IN THE SUPREME COURT OF NIGERIA

On Thursday, the 15th day of June 1978

SC. 470/57

Between

ADARAN OGUNDIANI .................................... APPELLANT

And

O. A. L. ARABA & ANOR. ................................... RESPONDENTS

One Ashiru (hereafter referred to as "the mortgagor") a customer of the 2nd respondent (hereafter referred to as "the bank/mortagee") in 1956 deposited by way of equitable mortgage with the bank account given him by the former, title deeds in respect of two of his premises, one of which was the subject matter of this suit. Later he executed a legal memoranda of deposit of the said deeds covenanting therein to execute a legal Mortgage in respect of each of the said properties upon default in repayment of the said overdraft whenever called upon to do so by the bank. Following the inability to repay the said overdraft, the bank/mortagee took the mortagagor to court asking inter alia for an order for specific performance of the covenant, in the aforesaid memorandum of deposit, to execute legal mortgage in respect of the premises in favour of the bank and damages amounting to £3,670.3s.9d. The trail judge declined to make an order for specific performance, awarding £2,474.5.10d in lieu of specific performance. The Mortagagor appealed against this judgment and the bank/mortagee cross -appealed; while these appeals were pending, the mortagagor sold to the appellant the property. In due course the Supreme Court dismissed the mortagagor's appeal but allowed that of the bank/mortagagor to execute the legal mortgage and on informing the bank for the first time that he had sold the property in issue to the appellant, the bank/mortagee prepared the necessary documents (i.e. the mortgage deeds of the premises) and they were signed on behalf of the mortagagor pursuant to the provisions of Rule 111, order X of the judgment (Enforcement) Rules made under the sheriffs and Civil Process Law cap. 116 of the Laws of Western Region by the Registrar of the High Court. Armed with these documents the bank/mortagee sold at public auction the said property. On learning of this sale, the mortagagor instituted an action claiming that the legal mortgages executed on his behalf by the Registrar were null and void, and that the sale of his premises was consequently null and void. These claims were dismissed by the High Court, a decision reversed by the Western State Court of Appeal. The Supreme Court dismissed the claims and restore the judgment of the High Court.

A month after the decision the appellant commenced the present proceedings in which he claimed a declaration of title to the property of in the alternative a declaration that the sale of property by the bank/mortgage (the second respondent therein) was null and void. The trial court dismissed the claims on the ground that the conveyance was void as it was in fraud of creditors (i.e. the bank and first respondent) and that in the alternative the appellant was estopped by the prior judgment of the High Court from relitigating the issue relating to the validity of the sale by the bank tot he 1st respondent.

On appeal to the Supreme Court the appellant submitted that he is a purchaser for value and so he is entitled to protection under the statute relating to fraudulent conveyances unless the respondents proved fraudulent intent on his part.

HELD

(1)     The 2nd respondent's equitable Mortgage was created by a deposit of title deeds accompanied by a memorandum of deposit which contained a covenant by the appellant's vendor to create a legal mortgage in their (2nd respondent's) favour and not by a mere charge of the said property as implied by the appellant's counsel when he argued that the appellant took the legal estate in the disputed property subject only to the bank's monetary or financial interest arising from the loan transaction.

(2)     Where a mortgage is by way of charge the mortagee takes no estate whatsoever in the land but has generally only an equitable interest to be enforced by sale upon an order of court, it only gives a right to payment out of the property on the land.

(3)     Where there is an agreement to create a legal mortgage when required following a default in the terms of the agreement, the agreement that the legal mortgage when executed will also confer on the mortgage an immediate power of sale; the mortagee's remedies correspond as nearly as possible with those of the legal mortgage.

(4)     The purchaser of the legal estate in any property for value and without notice has an absolute, unqualified and unanswerable defence to any claim by another person based on a prior equitable interest in the property.

(5)     If a purchaser receives notice of an outstanding equitable interest on the property before completion of his purchase like the appellant did in this case, and does not ensure that interest is got in or destroyed, his legal interest will not take precedence over the prior equitable interest.

(6)     The doctrine of lis pendens prevents the effective transfer of rights in any property which is the subject matter of an action pending in court during the pendency in court of the action and the doctrine clearly operates in the instant case.

(7)     The doctrine of estoppel by standing by prevents the appellant from relitigating the issue of title to the property in dispute as there have been previous decisions on same, the fact that the sale to him of the property took place after these suits were commenced being immaterial.

(8)     The rationale behind the doctrine of estoppel by standing by is that it will be against justice and common sense to allow a person who stood by and watched another fight his own battle intending (or in the circumstances where the inference can reasonably be drawn that he so intended) to take the benefit of the championship in the event of success.

(9)     The appellant was the person who stood to gain and not his vendor (Ashiru) from the suit instituted by the latter and so the appellant cannot relitigate the matter.

(10) The sale by the mortagagor to the appellant of the property in dispute is voidable and not void and until set aside by an action for the purpose it cannot be avoided, there being no cross-prayer or cross-action by the Bank (2nd respondent) in the proceedings to set aside the sale.

Appeal dismissed.

Chief F.R.A. Williams S.A.N. (with Chief Okenla and Mr Kasumu) for Appellant.

A. O. Sikuade for 1st Respondent

Olisa Chukwurah S.A.N. (with A. O. Okubadejo) for the 2nd Respondent

Statutes referred to:

Property and conveyancing Law cap. 100 vel Vs. Laws of the Western Region of Nigeria 1959.

