In The Supreme Court of Nigeria
On Friday, the 20th day of July 1990
SC 187/1986
Between
Chief S. A.Okubule ...... Appellants
Mr. Percy Savage
(Trustees representing St. Paul's Breadfruit Church, Lagos)
And
Mr. Thomas . A. Oyagbola ....... Respondents
Alhaji Folorunsho Awolowo
Mr. Tajedeen Adelabu
(Executors of the Estate of A.K. Adelabu (Deceased))
Judgment of the Court
Delivered by
Adolphus Godwin Karibi-Whyte. J.S.C.
On the 12th February, 1986, the Court of Appeal, Lagos Division allowed the appeal of the respondents.
Appellants were the plaintiffs in the High Court. On the 13th March, 1986, appellants who were the respondents in the court below filed a notice of appeal to this court against the whole of the decision. Appellants are in this appeal seeking to set aside the judgment of the court of Appeal and the restoration of the judgment of the High Court of Lagos State delivered by Omololu-Thomas, J. (as he then was) on the 16th day of July, 1982. The main issue contested in this appeal is whether the discussions and correspondence between the parties through their solicitors resulted in a new contract for a lease claimed by the appellants but denied by the respondents. The trial Judge held that it did. The court of Appeal reversed that decision.
The action before the High Court of Lagos State, which resulted in this appeal was between appellants, who as plaintiffs, are the trustees of St. Paul's Breadfruit Church, Lagos, who are the owners of No. 10 Murray Street, Lagos, and otherwise described as Sub-Area 3, Plot No.11, in the Lagos Central Planning Scheme (now described as 34 Balogun Street, Lagos) and defendants, who are the executors of the Will of Abudu Karimu Adelabu. Plaintiffs together with Mr. Ebun Bucknor, a third trustee (now deceased) granted a lease of 34 Balogun Street, Lagos to Abudu Karimu Adelabu for a term of 99 years commencing from the 1st day of November, 1957 at a rent during the period of N1,000.00 (One thousand naira only) per annum. This deed of lease is Exh. P1 in these proceedings. The deed of lease was registered in the Lands Registry Office with the Registrar of Titles as No.LO 3153.
The deed of lease contained conditions, covenants and other items of the holding. Appellants/plaintiffs claimed that subsequent to the grant of the lease, Abudu Karimu Adelabu proceeded to commit breaches of the covenants and conditions of the lease. Sequel to these breaches an action was brought against him in 1968 in the High Court of Lagos claiming inter alia, forfeiture of the lease. This is Suit No.LD 694 /68 W. Ebun Bucknor v. Alhaji A. K. Adelabu. Sowemimo J., as he then was, gave judgment (Exh. P2) against Alhaji A.K. Adelabu, subject only to a condition to remedy his breaches within a given period. Plaintiff dissatisfied, appealed to the Supreme Court against the condition granting relief from forfeiture. Defendant also dissatisfied appealed against the judgment. The appeals had not been heard and determined when first Plaintiff W. Ebun Bucknor, then later his Counsel, Chief Ayodele Williams, and finally on the 3rd March, 1977 Alhaji A.K. Adelabu died. It seems clear that neither party pursued the prosecution of their appeals.
We now enter a second phase in this litigation. Early in 1978 Mr. Oyagbola, one of the Executors of Alhaji A.K. Adelabu, initiated discussion for an amicable resolution out of Court of the matter. Counsel to the parties held meetings and discussions with a view to an amicable settlement out of court. Counsel acting for defendants expressed willingness in writing to enter into a new lease
as agreed
..The annual rent is to be N6,500 for the remainder of the term of years left to run on the old lease starting from 1st November, 1977, and on the terms and conditions that existed on the old lease.
- See Exhibit P5. Subsequent to this, counsel to the trustees wrote in Exh. P6 demanding payment of twenty years rent in advance on the agreed rent to be made on or before the execution of the lease. Counsel to the executors of the estate of Alhaji Adelabu in his reply offered in writing to pay the agreed rent of N6,500 per annum but five years rent in advance. The letter then concluded as follows
We would appreciate it if you would confirm your acceptance of this terms to us in writing as soon as possible -See Exhibit P7,
Counsel to the trustees in their letter Exh. P8 dated 2/2/79 accepting this offer by counsel to the executors, put a time limit of fifteen days from the date of their letter for the payment of the agreed rent and the preparation of the new lease. In Exhibit P9 by counsel to the executors, dated 27th February, 1979, they accepted the revised rent and the conditions for completion, but went on to advise as follows
In order to protect the executors however, we consider that you will need to file a motion in court whereby the names of the executors are substituted for that of the dead defendant in the suit. At the same time the terms of settlement to be filed and Probate Registrar put on notice.
