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CaseLaw

Bank of the North V. Bello (2000) CLR 6(k) (CA)

Brief

  • Grounds of appeal
  • Constructive notice
  • Deed of legal mortgage

Facts

One J. O. Obasa was the holder of Permit to Allocate Land No. 3432 in respect of No. 3, Olala Lane, Osere Village, Ilorin, now in dispute. The said Obasa was at the material time a customer of the 1st defendant now the 1st appellant, a commercial bank. He operated an overdraft account No. 400760 with the 1st appellant. Through the said account, he obtained two overdrafts. In order to secure the facilities, he executed a deed of legal mortgage with the 1st appellant dated 27/8/79. He also executed another deed of legal mortgage dated 4/10/79 to cover the 2nd overdraft. The two legal mortgage covered the property in dispute. In addition, he deposited with the 1st appellant-

  • 1
    the Permit to Allocate Land No. 3432.
  • 2
    the agreement which he purchased the land in dispute.

The total indebtedness of Mr. Obasa to the 1st appellant as at 25/1/96 was N312,284.00. It is to be mentioned that the 1st appellant has not released the property in dispute to Mr. Obasa since the date of the legal mortgage.

It appears that notwithstanding the above transactions, Mr. Obasa applied for and was granted a Certificate of Occupancy No. 3006 over the property in dispute. The Certificate of Occupancy is dated 16th May, 1979. With the said certificate of occupancy, the mortgaged the property in dispute to the Federal Mortgage Bank Nigeria Ltd. When he defaulted in servicing the loan, the F.M.B. Nigeria Ltd. instructed the 2nd defendant now 2nd appellant to sell the property by a public auction. The 2nd appellant, a licensed auctioneer, advertised the sale in the Nigerian Herald of Tuesday, 3rd October, 1989. The plaintiff now the respondent bidding in the auction sale. He was the highest bidder. Before the respondent paid the money, he instructed his lawyer, Kehinde Garba Esq. to carry out a search in the Land Registry, Ilorin in respect of the property. The search revealed according to the respondent that -

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    there was a mortgage agreement between Mr. J. O. Obasa and the Federal mortgage Bank Nig. Ltd. in respect of the property.
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    the said mortgage was registered as No 70 at page 70 in volume IX (Misc) at the Land Registry, Ilorin.
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    the mortgage had not been discharged.

The respondent armed with the above result, was satisfied that the property was not encumbered. He paid into the account of Mr. J. O. Obasa with the F.M.B. Ltd. the sum of N100,000.00. he was given -

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    copies of demand letters from the F.M.B. Ltd. to Mr. J. O. Obasa.
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    a certificate of occupancy
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    a certificate of occupancy

    • He moved into the property almost immediately. He carried out an extensive renovation of the property and erected another storey building on the property. The value of the property now as put by the respondent is N3,000,000.00

    When Mr. Obasa could not pay the 1st appellant the loan he obtained from it, the 1st appellant instructed the 2nd appellant to sell the property by a public auction.

    The 2nd appellant advertised the sale in the Nigerian Tribune Newspaper of 24/8/95. The respondent read the publication and was embarrassed. He then instituted an action against the 1st and 2nd appellants and later joined F.M.B.N as a 3rd defendant claiming inter alia the following reliefs:

    • a
      A declaration that the auction notice contained in Nigeria Tribute of 24th August, 1995, is null and void.
    • b
      A declaration that the purported deed of mortgage between J. O. Obasa and the 1st appellant is null and void.
    • c
      the mortgage had not been discharged.
    • d
      A declaration that the respondent who purchased from the 3rd defendant, is a bona fide purchaser for value without notice.
    • e
      A declaration that a Statutory Certificate of Occupancy confers a superior and better title to an alienation permit.
    • f
      An order of perpetual injunction restraining the appellants from selling the plaintiff’s house at Olala Close Osere, Saw Mill Area, Ilorin by way of auction or by any other means whatsoever.

      • The trial court granted the respondent’s claim whereupon the appellants, dissatisfied with judgment, appealed.

Issues

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    Whether the respondent herein is a bona fide purchaser for value...
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