Laws of England (Applicable) Law Cap. 60.

High Court Law, Western Region, Cap. 44, Laws of the Western Region of Nigeria, 1959.

Sheriffs and Civil Process Law Cap. 116 Laws of the Western Region of Nigeria, 1959.

The White Book.

Idigbe, J.S.C. -When these proceedings commenced as LD/729/72 in the High Court of Lagos State on the 6th day of July, 1972, the property in dispute, that is, the premises known as No. 46 Akpata (sometimes spelt 'Apata') Street at Shomolu in Lagos State already had had a chequered legal history. It had been the subject of a court action in the High Court of Western State holden at Ijebu-Ode (Suit HCJ/16/71 which commenced on 25th March, 1971) between Alhaji Adam Badejoki Ashiru, a businessman of 30 Isoku Street at Ijebu-Ode, through whom the appellant in these proceedings claims title to the property in dispute, on the one hand and three defendants i.e. Barclays Bank of Nigeria Ltd., (the second respondent herein), Chief A. Oresanya and O.A.L. Araba - the first respondents, hereing - who also claimed, (and still claims), title to the property in dispute through the second respondents herein on the other hand. About a month before commencement of these proceedings, to be precise, on the 19th day of June, 1972 the said Alhaji Adam Badejoko Ashiru (hereing referred to as "Ashiru") had - as will be shown later in this judgment - to the knowledge of the appellant herein, lost his claim (as plaintiff in HCJ/16/71) for a declaration that the sale of the premises at 46 Akpata Street, Shomolu, Lagos State, (herein referred to as the "disputed property") to the first respondent herein by the second respondents "on or about the 6th March, 1971, is null and void and of no effect."

Put in a short compass, the facts which form the background to the present proceedings are as follows: Between 1951 and 1959 Ashiru now a retired businessman was actively engaged in trade and in order to enjoy overdraft facilities from his bankers, the second respondents herein, he lodge with them, by way of equitable mortgage, the title deeds of two of his properties, that is, the premises at 30 Isoku Street at Ikebu-Ode and the disputed property. At a later date Ashiru executed in favour of his bankers formal Memoranda of Deposit of the two deeds in respect of these two properties, and in each of these memoranda he covenanted in the second clause to execute a legal mortgage in respect of each of the premises, on demand by his bankers, in the event of failure on his part to reduce the overdraft in terms of the covenants and stipulations on his part therein. These Memoranda of Deposit of Deeds are registered (in respect of the Premises at 46 Akpata Street, Shomolu) as No. 5 at Page 5 in Volume 288 at the Lands Registry Ibadan, and (in respect of 30 Isoku Street, Ijebu-Ode) as No. 4 at Page 4 in Volume 173 of the Lands Registry at Ibadan.

In due course, following his breach of the said covenants and his inability to reduce or retire the overdrafts, the second respondents brought an action against Ashiru in the High Court at Ijebu-Ode in Suit J/18/63 claiming inter alia:

"(1)    a declaration that Clause 2 of Memoranda of Deposit of Deeds dated the 22nd day of January, 1957 and registered as No. 4 at Page 4 in Volume 173 of the Lands Registry at Ibadan and the 26th day of January, 1959 and registered as No. 5 at Page 5 in Volume 288 of the Lands Registry at Ibadan made between the defendant of the one part and the plaintiff of the other part is a binding contract upon the defendant.

(2)     An order for specific performance by the defendant of the said contract;

(3)     damages amounting to £3,670.3.9d.

(4)     ..."

In a reserved judgment dated the 4th day of February, 1965, the learned trial Judge in that Suit - J/18/63, (Oyemade J. as he then was) came to the conclusion that the bank (i.e. 2nd respondent herein) was entitled to a declaration that Clause 2 of the Memoranda of the Deposit of Deeds is a binding contract on Ashiru and entered judgment accordingly. In respect of the second and third claims, however, the learned judge stated:

"As regards the claim for specific performance and damages for the sum of £3,670.3.9d. I give judgment for the sum of £2,474.5.10 in lieu of ordering specific performance at this stage."

Ashiru on the 30th day of March, 1965, appealed from the said judgment of Oyemade J. and the second respondents cross appealed as a result of their failure to obtain the order for specific performance. While the appeal was pending and without waiting for the result of the appeal Ashiru sold to the appellant the disputed property (which is covered by the Memorandum of Deposit of the Deed registered as No. 5 at Page 5 in Volume 288 at the Lands Registry Ibadan) on the 28th day of January 1966; in respect of the sale he later executed a deed of conveyance dated 23rd January, 1967, and registered as No. 36 at Page 36 in Volume 983 of the Lands Registry at Ibadan. We should add here that it was also clear from the evidence in these proceedings that when the appellant bought the disputed property he knew full well that the pending appeal from the judgment of Oyemade J. was in respect of a claim by the second respondents (herein also referred to simply as "the Bank") for specific performance by his vendor of his obligation under the equitable mortgage to convey to the Bank a legal mortgage in respect of the disputed property. The appeal was eventually heard in December, 1968, and the Supreme Court in a judgment dated 19th December, 1968, in Suit SC. 362/66, in respect of the said appeal made the following observations:

"By depositing two title Deeds with the Bank and signing on Memorandum of Deposits of Deeds in respect of each title Deed, the defendant created equitable mortgages which the Bank is entitled to have perfected subject to the terms of the Memoranda Clause 2 of which is as follows:

I hereby undertake that I and all other necessary parties (if any) will on demand at my own cost make and execute to you or your nominee a value legal mortgage or registered Charge of or on the said hereditaments and property or any part thereof in such form and with such provision and powers of sale leasing and appointing a Receiver as you may require."

