AUCTION SALE OF MORTGAGED PROPERTY: SUPREME COURT COMES TO TERMS WITH THE LAW IN TAIWO V. ADEGBORO (2011) 11 NWLR (PT.1259) 562



1.       Introduction
It is no longer an invention that the Mortgagee has statutory right to dispose the security where the mortgagor fails, or defaults or neglects to repay the mortgage sum and interest in accordance with the terms of the mortgage, especially where it is a mortgage created by deed or legal mortgage[1]. In disposing the security, the mortgagor usually has the option to either sell the security by private treaty or by public auction.[2] Where the mortgagee resort to public auction, is he bound by the provisions of the various Auctioneers Laws of the States? Should non-compliance with the provisions of the Auctioneers law be regarded as an irregularity or a fundamental breach that affects the sale?

We shall consider these questions in this work by ascertaining the positions of the Supreme Court in previous cases and the current case given above.


2.       The Auctioneers Law

Section 19 of the Auctioneers Law[3] provides:

No sale by auction of any land shall take place until after at least 7 days public notice thereof made at the principal town of the district in which the land is situated and also at the place of the intended sale. The notice shall be made not only by printed or written document but also by beat of drums or such other methods intelligible to uneducated person and may be prescribed as the divisional officer of the district where such sale is to take place may direct and shall state the name and place of the residence of the seller.

Commenting on the above provision, we have submitted elsewhere that:-[4]

By the above statutory provision, for there to be a sale of any land by auction: A 7 days public notice of the sale must have been given; The notice must be printed or in writing. The notice must be in a principal town of the district in which the land is situated...

The words of the section do not admit of any discretion on the part of the auctioneer. They are mandatory. This much was emphasised by His Lordship, Hon Justice Uwaifo in Ihekwoaba v. ACB Ltd where His Lordship rightly held that non-compliance with section 19 (1) of the Auctioneers Law render the purported sale invalid. If there is no valid sale, there can be no purchaser, not to talk of a purchaser for value without notice. Thus, in an earlier publication, we commented on the same section 19 of the Auctioneers Law where we observed:-[5]

It is trite law that where the provisions of a statute are unambiguous and does not lead to absurdity or injustice, the words must be given their natural and grammatical meaning. Also words of a statute that expropriate or authorise or provide for circumstances in which a person may be deprived of his property must be construed strictly against the person in whose favour the provisions are made. There is nothing in section 19 of the Auctioneers Law that makes it ambiguous. No injustice or absurdity will arise if the words of the section are given their natural grammatical meaning. The section clearly states ‘No sale..shall’ take place unless the conditions stipulated are fulfilled by the person in whose favour the section is made, in this case, the mortgagee or his agent, the auctioneer. Those two defining words ‘No’ and ‘shall’, we submit should be given their mandatory effect. They impose a duty on the mortgagee through his agent, the auctioneer which duty must be performed for there to be a sale. Thus any purported sale conducted contrary to the provision of the law is no sale under the law and can therefore not vest the title of the owner of the property on the purchaser. We therefore absolutely agree with the view of His lordship, Uwaifo, JCA, as he then was, when he said in Ihekwoaba v ACB Ltd:

The requirement of the above quoted provision (referring to section 19 of the Auctioneers Law) is mandatory. When a public notice of an auction sale is given, it must be allowed to last at least 7 days before the sale takes place. In other word, no sale shall validly take place within less than 7 days from the day the public notice is put out both at the principal town of the district in which the land is situated and the very place the land intended to be sold is. This was not the position of the Supreme Court until the recent case of Taiwo v. Adegbero.


3.       Previous cases

Some of the previous cases where the Supreme Court had made pronouncements on the validity of auction sale are Okonkwo v. CCB Plc,[6] and ACB v. Ihekwoeba.[7]


(a)   Okonkwo v. CCB (Nig) Plc[8]

A loan of N60,000.00 was secured with a legal mortgage of the appellant’s property at no.113, Aba-Owerri Road, Aba. The loan was payable in six months. The mortgage contained clauses 7 and 8 in which the mortgagor appeared to have waived his right to any notice under section 20, Conveyancing Act, 1881 or under any other law or custom in operation in any part of Nigeria. The appellant defaulted in the payment of the loan for more than six months. Several demand notices and notice of intention to sell were served on the appellant. The last of these notices was the one dated 30th May, 1985.
The appellant saw a publication in the Statesman newspaper of 30th January, 1988 in which the 2nd respondent, the auctioneer advertised for sale of the mortgaged property. The auction sale was scheduled for Monday, 1st February, 1988 at 8 a.m. the property was on that day sold to the third respondent. The appellant took out a writ challenging the sale on the ground that the sale was invalid having been carried out contrary to the provisions of the Auctioneers Law. The claims were dismissed by the trial court, Court of Appeal and by majority decisions of the Supreme Court. The Supreme Court held that the appellant had waived his right to notice and that by section 21 (1) of the Conveyancing Act, the sale though irregular for non-compliance with the Auctioneers Law was nevertheless valid.


