Onimas (Nig.) Ltd v. Chigbu: Examining the Court’s Power to Modify Contracts by Moruff Balogun
ONIMAS (NIG.) LTD v. NZE BERNARD CHIGBU: On whether the court can rectify/modify contract voluntarily entered into by the parties-: An insight into the Supreme Court landmark decision.
CITATION: 6 NWLR PT.1720 AT 237.
Courtesy: Moruff O. Balogun Esq.
Summary of Facts:
The respondent was the landlord of the appellant. He granted to the appellant, a sublease of a vacant parcel of land that was known as No. 6 Ebino Mbano, and they signed a sublease agreement. The agreement specified payment of N25 in January each year as annual rent from 23rd April 1985. The agreement also stated that if the rent was in arrears or unpaid for three consecutive years without reasonable cause or excuse on the part of the appellant, the respondent may re-enter the land and that the sublease may cease and be determined.
The appellant built a petrol-filling station called Tonimas Filling Station on the land and appointed the respondent as the dealer at the petrol station. After some years of operating the petrol station, the appellant found a shortfall in the respondent’s account. The appellant demanded for a refund of the shortfall, but the respondent declined to pay. Instead, the respondent invoked the re-possession provision in the agreement and filed an action for forfeiture of the sublease. The appellant counter-claimed for the equitable relief against the forfeiture.
The court dismissed the respondent’s claim for forfeiture, granted the appellant’s claim for relief against forfeiture, and ordered the appellant to pay the arrears of rent. The Court of Appeal dismissed the respondent’s appeal against that judgment.
After the dismissal of the respondent’s appeal, the appellant sought to pay rent at the rate of N25 per annum for the period of 1994 to 2023. The respondent insisted his rent should be paid to him in person only in his palace. His excuse was that he would not be able to issue receipts for rent paid otherwise. After futile attempts by the appellant to pay the rent to the respondent in person once at the courts and countless times at his palace, through his lawyer, and through the court, the appellant concluded that the respondent wanted the rent to fall in arrears to enable the respondent invoke the provision in the agreement for forfeiture of the sublease and his re-entry into property.
So, the appellant filed an action at the Magistrates Court for relief against forfeiture of the sublease, and for leave to pay the rent into the Magistrate’s Court’s Registry by money order or pay it to the respondent by certified cheque sent through registered post. The Magistrate’s Court granted the relief against forfeiture and further directed the appellant to pay arrears of rents for the years 1997, 1998, and 1999 to the respondent. The Magistrate’s Court, however, refused to grant the relief sought on how the appellant may pay its rent to the respondent because the agreement was still Subsisting and it could not vary the terms therein.
The appellant appealed to the High Court, which held that there was nothing to rectify in the agreement and that granting the appellant’s claim would modify the agreement. The High
Court further held that the appellant should not complain that the respondent was frustrating the agreement by consistently evading acceptance of his rent when due because the appellant, as the debtor, had the duty to seek the respondent (its landlord and creditor) to pay him rent as agreed by both of them. Therefore, the High Court refused to grant the appellant’s prayer for payment of rent to the respondent by other means than to seek him out, and pay it to him physically.
Still dissatisfied, the appellant appealed to the Court of Appeal. The Court of Appeal found that the agreement did not contain any provision that the appellant must pay rent to the respondent only in his palace as insisted by the respondent. The court, however, dismissed the appeal on the ground that the manner of rent payment proposed by the appellant amounted to seeking rectification of the agreement.
The appellant appealed to the Supreme Court on three grounds that, in substance, complained that the Court of Appeal wrongly dismissed its appeal on grounds of rectification it did not ask for in its appeal. In response, the respondent filed a preliminary objection against the three grounds of appeal, arguing that the grounds raised issues of mixed law and facts, and were therefore incompetent because they were filed without the requisite leave of court.
HELD: Unanimously allowing the appeal
The following issues were raised and determined by the Supreme Court:
On Nature of rectification of contract and when court will embark upon-
Rectification of contract is the judicial alteration of a written contract to make it conform to its true intention. It is an equitable remedy that a court of justice, in its equitable or inherent jurisdiction, exercises to correct a contractual term that is mis-stated. This inherent power to do justice avails the court when, for instance, the rent is wrongly recorded in a lease or when the area of land is incorrectly cited in the deed.
“ I am in agreement with the learned appellant’s counsel that, upon proper appreciation of the appellant’s case and in view of the findings of fact by the lower court, this a proper case the lower court should have intervened and granted the relief sought by the appellant. That is, that leave be granted to the appellant to pay the rent agreed on in exhibit A by any of any of alternative modes proposed by the appellant. Accordingly, I allow the appeal.
Conscious therefore that the court of justice is the keeper of conscience and will prevent any person from acting against the dictates of conscience (Onyia v Oniah (1989) 2 SCNJ 120 at 134, reported as Oniah v Onyia (1989) 1 NWLR (Pt. 99) 514 & Ashogbon v Oduatan (1935) 12 NLR 7 at 10). I hereby order the appellant, in the spirit of the mutual intent of the parties to exhibit A and his obligation to pay rents as and when due, to pay the agreed rent as and due (including the rents that became due in the course of this litigation) by means of certified cheque drawn in the name of the respondent which shall be sent to the respondent’s known address as endorsed on the deed of sublease, exhibit A.”
On When principles of equity will prevail over Common law-
Equity does not make the law; it only assists the law, and it follows the law. Equity is part of the legal system that has mixed with law and the admixture is for the purpose of doing justice. In other words, equity follows the law and will always intervene to prevent fraud being perpetrated on a party who had altered his position on the faith of a contract.
This principle of equity avails the court of justice always to ameliorate the rigidity and inflexibility of the common law. In other words, equity concerns itself with standards of good conscience, fairness and justice, and it invests the court with power to grant relief where the justice of the case demands.
In the instant case, the Court of Appeal rightly found and held that the mode of rent payment claimed by the respondent was not contained in the sublease agreement. By parity of reasoning, the alternative modes of payment proposed by the appellant were also not in the sublease agreement.
However, having regard to the findings of fact by the Court of Appeal and the respondent’s conduct, the Court of Appeal ought to have applied equity under the inherent jurisdiction vested in courts by section 6(6) of the 1999 Constitution, as amended, to grant the appellant leave to pay rent to the respondent by any of the alternative modes of payment proposed by the appellant.
On Principles of equity-
Equity acts in personam and would not allow a party benefit from his own wrong or mischief.
On Nature of ground of appeal complaining about lower court’s decision on issue not canvassed before it-
A complaint in an appeal that the lower court dismissed the appellant’s case on an issue not canvassed before the lower court raises a question of law alone. In this case, the appellant’s ground of appeal that the Court of Appeal wrongly dismissed its appeal on ground of rectification that it did not ask for in its appeal was a complaint based on law only.
Moruff O. Balogun Esq.
Ijebu Ode, Ogun State.