To enable legal mortgages to be executed by the parties, approval of the Commissioner of Lands, Western State, is required under the Native Lands Acquisition Law, Cap. 180, and such approval is given after an application form (Form 1A) has been executed by the parties, and sent to the proper authorities. On the 15th January, 1963, the Bank caused Form 1A to be sent to the defendant for execution, and he was informed that:

"if you fail to sign the enclosed Lands Form 1A and the relative legal mortgages that will be submitted to you shortly ..our instructions are to issue a writ against you claiming specific performance of the covenants made by you in favour of the Bank whereby you undertook to sign legal mortgages when called upon to do so."

The defendant refused to sign the form hence this action ...In the circumstances of this case we are of the view that it is appropriate to order the decree for specific performance sought by the Bank."

The Supreme Court, therefore, set aside the monetary award in lieu of specific performance made by the High Court at Ijebu-Ode and ordered that "the plaintiffs/respondent (i.e. 2nd Respondent herein) is hereby granted a decree for specific performance as sought in the second head of claim."

Pursuant to the order made by the Supreme Court and, the failure of Ashiru to either, pay the outstanding dues on his overdraft account or, in the alternative, execute legal mortgages in respect of the two properties (i.e. that at 30 Isoku Street, Ijebu-Ode and the disputed property) and also to endorse the relevant Lands Forms 1A, at the request of the second respondents herein, the latter caused legal mortgages and Lands Forms 1A, in respect of the said properties to be endorsed on behalf of Ashiru - pursuant to the provisions of Order X rule 11 of the Judgments (Enforcement) Rule made under the Sherrifs and Civil Process Law Cap. 116 of the 1959 Edition of the Laws of Western Region of Nigeria then applicable in the Western State of Nigeria - by the Registrar of the High Court at Ijebu-Ode. Armed with these legal mortgages (i.e. the legal mortgage in respect of 46 Akpata Street, Shomolu registered as No. 12 at page 12 in Volume 1321 in the Lands Registry Lagos; the legal mortgage in respect of 30 Isoku Street, Ijebu-Ode registered as No. 3 at page 3 in Volume 1171 in the Lands Registry, at Ibadan, and the Lands forms 1A in respect of the said properties covered by the equitable mortgages (i.e. the Memoranda of Deposit of Deeds aforesaid) the second respondents caused the two premises to be sold by public auction, (a) to the first respondent herein (in regard to the disputed property) and (b) to Chief Oresanya - the second defendant in Suit HCJ/16/71 aforementioned - in regard to the property known as 30 Isoku Street Ijebu-Ode. It was the sale of these properties by the second respondents herein that precipitated the action for declaratory judgments in Suit HCJ/16/71 earlier on mentioned in this judgment; and as was stated earlier on that action was lost by Ashiru, the vendor of the appellant, on the 19th day of June, 1972.

We think it is necessary, at this stage, to set out in detail, so far as it is necessary for the purpose of this appeal, that portion of the claims in Suit HCJ/16/71 which the High Court at Ijebu-Ode (Olu Ayoola J.) dismissed; and these read:

"The Plaintiff's claims against the defendants jointly and severally are as follows:-

3.      a declaratory judgment that the deed of mortgage registered as No. 12 at page 12 in Volume 1321 in the Lands Registry, Lagos in respect of the property situate at No. 46 Akpata Street, Shomolu purported to be executed by the plaintiff or on behalf of the plaintiff at Ijebu-Ode in favour of the first defendant (second Respondent herein) some time in 1970 or thereabout is irregular, null and void and of no effect on the grounds of (a) non est factum and or (b) that conditions precedent to the purported execution thereof were not complied with in law and in fact;

4.      a declaratory judgment that any sale or disposition or alienation of the property described in the said Deed of Mortgage referred to in Claim 3 above made by the first defendant (second Respondent herein) to the third defendant (first Respondent herein) on or about the 6th March, 1971, is null and void and of no effect."

(Brackets and underlining supplied)

In that suit the High Court at Ijebu-Ode rejected pursuant to its findings on the issues of facts in evidence before it and on its interpretation of the law in so far as the provisions of Section 22 of Cap. 44 (High Court Law Western Nigeria) and Order X rule 11 of Cap. 116 aforesaid were concerned, the contentions inter alia put forward on behalf of Ashiru that: (1) the provisions of Order X rule 11 of Judgments (Enforcement) Rules made under Cap. 116 being inconsistent with the provisions of Section 22 of the High Court Law Western Region Cap. 44 of the 1959 Edition of the Laws of Western Region of Nigeria "were repugnant and consequently void and of no effect"; (2) that the Registrar of the High Court could not validly execute the legal mortgages on behalf of Ashiru without (a) the latter first being given notice of the deed sought to be executed, (b) a prior demand by the Bank on the respondents to execute the same and (c) a prior order of the court made en banc for execution of the same by the Registrar.