We think this is the only way that the executors and will be paying the new rent under the lease will be protected. Please take steps towards putting these items into action. Mr. Oshunbiyi hopes to see you on Friday as arranged.
Perhaps because of this caveat, and despite the unambiguous acceptance of the new terms and conditions, counsel to the executors had not by the 13th March, 1978, returned the draft lease agreement or paid the agreed rent of N32,500 in discharge of the obligations. Rather in a letter in reply to counsel to the trustees complaint on the failure, they said they were still studying the lease agreement and will communicate soon. The result of that study is a letter dated 23/4/79 Exhibit P12 rejecting the entire agreement and that no agreement was reached on previous discussions. They referred to the judgment of Sowemimo, J. (as he then was) and argued that the executors were still bound by the terms of the original lease which remained valid. The letter claimed that Alhaji A.K. Adelabu was granted relief from forfeiture if the Mortgage Deed executed in favour of the Mutual Aids Society Ltd. was discharged on a release dated 26th August, 1969.
The executors then offered to pay the rent due and forwarded a cheque for N2,000 being payment for rent due for 2 years.
The trustees thereupon brought an action claiming as follows
1. The defendants have surrendered and yielded up their estate and interest in the plaintiff's landed property and premises situated and known as No.10 Murray Street, Lagos, now redesignated as 34 Balogun Street, Lagos, otherwise known and described as Sub-Area 3 Plot No.11 in the Lagos Central Planning Scheme to the plaintiffs.
2. The defendants are trespassers on the aforesaid property.
Whereof the plaintiffs claim N50,000 damages as per the writ of summons.
After due trial on pleadings filed and exchanged by the parties, the plaintiff gave evidence, but the defendants offering no evidence relied on the case of the plaintiffs, the learned trial Judge entered judgment for the plaintiffs on all the claims. He awarded N35,000, as the amount
...which roughly would have been amount of rent the plaintiffs would have been entitled to have the defendants fulfilled their side of the bargain.
In coming to his decision the learned trial Judge considered the following three issues as arising from the submissions before him.
(a) Was there a contract for a new lease between the plaintiffs and the defendants and what is the effect of such contract in relation to the original lease.
(b) Was there a surrender whether express, by operation of law or by estoppel; whether there was a consideration for the change in the lease, whether the plaintiffs had altered their position and whether estoppel need be pleaded.
(c) Whether Mr. Osunbiyi had authority to bind the defendants.
In respect of the first issue, the learned trial Judge held that on a reading of Exhibits P3, P6, P7 and P8 it was clear that the parties agreed on the terms of a new lease
on the terms and conditions that existed on the old lease.
The only variation was that the rent payable for the remainder of the term of years starting from 1st November, 1977 was to be N 6,5OO per annum. The amount payable in advance was also agreed. It was accordingly held that the exhibits disclose a valid contract between the parties as at 2nd February,1979 which was confirmed by the defendants again as at 27th February, 1979 in Exhibits P8 and P9.
In respect of the remaining two issues (b) and (c), the learned trial Judge held that the effect of the contract of the new lease is that as of the date of the agreement, as evidenced by Exh. P8, the old terms of the lease become merged in the new lease which was yet to be formalised in the draft of lease later in the possession of the defendant.
With respect to the fulfilment of the condition for the relief from forfeiture learned trial Judge held that although Exh.P4 indicated there a discharge of the mortgage to Mutual Aids Society, there was no evidence before him linking the entries in Exh. P4 to the averment of the defendants in their statement of defence. No oral evidence was offered in support of the defendants' case, there was no evidence that the first three breaches of the conditions for relief against forfeiture in Suit No.LD/694/68 ever fulfilled. He therefore found that the conditions for the relief against forfeiture were not fulfilled. Accordingly, forfeiture and immediate possession was deemed to have been granted the plaintiffs.
By entering into the new lease agreement, plaintiffs were deemed to waived their right to immediate possession on failure of defendants to the conditions for relief against forfeiture. This he regarded as alteration of their position to their detriment.
Finally, it was held that this case concerns the operation of equitable principle of surrender by operation of law or by estoppel. It is also a case of estoppel by representation or conduct. The defendants appealed to the Court of Appeal contending forcefully that no new contract arose from the various discussions as between the parties. It was also contended that the conditions for relief against forfeiture having been met, the old lease agreement remained the contract between the parties. It was submitted that the issue of surrender of the lease did not arise for determination on the pleadings. Finally it disputed that appellants were trespassers within the meaning of the Recovery of Premises Law and the Recovery of Residential Premises law.
