and the 2nd and 6th Respondents for breach of contract.

The 1st Respondent also sought declaratory orders of court, to the effect that the assignment of the property to the Appellant and the subsequent registration of the Deed of Assignment issued to him are null and void and ought to be vacated from the register of deeds at the Ministry of Lands, Housing and Physical Planning, Oyo State.

The case of the 2nd Respondent, who was the estate agent that introduced the 1st Respondent to the 3rd–4th Respondent, was that when the 1st Respondent paid the first installment of N500,000.00, the money was shared between the 3rd, 4th, and 5th Respondents; however, while the 4th and 5th Respondents collected their share, the 3rd Respondent asked the 2nd Respondent to keep it until the entire purchase price was paid. He averred that when the balance of N250,000.00 was received subsequently and the 2nd Respondent notified the 3rd Respondent, the 3rd Respondent informed him that he was no longer interested in the transaction as he had found a buyer who offered N800,000.00, and that he asked the 2nd Respondent to return the N750,000.00 paid by the 1st Respondent.

On the other hand, the 3rd Respondent’s defence was that, as the head of the family and the sole surviving administrator of their late father’s estate, he had the right to sell the property without the consent of the other members of the family.

At the conclusion of the trial, although the trial court found that the 3rd Respondent consented to the sale of the property to the 1st Respondent, it declined to grant the award of specific performance sought by the 1st Respondent. Rather, the trial court awarded the sum of N1,000,000.00 as damages against the 3rd Respondent in favour of the 1st Respondent for breach of contract.

Dissatisfied with the failure of the trial court to grant his prayer for an order of specific performance, the first respondent filed an appeal at the Court of Appeal. The Court of Appeal allowed the appeal, set aside the decision of the trial court, and made an order of specific performance of the sale of the property in favour of the 1st Respondent. In its judgement, the Court of Appeal held that the 3rd Respondent had earlier given his consent for the subject property to be sold to the 1st Respondent, and the property had already been sold to the 1st Respondent before the 3rd Respondent changed his mind and purported to sell to the Appellant; hence, the 3rd Respondent had nothing again to sell based on the doctrine of Nemo Dat Quod Non Habet.

Aggrieved, the Appellant appealed to the Supreme Court.

Issue for Determination

The Supreme Court considered the issue below in its consideration of the appeal.

Whether the Court of Appeal was right to overturn the judgement of the trial court, granting the alternative remedy of damages in lieu of specific performance. 

Arguments

Counsel for the Appellant submitted that a decree of specific performance is an equitable relief and therefore discretionary, and for an order of specific performance to be made, the contract must be capable of being specifically performed. He submitted that, being a discretionary relief, there is wisdom in seeking an alternative relief of damages for breach of contract in the event that a decree for specific performance could not be granted, especially in a situation where the property in dispute had been sold to a third party.

He argued that that from the records before the court, it was clear that the 3rd Respondent, as the sole surviving administrator of the deceased’s estate, never entered into any contract with or execute any deed of assignment in favour of the 1st Respondent for the sale of the property. He argued that there was also evidence that he did not consent to the sale of the property to the 1st Respondent and did not receive any money in respect thereof; thus, no legal title had passed to the 1st Respondent. He submitted that since the 1st Respondent sought alternative relief for damages, the trial court was right to have declined the order of specific performance on the ground that the property had been sold to a bonafide purchaser for value without notice and that the property had been duly registered at the Lands Registry, Oyo State. He submitted that the alternative remedy of damages was rightly granted by the trial court, and the Court of Appeal was wrong to have set it aside

In response, Counsel for the 1st Respondent, relying on ODUTOLA HOLDINGS LTD v. LADEJOBI (2006) 12 NWLR (PT. 994) 321 at 352 E-H, submitted that once a substantive claim is proved, there is no justification for considering the alternative relief.

On his own part, Counsel for the 2nd Respondent argued that since the findings of the trial court that the contract was breached were not disturbed by the lower court, the lower court was right in allowing the appeal and granting an order for specific performance. He submitted that, in light of the trial court’s finding that the 1st Respondent had paid for the property, its failure to grant an order for specific performance was perverse.