On appeal, however, to the Western State Court of Appeal, that Court (hereinafter referred to as "the Court of Appeal", by a majority decision in the Appeal No. CAW/50/71 reversed the decision of Olu Avoola J. in HCJ/16/71. The Bank's (the second respondents herein) appeal from the judgment of the Court of Appeal in CAW/50/71 was allowed by this Court for detailed reasons given in our judgment in SC.92/76 and which we need not reproduce here. We would, however, like to observe in passing that the expression "the Court" in Section 22 of Cap. 44 aforesaid must mean the Court sitting en banc (being an expression used in an Act of Parliament, that is substantive statute, but that expression (i.e. "the court") when used in 'Rules' made pursuant to an Act of Parliament of Substantive Statute) does not necessarily mean the court sitting en banc: it can, and quite often does mean, the Judge or the court sitting in Chambers and sometimes does mean a Master or the Registrar. (See Baker v. Oakes (1877) 2 Q.B. 171; also Para. 2004, of the White Book or the Annual Practice 1976 Vol. 2). The position, therefore, is that the decision of the High Court at Ijebu-Ode in HCJ/16/71 dated the 19th day of June, 1972, having been affirmed, is extant.

In the case in hand, the appellant (as plaintiff) claims from the first and second respondents (as defendants) jointly and severally as follows:

"(1)    a declaration of title in fee simple to a piece or parcel of land with the buildings thereon, situate and being at No. 46 Akpata Street, Shomolu, Lagos State, which is the subject of a Deed of Conveyance dated 12th July, 1956, registered as No. 14 at page 14 in Volume 149 of the Lands Registry, Ibadan and legally transferred to the plaintiff by a Deed of Transfer dated 23rd January, 1967 and registered as No. 36 at page 36 in Volume 983 of the Lands Registry, Ibadan;

or in the alternative

(2)     a declaration that the purported public auction sale of the said piece of parcel of land with the buildings thereon, situate and being at No.46 Akpata Street, Shomolu, Lagos State by the second defendant Company to the first defendant on or about 6th March, 1971, at Shomolu, Lagos is wrongful, illegal, void and of no effect."

We think it is necessary to set out certain paragraphs of the statement of claim; these read:-

"(7)    On 28th January, 1966, Adam Badejoko Ashiru sold the land in dispute to the plaintiff and thereafter conveyed the land with the completely burnt dilapidated house thereon to the plaintiff vide the Deed of Transfer dated 23rd January, 1967, and registered as No. 36 at page 36 in Volume 983 in the Lands Registry, Ibadan.

(8)     Before the plaintiff purchased the land in dispute he made enquiries thereon, and discovered that there was no legal document registered against the property except a Memorandum of Deposit of Deeds to secure an advance in favour of the second defendants by the plaintiff's vendor, A.B. Ashiru.

(9)     On further enquiries from the said A.B. Ashiru he exhibited to the plaintiff the correspondence between himself and the second defendants on the issues of the arson committed on the buildings on the land in dispute during the Western Nigeria political crisis and the subsequent decision to sell the land in dispute.

(10) Thereafter the plaintiff re-built the completely burnt down house at a cost of over £3,000 between 1966 and 1967.

(12) In or about 1971 the plaintiff saw some public auction notice pasted on his house on the land in dispute at the instance of the second defendant.

(13) The plaintiff thereafter contacted his vendor-A.B. Ashiru...about the advertised sale of the land in dispute based upon a deed of legal mortgage in favour of second defendants dated 25th May, 1970 registered as No. 12 at page 12 in Volume 1321 at the Lands Registry, Lagos.

(15) Upon further inquiry, it was discovered that the second defendants without any application to the court and without any order of the court simply procured, by exchange of correspondence, a Mr.. Bakare, Higher Registrar of the High Court Ijebu-Ode to execute the legal mortgage purporting same to be executed for and on behalf of Adam Badejoko Ashiru, on or about 17th March, 1970."

(Underlining supplied by the court).

In their reply the second respondents referred to the Court actions in J/18/63 decided by Oyemade J. and HCJ/16/71 decided by Olu Avoola J. both of which were referred to earlier on in this judgment and pleaded, in portions of their statement of defence, thus:-

(16) The Bank will contend at the hearing that:

(a)     when the plaintiff made the inquiries referred to in paragraphs 8 and 9 of the statement of claim he knew

(i)      that his vendor had been taken to court in respect of the Memoranda;

(ii)     the nature of the claim and

(iii)    the terms of the ground of appeal to the Supreme Court.

(b)     the plaintiff is not a purchaser for value without notice;

(c)     the subsequent litigation initiated by the vendor in respect of the land was at the instance of and with the knowledge and consent of the plaintiff;

(d)     the plaintiff is therefore estopped per rem judicatam by reason of the action referred to in paragraphs 13 and 14 hereof (N.B. these two paragraphs refer to the decisions in HCJ/16/71;

(e)     the vendor went through the purported sale to the plaintiff in fraud of the judgment creditor in Suit No. J/18/63 and Appeal No. SC.362/66 and the plaintiff purchased with full knowledge and all antecedent clogs on the land;

(f)     the Judgment in HCJ/16/71 is a judgment in rem as regards the status of the mortgage sale and concludes the matter for all time - and the plaintiff is estopped per rem judicatam from re-litigating issue."

