CITY LAWYER LAW REPORT

In the Court of Appeal

Holden at Lagos

On Wednesday, the 18th day of June, 2025

Before Their Lordships

Paul Ahmed Bassi

Polycarp Terna Kwahar

Abdulaziz M. Anka

Justices, Court of Appeal

CA/L/888/2014

Between

1. RCN NETWORKS LIMITED APPELLANTS

2. ALHAJI SI-NURAINI AGBOOLA ABIOLA

And

GUARANTY TRUST BANK PLC RESPONDENT

(Lead Judgement delivered by Honourable Paul Ahmed Bassi, JCA)

Facts

The Respondent commenced an action at the Federal High Court via an Originating Summons dated 21st June, 2013 seeking the determination of several questions including: (i) “Whether given the circumstances of this case, the 2nd Defendant is at law the debtor with the primary obligation, given the failure, refusal and/or otherwise neglect of the 1st Defendant to liquidate the debt owed to the Plaintiff in the sum of N970,743,041.15 plus interest” and (ii) “Whether having regard to the provisions and Clauses of the Deed of Tripartite Legal Mortgage dated 15th August, 2012 between the Plaintiff and the Defendants, the Defendants, their agents, privies howsoever described, are estopped from challenging the appointment of Mr Norrisson I. Quakers SAN as Receiver/Manager over the asset covered by the said Deed of Tripartite Legal Mortgage, upon the failure of the 1st and 2nd Defendant to liquidate their outstanding indebtedness to the Plaintiff as covenanted in the said Deed of Tripartite Legal Mortgage dated 15th August, 2012”. And, upon the court answering these questions in the affirmative, they prayed the court to grant the reliefs sought in the Originating Summons.

The Appellants filed a 31-paragraph Counter-Affidavit and Written Address to the Summons. On 26th March, 2014, the trial court heard all pending applications including the substantive suit, and adjourned to 5th June, 2014 for delivery of ruling on all the applications and judgement. However, on 4th of April, 2014, prior to the date scheduled for delivery of ruling, the Respondent filed a 19-paragraph Further Affidavit & Reply on Points of Law and a Motion to regularise same.

On 16th April, 2014, the Appellants filed their Counter-Affidavit and Written Address to the motion and on 12th May, 2014, the trial court re-opened the matter, heard the said motion and adjourned for final judgement again. On 20th June, 2014, the trial court delivered judgement in favour of the Respondent and granted the reliefs sought in the Originating Summons. Aggrieved, the Appellants appealed to the Court of Appeal.

Issues for Determination

The Appellant formulated three issues for determination of the appeal. However, the appellate court struck out ground one of the Appellant’s Amended Notice of Appeal, from which issue one was derived. As a result, the Appellant had only, two surviving issues for determination, which were adopted by the court, to wit:

i. Whether there was a valid Tripartite Deed of Legal Mortgage, entitling the Respondent to appoint a Receiver over the property of the 2nd Appellant?

ii. Whether the trial court was right in holding that the Respondent was entitled to the reliefs sought in its Originating Summons, and in granting the said reliefs?

Arguments

On issue one, the Appellants argued that under Section 15(1) of Mortgage and Property Law, Cap M5, Laws of Lagos State 2015, a valid mortgage in Lagos State must be in writing, specifically by deed or using one of the statutory forms in the Schedule. They contended that the purported Tripartite Deed of Legal Mortgage was only executed by the Borrower, the 1st Appellant, and the Respondent, as shown by the signatures of their respective officers and one witness. Although the 2nd Appellant was named as the mortgagor, the Appellants contend that he did not sign the document. Thus, there was no legal mortgage between the 2nd Appellant and the Respondent. As such, enforcing the document against the 2nd Appellant, as the trial court did by granting the Respondent’s application to appoint a receiver over his property, amounted to a clear violation of the doctrine of privity of contract. Counsel then urged the court to set aside the order of the trial court, appointing Mr Norrison I. Quakers, SAN as receiver over the property of the 2nd Appellant.

In response, Counsel for the Respondent relied on the 2nd Appellant’s Petition dated 27th August, 2015, 2nd Appellant’s petition dated 11th November, 2016 which were duly investigated by the Police, and the Certified True Copy of the striking out order of Hon. Justice Tsoho of the Federal High Court, Lagos dated 23rd day of October, 2015 in Charge No. FHC/L/285C/15, submitting that there was proper execution of the document forming the nucleus of the judgement of the lower court. Counsel thereafter, submitted that by virtue of Section 168(1) of the Evidence Act, 2011 on the principle of presumption of regularity attached to official acts and Section 4 of the Police Act 2020, the acts of the Police and the court having investigated and found that the Appellants’ petition on the 2nd Appellant’s alleged invalid execution of the Tripartite Deed of Legal Mortgage was unmeritorious, the 2nd Appellant cannot continue to maintain that he did not sign the Tripartite Deed of Legal Mortgage with a view to getting the Court to invalidate same. Counsel argued further that an allegation of fraud by the Appellants is an allegation of crime which must be proved beyond reasonable doubt whether in civil or criminal case, of which the Appellants had fallen short of. Counsel then urged the court to resolve the issue in favour of the Respondent.