(b)    ACB Ltd v. Ihekwoba[9]

The property of the mortgagor that was valued in 1977 for N194,000.00 was sold by public auction in 3/6/87 (ten years after) for N115,00. The public auction was not in compliance with the section 19 of the Auctioneers Law that required 7 days notice. The sale was upheld to be valid by the trial court. On appeal, the Court of Appeal, per Uwaifo, JCA (as he then was) invalidated the  sale for non-compliance with what he considered as mandatory provisions of the Auctioneers Law. Unfortunately when the matter got to the Supreme Court, the sale was upheld and the non-compliance with the Auctioneers Law held to be an irregularity.


(c)    Taiwo v Adegbero[10]

In this case, one Michael Adegboro, the late husband of the 1st respondent, before his death mortgaged his property at Agbabiaka Road, Gaa Akanbi Area, near Agba dam housing Estate, Ilorin, Kwara State to Societe Generale Bank (Nig) Ltd to secure a loan granted to his company. Both he and the company defaulted in the repayment of the loan. The loan was still unpaid at the time of the death of Mr. Adegboro. The bank as unpaid Mortgagee appointed an auctioneer to sell the house by public auction. On 17/6/89 the auctioneer sold the house to the appellant for N140,000.00.
The 1st respondent, wife of Mr. Adegboro, who lived in the property with her children sued the bank and the appellant, the purchaser seeking declaration that the sale of the house was null and void having not been in compliance with the Auctioneers Law, Kwara State in that the auctioneer gave only one day notice before the house was sold. She gave evidence in support of her averment that it was only one day notice that was given. The trial court nullified the sale. This decision was affirmed by the Court of Appeal. On further appeal to the Supreme Court, the Supreme Court considered section 19 of the Auctioneers Law, Cap.10, Laws of Northern Nigeria, 1963 applicable to Kwara State.

The section provides:

19. No sale by auction of any land shall take place until after at least seven days (7) public notice thereof made at the principal town of the district in which the land is situated, and also at the place of the intended sale. The notice shall be made not only by printed or written documents, but also by beat of drums or such other method intelligible to uneducated person as may be prescribed, or, if not prescribed, as the divisional officer of the district where such sale is to take place may direct and shall state the name and place of residence of the seller.

The Supreme Court per Rhodes Vivour, JSC, said:-[11]

Nowhere in the statement of defence or in evidence on oath is it stated when notice was pasted on the wall of the house to be auctioned or when television and radio announcements were made. Exhibit one the notice of auction is undated. To my mind, the fact that notice was pasted on the house on 16/6/89 and sale carried out on 17/6/89 has been established to my satisfaction. Both lower courts were correct in that regard. The notice of only one day given by the auctioneer before the auction sale of the property on 17/6/89 was contrary to the requirements in section 19 of the Auction Law. The only reasonable conclusion is that the sale of Late Michael Adegboro’s property was not valid. There was no valid sale of the deceased property on the 17 of June, 1989.

At page 584 paragraph (b)-(d), His Lordship observed:-

The fact in issue is whether 7 days notice was given by the auctioneer before the auction sale was conducted in 17/6/89. Mr. Lambo Akanbi, learned counsel for the auctioneer in the Court of Appeal conceded that only one day’s notice was given by the auctioneer before the auction sale of the Late M. Adegboro’s house was carried out on 17/6/89. The concession is an admission under section 75 of the Evidence Act, and it iss conclusive on the issue. Issue no 3 asks the question ‘whether the property was sold at an under-value’. There is no longer a live issue in view of the fact that no valid sale took place at the auction. Determining this issue would amount to engaging in an academic exercise and courts spend time only on live issues. See Global Trans. Oceanico S.A v. Free Ent (Nig) Ltd (2001) 5 NWLR (pt.706) 426; Oyeneye v. Odugbesan (1972) 4 SC p.244.

From the above pronouncements of His Lordship, non-compliance with the requirements of section 19 of the Auctioneers Law is a fundamental breach. It renders the sale to be invalid. It is not merely an irregularity as was earlier decided by the same Supreme Court in the case of Okonkwo v. CCB (Nig) Ltd[12] and in ACB v. Ihekwoeba.[13]In her concurring judgment, Muktar, JSC at page 588 paras C-D said:-

There is no gainsaying that the use of the word ‘shall’ in the above provision connotes compulsory and mandatory nature which transcends any form of discretion. The spirit of the provision requires that it must be complied with intoto as a duty imposed by a law that must be complied with and enforced. Ample evidence was adduced by the 1st respondent to show non-compliance with section 19 of the Auctioneers Law, supra, and the learned trial judge so found. The finding of the learned trial court was again rightly affirmed by the Court of Appeal when it found as follows:
... On this authority therefore, the learned trial judge was right in his finding that the sale by auction of the property by the 3rd respondent in violation of section 19 of the Auctioneers Law of Kwara State was invalid. This finding was quite in order as the 2nd respondents’ power of sale under the mortgage deed was not in issue in the action at the lower court’

Though the Supreme Court did not in Okoro’s case expressly overrule its earlier decision in Lamu v. the State[14], this pronouncement nonetheless, clearly contradicts the earlier decision.  It may therefore be said that the decision of Ogundare, JSC was given per incuriam.[15]  This is not correct for the Supreme Court is not bound by its earlier decision, though it would not ordinarily disregard such decision.[16]  Lower courts therefore have the option to chose the earlier position or relying on the current position as espoused in Okoro’s case.[17]  Such lower courts are however urged to adopt the current position as stated by Hon. Justice Ogundare of the Supreme Court for it is a better reflection of the law on the point.