More importantly, the first respondent in paragraph (5) of his statement of defence pleads thus:-

"The defendant avers that the plaintiff well knew of the trial in Suit No. HCJ/16/71 between Mr Ashiru referred to in the plaintiff's statement of claim and the defendant in respect of the subject matter of this action, but did nothing and the defendant as against the plaintiff therefore pleads res judicata and will at the trial contend that the plaintiff is estopped by the judgment in the said suit from denying the defendant's (meaning the first respondent's) title to the property the subject matter of this action."

(Brackets and underlining supplied by the court).

In the course of his evidence the appellant testified that when he bought the house in 1966 there was a "partially burnt-out" building thereon and that he paid £200 to Ashiru for the land. In his statement of claim he pleaded that at the time of purchase of the property by him the dilapidated building thereon was "completely burnt". Further, he stated that his solicitor told him, at the time of purchase of the property, that "the second defendant Bank was interested in the land" and that Ashiru his vendor had "borrowed £1,500 from the Bank and executed a Memorandum of Deposit in respect of the land." According to him, he had pulled down "the burnt-out" building on the land because, as he claimed, "it was valueless" to him and had had a completely new one erected thereon. He said he knew of legal mortgage relating to the disputed property and advised Ashiru "to go to the bank and put the matter right." Under cross examination the appellant admitted that the tenants who live on the disputed property have been paying rents to first respondent since June 1972. We pause, to observe that it is significant that Ashiru's claim in HCJ/16/71 to avoid the sale of the disputed property to the first respondent by the second respondent was lost (i.e. dismissed) in June, 1972, and that these proceedings were initiated nearly a month after in July, 1972.

In a reserved judgment the learned trial Judge reviewed the evidence on both sides and came to the conclusion that the appellant's claims ought to be dismissed. In his view (1) the sale to the appellant by Ashiru was in fraud of Ashiru's creditors (the Bank-the second respondents herein), and (2) in the alternative the learned Judge was of the view that the appellant was, by virtue of the doctrine of estoppel by "standing by", estopped by the decision in HCJ/16/71 from contesting, or re-litigating the issues as to the validity of the sale by the second respondents to the first respondent. At this stage, we think that certain relevant parts of the judgment of the learned trial Judge should be reproduced, and these read:

"...While the appeal and cross appeal (i.e. in J/18/63) were pending Ashiru sold for £200 and conveyed the property to Adam Ogundiani, the plaintiff in the present proceedings...I shall return hereafter to this conveyance executed penente lite by Ashiru in favour of the plaintiff who knew fully about the legal proceedings pending between Ashiru and the Bank. The cross-appeal succeeded ... The Bank was granted a decree of specific performance...Ashiru who had already sold the property in dispute to the plaintiff in 1966 and conveyed it to him by Exhibit 2, instituted an action in Ijebu-Ode High Court, Suit No. HCJ/16/71...On 19th June, 1972, Ayoola J....dismissed Ashiru's case after pronouncing in favour of the legal mortgage (in favour of the Bank)...Chief F.R.A. Williams for the plaintiffs has addressed some submissions to the court. The first is that Oyemade J's judgment in J/18/63 left the title in Ashiru, and the plaintiff who bought before the "Supreme Court Judgment should have the legal estate. I am afraid this submissions oversimplifies the facts and the law. The plaintiff "testified that before he bought the property from Ashiru in 1966 he was aware of the action pending between the Bank...and Ashiru (i.e. Suit J/18/63). He admitted that his solicitor Oriyomi informed him that the Bank was interested in the property. He admitted that his solicitor who was acting for him in the matter (i.e. the transaction of Sale of the property by Ashiru) informed him that Ashiru had borrowed £1,500 from the Bank and signed a Memorandum of Deposit in respect of the property (which he the plaintiff was about to buy). He and Ashiru belong to the same little town near Ijebu-Ode and so he knew what Ashiru was doing about the property. Although there was no settlement with the Bank the plaintiff bought the property for £200. He told the court that the building on the land had been destroyed. This would suggest that all he bought was vacant land. I am unable to accept this testimony. He said in cross examination that he told the building inspectors that he was merely repairing the building. Of course, if that was not the position he would have needed a building plan (for the building allegedly put up by him on the land after the purchase). On the evidence before me I find it difficult to believe that the building on the land was destroyed. Ashiru was not called nor was Chief Okenla who reported the destruction to the police. The plaintiff wistfully kept out of all the expensive litigation in which Ashiru had been involved since he sold the land to the plaintiff for £200. On the evidence before the court it is not easy to resist the "view that the sale and conveyance of the property to the plaintiff pendente lite were intended to defeat the execution of the judgment J/18/63 or to defeat the Bank as Ashiru's creditors. The sale was obviously collusive; it was in fraud of the Bank. That was why the plaintiff did not bother to join (in) the actions of which the property was the subject matter although on his own testimony he knew about them all...I would therefore declare void Exhibit 2 (the conveyance from Ashiru to plaintiff, of the disputed property). The plaintiff will therefore not be entitled to a declaration that the sale of the property by the Bank to first defendant was wrongful, void etc. If I am wrong in holding on the facts that the Bank then - The present plaintiff knew about the case (i.e. HCJ/16/71). He was in court - during the trial. He left Ashiru who had sold the property to him to fight the battle for him. Both defendants have pleaded res judicata and there is in my view considerable substance in the plea."