On the issue whether a new contract arose between the parties from the various exchanges, discussions, meetings between their both counsel, the Court of Appeal held that the offer in Exh. P7 dated 27/4/78 of five years rent in advance is a rejection of Exh.P6 which asked for 20 years. Again Exh. P8 which appeared to have accepted the offer of five years rent, but introduced the condition that the payment must be made before the new lease was prepared and giving a time limit of 15 days to complete. This new term, it is argued is the introduction of new conditions and terms. These new terms amount to a counter offer which lapsed after 15 days. It was held therefore that Exhibit P9 coming after 15 days is a complete nullity, coming after the 15 days limit.
The Court of Appeal also observed that plaintiffs introduced new conditions and terms before the signing of the new lease which were not complied with. Similarly not complied with were the requests by the defendants for the substitution of the new executors to safeguard their interest before they could enter into the new lease.
It was also observed that the date of the commencement of the new lease and that the term of the new lease would incorporate those of the old lease in order to effect a surrender of the 1958 lease were not stipulated.
The Court of Appeal held that the learned trial Judge was in error to hold that there was a surrender of the old lease on the pleadings. It was held that was not the case of the plaintiffs. Their case was that parties have reached agreement including surrender of the old lease embodied in a draft lease which defendants failed to execute. It is not a case of surrender by operation of law or on the equitable principles of conduct or estoppel It was held that once an enforceable contract cannot be inferred, the basis for the surrender of the old lease is absent.
Referring to the issue of the conditions for relief against forfeiture, the Court of Appeal held that this was not an issue in the case, the plaintiff having not made it part of their case. The learned trial Judge ought not to have made any adverse finding against the defendants. It was observed that there had been a forfeiture for non-fulfillment of the conditions for possession and possession had reverted as far back as 1969, the question of a surrender of the lease already forfeited would have been unnecessary.
The Court of Appeal did not deal with the applicability of the Recovery of Premises Law and the Rent Control of Residential Premises Law.
The appeal was allowed. Judgment of the High Court was set aside. The claims of the plaintiff in the High Court were dismissed in their entirety, with N 500 as costs in each court.
Plaintiff has now appealed to this court. There are five grounds of appeal. All the five grounds of appeal are challenging the Court of Appeal for
(a) refusing to hold that there was a new concluded agreement between the parties on the discussions and exchange of letters between their counsel;
(b) that there was a surrender by operation of law of the old lease; and
(c) that the trial Judge was wrong in law for evaluating the non-fulfillment of the conditions for relief against forfeiture.
I do not consider it necessary to set out the grounds of appeal, as the issues for determination adequately cover them.
Counsel to both parties filed their briefs of argument and relied on their briefs in argument before us. Counsel are ad idem in the formulation of issues for determination, with minor and inconsequential variations.
Learned Senior Advocate to the appellant's formulation is as follows
the main issue raised by this appeal is whether or not there was a valid agreement for a new lease concluded in 1979. The next issue which arises is whether the 1958 lease was surrendered, and if so, was it surrendered by operation of law and the conduct of the defendant. Arising out of this is whether issue was joined on the question of whether Abudu Adelabu had complied with the conditions for relief from forfeiture, and if it had been, what was the effect of his non-compliance on the plaintiffs' claim that the lease had been surrendered.
Learned Senior Advocate to the respondent had submitted that the sole issue for determination in this case is,
was there a contract for a fresh lease negotiated and reached between the parties on the 21st March, 1978.
In his submission it was not permissible to look at any correspondence after the 21st March, 1978 for the formation of a contract.
It is of immense importance to appreciate that both parties rely on the same documents, but arrive at opposed conclusions on their effect. It is also relevant to consider that respondent having not given oral evidence relied entirely on the case of the appellant.
The following facts are undisputed and are agreed to by the parties.
First, there is an existing lease agreement between the parties for 99 years at a rent of N 1,000 per annum dated 28th February, 1958.
Secondly, Judgment in Suit No. LD 694/68 W. Ebun Bucknor v. Aihaji A.K. Adelabu, gave judgment in favour of the plaintiff and ordered forfeiture and possession. Relief was granted against forfeiture, if within six months of the judgment i.e. before 2/11/69, defendant discharged the mortgage deed executed in favour of the Mutual Aid Society. Defendant should also comply with the request to
(i) disclose the type of building erected on the premises
(ii) disclose the names of the present occupants of the premises and the terms of their holdings
(iii) produce for inspection the receipts for the current insurance premium and for rates, taxes or any other charges. assessment relating to the said premises.