On the second issue, Counsel for the Appellants argued that the 1st Appellant took only two loans from the Respondent i.e., N508,000,000 at 16% interest per annum and N1,000,000,000 at 16% per annum, and that it had repaid the said two loans even above the stipulated amounts, while protesting the interests charged by the Respondent at several times. Additionally, the Respondent did not discharge the burden of proof placed upon it under the law, to entitle it to the reliefs in the Originating Summons. Furthermore, the law prescribes specific requirements for proving a customer’s indebtedness in loan transactions. Counsel submitted that the documents exhibited by the Respondent being entries from a banker’s book relating to the 1st Appellant’s account, constitute secondary evidence and must comply with Sections 89(h) and 90(1)(e) of the Evidence Act 2011, to be admissible. As such, since the Respondent failed to satisfy both the admissibility requirements under Sections 89 and 90, and the evidential sufficiency requirement under Section 51, the trial court erred in law by granting the Respondent’s reliefs.

Responding, Counsel for the Respondent argued that the Appellants, having failed to appeal the ruling of the lower court as regards the commencement procedure adopted by the Respondent, they cannot be heard to oppose the nature of the proceeding adopted to suit another proceeding, since Originating Summons are proper for matters that were non-contentious. Counsel opined further that, having put forward affidavit and documentary evidence in support of the reliefs claimed, the burden of proof shifted to the Appellant to show that the debt had been fully liquidated and that this ought to have been done by documentary evidence. Counsel argued that the denial of liability could not amount to a reasonable defence in a claim where debt had been admitted, and the burden of proof in this regard rested on the Appellant. Additionally, the Respondent relied on Jukok International Ltd v Diamond Bank Plc (2016) 6 NWLR (Pt. 1507) 55 to contend that the law is trite that, a document attached or exhibited with an affidavit forms part of the evidence adduced by the deponent and is deemed to be proper before the court, thereby dispensing with the formality.

Court’s Judgement and Rationale

Starting with issue one, the Court of Appeal rehashed the trite principle of law that the Originating Summons procedure should only be applicable in circumstances where there is no dispute on questions of fact, and should never be a substitute for initiating contentious issues of fact. The court summarised the contentions in this issue as follows: (i) the 1st Appellant as the borrower signed the Tripartite Deed of Legal Mortgage alongside the Respondent; (ii) the 2nd Appellant denied signing the Deed and rather, alleged that the execution page bearing his signature was from an entirely different document which was fraudulently attached to the Deed of Tripartite Legal Mortgage to bring the assets of the 2nd Appellant into contemplation as part of the security for the loan; (iii) the Respondent insisted the 2nd Appellant signed the Deed and was therefore, liable. Their Lordships, therefore, noted that there were obvious conflicts in the Affidavits, and that the trial court misconceived the issue when it held in its judgement that the Plaintiff (Respondent) was merely seeking the construction of the provisions of the Deed of Tripartite Legal Mortgage and nothing more.

The Court of Appeal highlighted the Appellants’ consistent position, that the Respondent unlawfully combined two distinct loan agreements without their consent, in order to leverage the collateral located at Oyinkan Abayomi Street, Ikoyi, Lagos. That the Appellants alleged that the Respondent had improperly used the execution page of the N508 million loan agreement and attached it to the N1 billion loan deed, and after selling the shares pledged for the N1 billion loan, attempted to recover the shortfall from the 2nd Appellant’s property in Ikoyi.

The court noted further, that the 2nd Appellant had lodged a formal complaint with the Police, prompting an investigation into the alleged forgery of the mortgage instrument and that this led to the prosecution of the Respondent and some of its officers, although the criminal charge was eventually struck out. However, that the Police carried out two separate investigations and issued corresponding reports, with the first report recommending that the dispute be resolved through alternative dispute resolution (ADR) or arbitration, and that the second report concluded that the alleged irregularities concerning minor amendments on the consent page of the Tripartite Legal Mortgage were not sufficient to invalidate the mortgage, which had been duly executed by six undisputed signatories.

Their Lordships thereby, expressed that taking into consideration that the Deed as a whole was called into question, the trial court could not validly rely on the said document to make a pronouncement on the rights of the parties. The Court of Appeal held “that a court cannot proceed to make a determination of rights of Parties on a contested Deed or Document, especially one tainted with allegations of fraud or Forgery. The Court cannot fill in the gaps, in establishing authenticity or the Fraud by itself. That would be proceeding on a faulty premise.”

Further, it is the law that where there are highly disputed facts in the affidavits of parties to a suit, such action ought not to be resolved via originating summons procedure, but via writ, thereby requiring filing of pleadings and oral evidence taken. The court observed that a review of pages 27 to 35 of Volume 1 of the Record, which contained the disputed legal mortgage, revealed notable inconsistencies. While pages 28 to 36 bore handwritten notations ranging from “2 of 9” to “9 of 9,” the execution page (page 9 of the Record) was computer-numbered as “11 of 17.” Furthermore, page 36, the disputed execution page contained a unique printed line, which appeared nowhere else in the document. The Appellate Court expressed concern that the trial court failed to address these material discrepancies, before reaching its decision. Despite the Respondent’s reliance on Police reports and the striking out of the related criminal charge, the anomalies in the documentation remained unexplained. The Respondent also failed to respond to, or explain the irregularities identified in the relevant pages of the Record.

The court held that it was an error for the lower court to base its findings on a document alleged to be forged, without first resolving these issues. Consequently, the court held that the trial court’s decision could not be sustained on such a flawed evidentiary basis, and resolved this issue in favour of the Appellants.

As a corollary, the court held that, based on the findings of this issue one, that the other issue became an academic exercise. The appeal, therefore, succeeded.

Appeal Allowed.

Representation

Dr Charles Adeogun-Philips, SAN with I. O. Apalando and C. C. Azuwike for the Appellants.

N. I. Quakers, SAN with E.E. Ekwonye and E. I. Itene for the Respondent.

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

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