(Underlining and brackets supplied by this Court),

A good deal of the argument of learned Counsel for the appellant was directed against the portions of the judgment of the court of trial dealing with the law relating to voidable conveyances. It was submitted that as the appellant is a purchaser for value he was entitled to protection under the statute relating to fraudulent conveyances unless the respondents proved fraudulent intent on the part of the appellant. The fraud of the Vendor, learned Counsel submitted, was not necessarily that of the purchaser. Finally, it was submitted that as the transaction, if fraudulent, was merely avoidable (not VOID) under the statute, the respondents who have not brought a cross-claim or cross-action to set aside the conveyance cannot avail themselves of the provisions of the relevant statute. (2) With regard to the plea of res judicata raised by the defendants/respondents, learned Counsel for the appellant maintained (a) that the appellant was neither a party to Suit HCJ/16/71 (b) nor a privy of the Vendor who long ago, before the Suit HCJ/16/71 was commenced and judgment recovered thereon - against the vendor - divested himself of the legal estate in the disputed property in favour of the appellant. (3) Learned Counsel for the appellant finally submitted that the sale to the appellant finally submitted that the sale to the appellant having been made in January, 1966, by Ashiru (the equitable mortgagor to the Bank who still retained the legal estate) prior to the execution by the Registrar, High Court of Ijebu-Ode of the legal mortgage, "purportedly" on behalf of the debtor (Ashiru) - in favour of the Bank - the latter got no legal estate or interest which it could pass to the first respondent; the resultant position was that since (as he conceded) the appellant had notice of the transaction between the Bank and Ashiru, the appellant took the legal estate in the disputed property SUBJECT only to the Bank's monetary or financial interest (arising from the loan transaction). This, learned Counsel for the appellant submitted, is the true meaning of the expression that the Purchaser (the appellant) took the vendor's legal estate in the disputed property subject to the Bank's equity (or equitable mortgage) in the disputed property.

We consider it convenient to begin with the last submission on behalf of the appellant, and we think attention ought to be drawn to the fact that the Bank's equitable mortgage in the case in hand is not one created be a mere change; it was created by a deposit of title deeds accompanied by a MEMORANDUM which contained a clause reciting an "agreement to create a legal mortgage" (which was the subject of litigation before Oyemade J. and up to the Supreme Court). Now, equitable mortgages are created inter alia, (1) by mere deposit of title deeds with a clear intention that the deed should be taken or retained as security for the loan; (2) by an agreement to create a legal mortgage and (3) by mere equitable Charge of the mortgagor's property. In passing we think that it should be pointed out that the last of the three classes of equitable mortgage i.e. that which is created merely by a charge on the property intended as security for the loan differs considerably from the first two in respect of the remedies it confers; and the property so charged is appropriated only to the discharge of a debt or some other burden in respect of which the property stands charged. (See London County & Westminster Bank Vs Tompkins (1918) 1 K.B. 515 at 528). As was stated in Mathews Vs. Gooday (1861) 31 L.J. Ch. 282.

"With regard to what are called equitable mortgages, my notion is this. Suppose a man signed a written contract, by which he simply agreed that he thereby charged his real estate with £500 to A, what would be the effect of it?

It would be no agreement to give a legal mortgage, but a security by which he equitably charged his land with payment of a sum of money, and the mode of enforcing it would be by coming into a court of equity to have the money raised by sale or mortgage; that would be the effect of such a simple charge. It is the same thing as if a testator devised an estate to A, charged with the payment of a sum of money to B. B's right is not to foreclose A, but to have his charge raised by sale or mortgage of the lands. But the thing would be distinctly an equitable charge, and not a mortgage nor an agreement to give one. On the other hand the party might agree that having borrowed a sum of money, he would give a legal mortgage whenever called upon. That agreement might be enforced according to its terms, and the court would decree a legal mortgage to be given and would also foreclose the mortgage unless the money was paid."

In other words where the mortgage is by way of charge, and not by conveyance, the mortgagee takes no estate whatsoever in the land or in the property but he has generally only an equitable interest to be enforced by sale upon an order of court. The equitable charge simpliciter only gives a right to payment out of the property; it does not amount to an agreement to give a legal mortgage at all. The strict mode of enforcing the charge is, however, by sale (or appointment of a receiver under an order of court) but never by foreclosure. On the other hand where, as here, the agreement is to create a legal mortgage when required following a default in the terms of the agreement, the agreement may be enforced according to its terms notwithstanding that the legal mortgage when executed will also confer on the mortgagee an immediate power of sale (Hermann Vs Hodges (1873) L.R. 16 E. 18). The equitable mortgage by agreement to create a legal mortgage, therefore, entitles the equitable mortgagee to something more than a mere right to payment out of the property or premises mortgaged; under the general principles, his remedies correspond as nearly as possible with those of the legal mortgagee.