[1] Both the Property Law and Conveyancing Law, 1959 (s.123) applicable in States created out of the old Western Region (later called PCL), and the Conveyancing Act, 1881 (later called C.A) (s,19) recognises the mortgagee’s right of sale. The statutory right of sale can be exercised when the power of sale has arisen, and preferably become exercisable. The power of sale arises where it is a mortgage created by deed; the mortgagor is in default of agreement to repay mortgage sum or interest; the parties have not made any contrary agreement prohibiting the mortgagee from exercising his right of sale. See, s.123, PCL; s.19, C.A; K.K Shorunmu v. J.A Dolphin XV NLR 87; NHDS Ltd v. Mummuni & Or (1977) NSCC65; Okonkwo v. CCB PLc (2003) 8 NWLR (pt.822) 347. The power of sale becomes exercisable in any of the following circumstances- Either the mortgagee gave the mortgagor demand notice for the payment of the outstanding mortgage sum and the mortgagor remains in default for a period of three months or the mortgagor is in default of payment of interest for two months or the mortgagor is in breach of any other covenant other than the one relating to payment of money-See s.125, PCL, s.20, C.A; UBN v. Olori Motors Ltd (1998) 5 NWLR (pt.551) 652; Bank of the North v. Alhaji Mamman Muri (1998) 2 NWLR (pt.536) 153; Okafor & Sons Ltd v. NHDS Ltd (1972) NSCC vol.7 271.
[2] Mortgagee will usually prefer sale by public auction to reduce or eliminate element of fraud or collision between the mortgagee and the eventual purchaser, which will be premise for setting aside sale of the security. See UBA PLc v. Fidelia Okeke & Or (2004) 7 NWLR (pt.872) 393; Oguchi v. FMB (Nig) Ltd (1990) 6 NWLR (pt.156) 335; Farrar v. Farrar Ltd (1888) 40 Ch.395.
[3] Cap 12, Laws of Eastern Nigerian, 1961
[4] F.J Oniekoro, “Auction Sale of a Mortgaged Property in Nigeria: The Supreme Court Decision in Okonkwo v. CCB (Nig) Ltd Revisited”,  Journal of the Nigerian Bar Association, Ikeja Branch, vol1, part1, June, 2005, at page 172
[5] F.J Oniekoro, Mortgages in Nigeria, Law and Practice (Chenglo Ltd, Enugu, 2007) p. 253
[6] Infra.
[7] Infra.
[8] (2003) 8 NWLR (pt.822) 347
[9] (2003) 16 NWLR (pt.846) 249
[10] Supra. There are several decisions of lower court that had taken the position now adopted by the Supreme Court. see Ihekwoaba v. ACB Ltd  (1998) 10 NWLR (pt.571) 590 (though later set aside by the Supreme Court in ACB Ltd v. Ihekwoaba, supra; Oseni v. American International Ins. Co. Ltd. (1985) 3 NWLR (pt.11) 229; UBA Plc v. Fidelia Okeke & Or (2004) 7 NWLR (Pt.872) 393
[11] At page 583 paras E-F.
[12] (2003) 8 NWLR (Pt.822) 347.
[13] (2003) 16 NWLR (Pt.846) 249.
[14] Supra, n. 17 The decisions in the other cases cited are by court whose decisions are not binding on the Supreme Court in that in the hierarchy of courts,  The West African Court of Appeal and the then Federal Supreme Court are lower courts to the Supreme Court.
[15] A decision of court is said to be given per incuriam, where it was delivered without reference to applicable statutory provision or decision of superior court or court of coordinate jurisdiction on the point.
[16] The Supreme Court will overrule its previous decision, in the interest of justice, where such decision has become a vehicle of injustice; or was given per incuriam; or is clearly erroneous in law; or it is contrary to public policy; its inconsistent with the provisions of the Constitution; or capable of fettering judicial discretion of the court.  See Alhaji Karimu Adisa v. Emmanuel Oyinwola (2000) 6 SCNJ 290; Osita Nnamani Ogbu, Modern Nigerian Leal system, (Enugu, CIDJAP PUBLISHERS, 2002).
[17] Where a lower court is faced with two seemingly contradictory decisions of a superior court, it has the right to chose which of the conflicting decisions to follow.  See Peter Onwumelu v. Ezeanya Duru (1997) 10 NWLR (pt. 525) 377.
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