The submissions of counsel for the 4th and 5th respondents were on the same premise as that of the 1st and 2nd Respondent. He submitted further that the Appellant is not deserving of any equitable consideration by the court, having shown disrespect to the court by perfecting the Deed of Assignment during the pendency of the suit.

In addition to the other arguments made by the respective Counsel for the 1st–5th respondent, the Counsel for the 6th Respondent argued that the Appellant’s contention that he was an innocent purchaser for value without notice could not be raised as a fresh issue before the Supreme Court without leave of court, as same was not raised at the trial court. He urged the court to discountenance the Appellant’s position.

court’s judgment and Rationale

In resolving the appeal, the Supreme Court held that an order for specific performance is an equitable remedy granted at the court’s discretion, and being an equitable remedy, an order for specific performance will not be made where the plaintiff can be adequately compensated by the common law remedy of damages. Their Lordships, relying on their earlier decision in UNIVERSAL VALCANIZING (NIG) LTD v. IJESHA UNITED TRADING & TRANSPORT CO. LTD (1992) LPELR 3415 (SC) @ 37 A–BB, held that even where a contract is valid in law, specific performance may be refused on general equitable principles, for instance where it will occasion severe hardship to the defendant. The Court held further that the impossibility of performance of a contract is a defence to a claim for specific performance, even though the contract is unconditional both in terms and in intention, and one of such impossibilities is when the property that is the subject matter of the contract has been sold to a third party. 

Placing reliance on its judgement in INTERNATIONAL TEXTILE INDUSTRIES NIG. LTD v. DR. ADEMOLA O. ADEREMI (1999) 8 NWLR (PT. 614) 268 at 303 C, the Court held that the rationale for including an alternative to a claim for specific performance is so that if specific performance fails, a claimant can ask for damages.  Thus, where it would be impossible to grant an order of specific performance, the plaintiff would be entitled to the alternative remedy of damages for breach of contract, where he has sought the said relief.

Applying the principle to the instant case, the Court held that by seeking an alternative relief for damages, the 1st Respondent had taken the stance that in the event that the court, for any reason, was unable to grant the relief for specific performance, an award of damages would sufficiently compensate him for the loss. The Court supported its finding with its earlier decision in HELP (NIG) LTD v SILVER ANCHOR NIG. LTD (2006) 5 NWLR (PT. 972) 196 at 208-209 G-A, in which it held that when a party makes a claim in the alternative, the belief is that he wants either of the reliefs sought, in which case, when he is granted any of the reliefs, it suffices for the purpose of satisfying his claim. 

The Court held that in the instant case, the sale of the property to the Appellant, an innocent third party for value who was in occupation and had perfected his title, made it impossible for the trial court to order specific performance in favour of the 1st Respondent, who, although paid money, had no document executed in his favour and was yet to be put in possession. The trial court was thus left to fall back on the 1st Respondent’s alternative prayer for damages for breach of contract, in which the 1st Respondent had tacitly agreed that if he could not get specific performance of the contract between him and the 3rd Respondent, he would be happy with the alternative relief. The Apex Court held that the lower court erred in insisting on a decree of specific performance in the circumstances of the case, especially where the 1st Respondent, in his further amended statement of claim, considered an award of damages adequate compensation for his loss in the event that an order for specific performance cannot be granted. 

Appeal Allowed; Judgement of the Court of Appeal Set Aside; and Judgement of the Trial Court Restored.

Representation 

Agba Eimunjeze is the Appellant.

Dr Abiodun Adesanya is the first Respondent

Adeniyi Uthman for the second Respondent

M. 0. Lawal for the 3rd Respondent ·

Akeem Agbaje and A. M. Aderibigbe are the 4th and 5th Respondent

Yusuf Olatunji Ogunrinde is the 6th Respondent

Reported by Optimum Publishers Limited, Publishers of the Nigerian Monthly Law Reports (NMLR)(An Affiliate of Babalakin & Co.)

Source: @TheNigerialawyer