Because equity regards that as done which ought to be done the equitable mortgagee, by agreement to create a legal mortgage, can enforce the execution of a legal mortgage by suing in equity for specific performance; if successful he obtains a legal term of years and can then pursue all the statutory remedies open to a legal mortgagee. In considering the scope of the rights of an equitable mortgagee (not by way of charge) it should be borne in mind that the general rule is that foreclosure (and not sale) is the proper remedy of an equitable mortgagee (See James Vs James (1873) L.R. 16 E. 153 citing with approval Pryce Vs Bury at 154); and when an equitable mortgagee by deposit of title deeds and agreement to give a legal mortgage if called upon to do so takes foreclosure proceedings to enforce his security, the court usually decrees that the deposit operates as a mortgage and that in default of payments due under the mortgage the mortgagor is trustee of the legal estate for the mortgagee and that he must convey that estate to him. (See Marshall Vs. Shrewsbury (1875) 10 Ch. App. 250 at 254). The right to foreclosure is very powerful remedy in the hands of the equitable mortgagee and the vendor who takes a legal estate with notice of an equitable mortgage and therefore subject to this class of equitable interest should bear this in mind since, in certain circumstances, he may find in the end that he has bought a worthless legal estate. This brings us to the subject of the equitable doctrine of "Notice." It is usually said that a purchaser of the legal estate in any property for value and without notice has an "absolute, unqualified and unanswerable defence" to any claim of a prior equitable owner or person having a prior equitable interest in the same property (see Pilcher Vs Rawlings (1872) 7 Ch. App. 259 at 269 per James L.J.). Where, however, the purchaser, as here, has notice of a prior equitable mortgage in the property in which he seeks to take a legal estate he has a duty, by himself or by his vendor, to get rid of that prior equitable interest otherwise he is taking unnecessary risk. Accordingly, it was held in Jared Vs Clements (1903) 1 Ch, 428, affirming Byrne J. in Jared Vs Clements (1902) 2 Ch. 399 that a purchaser who has before completion of his purchase received notice of an outstanding equitable interest must, in order to get a good title from his vendor, take care to see that the interest is got in or destroyed. If he chooses to complete in reliance upon the assurance of the vendor, or of the vendor's solicitor, that the interest has been got in or destroyed he does so at his own risk if it turns out that the interest is still outstanding, and the conveyance to him of the legal estate accompanied by the delivery (unknown to the owner of the equitable interest) of the title deeds, affords him no protection against the prior equitable interest. In Jared Vs Clements 1903 (Supra), a decision of a strong court, Collins M.R. Romer & Cozens-Hardy L.JJ.-Romer L.J. made the following observation:

"A person contracts to purchase certain property. Before completion he is told of an equitable mortgage created some time before by his vendor. What is the position of the completing purchaser when he knows of this? He knows he cannot get title from his vendor unless that outstanding equitable interest is got in or destroyed; and if he completes without that equitable interest being got in or destroyed, he can only take the property subject to that outstanding interest being got in or destroyed. In order to get a good title, it is for him to see that the outstanding interest is got in or destroyed - the purchaser might have asked that the equitable mortgagee should join in the conveyance. He might have gone himself to the equitable mortgagee and asked how matters stood; or he might have done what in fact he did, and asked the vendor to get in the equitable interest ..." (1903) I Ch. at P ...

Under the equitable doctrine of notice, the appellant (as purchaser) was at considerable risk when he bought the disputed property in spite of his actual notice of the Bank's equitable mortgage therein. It was, therefore, clear on the facts in the case in hand that when the appellant bought the disputed property he, in normal circumstances, took the vendor's legal estate therein-but it was a defective or qualified legal estate as it was-subject to the Bank's equitable mortgage and therefore subject to all the cumulative rights and remedies of the Bank in equity as an equitable mortgagee; and as earlier on explained, these rights and remedies of the Bank extend beyond the mere right of payment of all dues under the mortgage. However, we need not dwell on the subject further, or inquire further on the resultant positions of the Bank (and or the first respondent who bought from the Bank) on the one hand and the appellant-as Ashiru's vendee-on the other hand, because the appellant's rights if any, in the disputed property are affected by a much stronger principle of law - the doctrine of lis pendens; and this we will consider in the next paragraph.

The doctrine of lis pendens prevents the effective transfer of right in any property which is the subject matter of an action pending in court during the pendency in court of the action. In its application against any purchaser of such property the doctrine is not founded on the equitable doctrine of notice - actual or constructive - but upon the fact that the law does not allow to litigant parties or give to them, during the currency of the litigation involving any property rights in such property (i.e. the property in dispute) so as to prejudice any of the litigating parties. As was stated in Bellamy Vs Sabine (1857) 25 L.J. (N.S.) Equity Reports 797 at 803:

"It is ... a doctrine common to the courts of both law and equity, and rest ... upon this foundation, that it would be plainly impossible that any action or suit could be brought to a successful termination if alienations pendente lite were permitted to prevail..." (per Turner L.J. in Bellamy Vs Sabine)

and as was said by Lord Coke (usually regarded as one of the greatest exponent of the "Common Law", "pendente lite nihil innovetur." In Sorrell Vs Carpenter (1728) 2 P. Wms. 482 the plaintiff instituted an action against ligo upon a claim which the decree established to certain leasehold estate. Pending the suit, Ligo sold the property involved to Carpenter. The question was whether Carpenter qua purchaser could sustain his purchase. Although upon some formal ground the bill in that case was dismissed, Lord King (Lord Chancellor) was unequivocal in his view that Carpenter could not sustain his purchase. A very important aspect of this doctrine which is germaine to the facts in this case is reflected in the head note in Sorrell (supra) and it reads:-

"A purchase pendente lite though without actual notice and for valuable consideration, yet shall be set aside ... but as it is hard enough in some cases to make people take notice of a decree, it is harder still to oblige them to take notice of a pendency of a suit; and in case of a real purchase pendente lite, the plaintiff is to be held to strict proof. And if any flaw at the hearing be on the plaintiff's side, the court will not let him amend, but if the purchase pendente lite be fraudulent, and to elude the justice of the court, it ought to be highly discountenanced."