Thirdly, there are letters between counsel to the parties referring to conclusions of discussions relating to negotiations for a new agreement in respect of the lease agreement of 1958 -Exh.P3, P6, P7, P8, P9, Pl0, PI2A. Although counsel to the respondents raised objection to some of these letters being admitted in evidence, the objection was rightly overruled by the learned trial Judge.
The construction of Exhibits P3, P6, P7, P8, P9, Pl0, PI2A became relevant in determining whether a new lease agreement resulted, from the negotiations and at what point of the negotiation can it be concluded that agreement was reached.
In Exhibit P3 the defendants confirmed their willingness to enter into a new lease agreement. It seems to me that both parties assumed the existence of the 1958 agreement despite the fact of the relief against forfeiture. It is also clear that the annual rent of N 6,500 was already agreed to run for the remainder of the term of years of the old lease, starting from 1st November, 1977. The conditions and terms of the old lease were to apply. Exhibit P6 referred to Exhibit 3 and asked for payment of rent of 20 years in advance to be made before the execution of the lease. In Exhibit P7 respondents offer to pay 5 years rent in advance at the rate of N6,500 per annum. Exhibit 8 dated 2nd February, 1978 is an acceptance of this offer by the appellant who called for the cheque for N32,500 in payment of five years rent in advance as long overdue and as a matter of priority. Appellant warned that the fresh lease could not be prepared until payment was made. They requested completion within fifteen days on the 27th February, 1979. The defendants/ respondents wrote in Exhibit 9 and stated that
In connection with the above matter, this is to state that the executors agreed in principle with the settlement of the court case on the property and the revised new rent as discussed and agreed with one Mr. Oshunbiyi.(italics mine)
The same letter stated in paragraph 2,
In order to protect the executors however, we consider that you will need to file a motion in court whereby the names of the executors are substituted for that of the dead defendant in the suit. At the same time the terms of settlement to be filed and Probate Registrar put on notice.
We think this is the only way that the executors who will be paying the new rent under the new lease will be protected. Please take steps towards putting these items into action. Mr. Oshunbiyi hopes to see you on Friday as arranged.
Although this letter was written on 27th February, 1979, it is curious to serve that in their letter dated 10th April, 1979 in reply to Exhibit P10 by the appellant dated 13th March, 1979 they stated that they were still studying the draft lease. Their letter dated 23rd April, 1979 Exhibit Pl2A to the previous discussions on the matter, and to Suit No.LD/694/68 original lease of 28/2/58 stating that they were still bound by it. The letter referred to the relief against forfeiture and claimed to have satisfied the conditions. Respondents tendered a cheque for N 2,000 being payment for two years rent due as from Nov., 1977.1 do not think that the submission of Mr. G.O.K. Ajayi, S.A.N., that as at March 1978 the agreement for a new lease between the parties had been concluded is correct. From what will be said anon it is obvious that the terms to be incorporated were not all set out in Exhibit P3 For instance, although the unexpired residue of the original 99 year term was to commence as from 1st November, 1977; the rent was to be at N 6,500 per annum, and the other terms and conditions were to be as in the original 1958 lease, but the stipulation about the completion date and the question of payment were not in Exhibit P3.
Learned counsel to the respondent has submitted that Exhibit P6 was not an acceptance of the offer in Exhibit P3; being a counter-offer was a rejection of that offer. Counsel relied on Brogden v. Metropolitan Railway (1877) 2 App. Cas. H.L., June v. Daniel (1894) 2 Ch. 332; Chitty on Contracts Vol.1 p.53, para. 52; pp.53-54, paras. 54 & 55. Halsbury's Laws of England Vol.9 Title Contract, paras.227 and 245 Balonwa v. Odunukwe 1971 ALR.388; Rejendram Madras Manufacturing Co. Ltd. (Suit 1D118&74); Oliver Johnson v. Christian Council of Nigeria (LD/599172) all reported in Casebook on the Nigerian Law of Contract (I.E. Sagay). It is obvious that the suggestion of 20 years rent in advance in Exhibit P6 was by plaintiffs. This is clear from Exhibit P7 where plaintiff accepted payment of 5 years rent in advance suggested by the defendants. This is also a written confirmation of what had been agreed between the solicitors. Counsel to the respondent contends that Exhibit P7 is not a written confirmation of what had already been agreed by the parties. His reason is that Exhibit P8 dated February 2, 1979 raised fresh terms giving conditions for preparing the lease agreement, and Exhibit P9 requiring certain formalities to protect the executors.
I think learned counsel to the respondents' submission founded on the consideration that the introduction of new conditions to the contract between the parties, i.e. the unilateral conditions for drawing up the lease agreement, is a rejection of the offer made by the respondents is right. Ordinarily as soon as all the terms of the new lease were agreed, a new contract had come into existence. This final agreement could have been reached when the parties agreed on 5 years rent in advance in Exhibit P7.
It seems to me too clear for argument that Exhibit P8 was referring to a concluded agreement. But, both the fact of payment and the time limit of 15 days, unilaterally imposed by the appellants were at no time considered a term of the agreement and were not part of the agreement for the lease. The period of 15 days requested by the appellant for completion of the agreement was not a term of the agreement. This is exemplified by the request in Exhibit P8 that
The agreed rent is long over due and you must pay it within 15 days so that we can complete, and if you do not I will consider you in breach of our agreement to lease.
It seems clear to me that this suggests that they are terms introduced by the appellant after what was regarded as an agreement had been reached. There is nothing in any of the Exhibits from where it could be inferred that either of the rent or completion within 15 days is a term of the agreement. They therefore constitute a counter-offer which operates as a rejection and an acceptance of the offer - See Hyde v. Wrench (1840)3 Beav. 334 Thus a new agreement has not arisen from the negotiations.
I therefore do not agree with counsel for the appellants that the Court of Appeal was in error when it said that the Respondents, i.e. appellants before us, through Exhibit P8 dated 2nd February. 1978
purported to accept the offer of five years rent in advance but introduced new terms i.e. that payment must be made before the new lease is prepared and that there must be time limit of 15 days to complete.
In their criticism of the judgment of the learned trial Judge, the Court of Appeal observed that plaintiff did not put in evidence the draft lease which counsel to the defendant failed to return or give counsel notice to produce, or on his failure to tender the counterparts in his possession.
It is pertinent to refer to the observation by the Court of Appeal that it was defendants pleading in paragraphs 15,16,17,18,19 of the statement of defence that plaintiff introduced new terms in the draft agreement which were not originally agreed upon.
It is well settled that where a party has alleged the existence of a fact, in this case introduction of new terms, the onus is on him to show the existence of such facts. Here the onus that plaintiffs in fact made new proposals in the draft is on the defendant. He it is who must establish it. I think this was clearly satisfied on the Exhibits before the court. It was therefore not necessary for defendant to lead any evidence.
I think Chief G.O.K. Ajayi. S.A.N., cannot be right in his submission that the Court of Appeal failed to recognise that the agreement for the lease had been concluded since 1978 and that all subsequent correspondence were with the object of enforcing that agreement.
I have no doubt therefore that there was not a new contract between the parties. Appellant having by his counter offer rejected respondent's offer to pay the agreed rent. The Court of Appeal was therefore right to hold that there was no such contract.
I now turn to the issue about the effect of the order for forfeiture. The Court of Appeal held that since the pleadings of the appellants did not raise the issue whether the respondent satisfied the conditions laid down in the judgment enabling relief against forfeiture, no issue was joined as to the non-compliance vel non with the conditions.
The Court of Appeal agreed that Dr. Braithwaite, counsel to the respondents in the court below in his submission referred the court to paragraphs of the statement of claim where in his opinion the issue was raised. But the court observed that the issue ought to have been more explicitly expressed in the pleadings. It was observed that there was no specific averment that the conditions prescribed against relief from forfeiture were not fulfilled.
It is pertinent to observe at this juncture that the issue of compliance or not with the conditions for relief against forfeiture was raised by the respondent. It was raised undoubtedly in reaction to appellants' claim that there was a new lease agreement. It is well settled that having so asserted the onus of proof rests on respondents. It is not for the appellants to prove that respondents have complied or not complied with the conditions for relief against forfeiture.
The Court of Appeal had relied on the issue of forfeiture to hold that creation of a new lease agreement was not possible in law. It was stated as follows
.......If there had been a forfeiture for non-fulfilment of conditions and possession had reverted to respondents as far back as November, 1969 according to the findings of the Judge, there can hardly be any point in talking about surrender of the lease already forfeited by any negotiation in 1978/79, for by that time the 1958 lease had gone. It is absurd to talk about surrender of something that is no longer in existence.
I agree with this reasoning.
The contention of the Court of Appeal is right. The situation here would seem to me different. Both parties were negotiating an amicable settlement to resolve their litigation out of court. At the time of these negotiations there were pending appeals against relief from forfeiture on the part of the appellants. The settlement if it was reached would result in either party abandoning its strict legal rights acquired under the judgment subject matter of the appeals. For the appellan