Now, applying the doctrine of lis pendens to the facts in the case in hand what do we find? The following salient facts emerge:

(1)     Ashiru, sells the property 46 Akpata Street, Shomolu, Lagos - the subject matter of a court action and during the pendency of the said action - to the appellant in circumstances, undoubtedly, fraudulent.

(2)     The sale was undoubtedly made during the pendency of the action because at the time of the sale the decision of Oyemade J. was being prosecuted by both the litigating parties who each appealed from the judgment; and an appeal is in law a continuation of the prosecution of the original cause or matter which is the subject of the appeal (See also Kinsman Vs Kinsman (1831) 1 Russ & M. 617; also 39 E.R. 236).

(3)     What was pending before Oyemade J. whose decision was on appeal to the Supreme Court at the time of the sale of the disputed property by Ashiru to the appellant, was the claim of the Bank for specific performance by Ashira of his obligation under the Memorandum of Deposit of title Deeds to convey to the Bank the same legal estate in the disputed property, later purportedly conveyed to the appellant.

We are in no doubt that in the circumstances the doctrine of lis pendens prevents the effective transfer of title, that is the legal estate in the disputed property to the appellant (Ogundiani). At common law it was not compulsory to register a lis pendens. The statutes which later made registration of a lis pendens compulsory in England do not come within the definition (in the framework of our local laws) of "statutes of general application"; in any event, those statutes which require, in England, compulsory registration of a lis pendens have no force and effect in Nigeria, and particularly in Lagos, the situs of the disputed property, at the time of the sale to Ogundiani and the trial in these proceedings (see Laws of England (Application) Law; Cap. 60, Vol. III 1959 Edition of the Laws of Western Region of Nigeria). There is no local statutory provisions requiring a lis pendens to be registered. In the result, the appellant did not, in our view, obtain a legal estate in the disputed property when Ashiru sold to him. When therefore the Registrar of the Ijebu-Ode High Court executed a legal mortgage - pursuant to the provisions of Order X rule 11 of Cap. 116 aforesaid - on behalf of Ashiru in favour of the Bank, the latter obtained the legal estate in the disputed property and transferred that estate by a later sale and conveyance to the first respondent.

The second principal point raised on behalf of the appellant relates to the question of estoppel by "standing by". Dealing with the subject, Spencer Bower in his book titled "Doctrine of Res Judicata" (the original edition, 1924) at P. 126 Article 197 states:

"For the purpose of estoppel per rem judicata a 'party' means not only a person named as such, but also one who intervenes and takes part in the proceeding's, after lawful citations, in which character he is cited to appear or who, though not nominatim a party, insists on being made so, and obtains the leave of the court for that purpose, or who being coqnizant of the proceedings, and of the fact that a party thereto is professing to act in his interests, allows his battle to be fought by that party, intending to take the benefit of his championship in the event of success."

Cases usually cited in support of the above proposition are, no doubt, prebate suits (e.g. Emberley Vs Trevanion (1860) 4 Sw, & Tr. 197: in the Estate of Langdon (1964) P. 163, & Wytcherley Vs. Andrews (1871) L.R.2 P&D 327). The principle relied upon for this doctrine is that any interested person who is cognisant of the proceedings, and has the opportunity to intervene is bound by the result and cannot be allowed to re-open the matter. Accordingly, if one knowing what was going on was content to stand by and see his battle fought by someone else in the same interest then he ought to be bound by the result (see Lord Penzance at P. 329 (1871) L.R.2 P&D). Although, as earlier on pointed out, the principle has mainly been applied in probate proceedings it is not so confined; and as was stated by the Privy Council in an appeal from West Africa:

"........ No decision was cited to their Lordship which confines the principle to wills and representative actions ......... But assuming without deciding that the English decisions have hitherto been so confirmed, their Lordship would point out that there is nothing in the principle itself which compels it to be limited to wills and representative action. The principle as Lord Penzance said, is founded on justice and commonsense ....... It seems to be the recognised thing in this part of West Africa for all persons with the same interest in a land dispute to range themselves on one side or the other. Sometimes they apply to be joined parties. On other occasions they regard the named party as their champion and support him by giving evidence. If he wins they reap the victory. If he fails they fall with him and must take the consequences. It is now twenty-five years ago that the Chief Justice (Deane C.J.) drew attention: see Yode Kawao Vs Kwasi Coker (1931) 1 W.A.C.A. 162 at 167 ........... It has led the Court of Appeal in West Africa to look for a principle to meet the situation, and they have found it in the principle stated by Lord Penzance ......... when Adamsi's title was thus asserted it was, as the court of Appeal said, 'clearly the duty of Akin Abuakwa to intervene' if it had an interest in the land. Akin Abuakwa did not do so and cannot now be allowed to fight the battle all over again .......... (See Lord Denning: Nana Ofori Atta II, Akym Abuakwa and another Vs Nana Abu Bonsra II of Adansehene for the Stool of Adanse (1957)3 All E.R. 559 at 561-562).

Chief Williams, learned Counsel for the appellant has, however, argued with considerable force, on the issue of estoppel that a purchaser cannot be stopped by a decision of judgment in an action, touching the vendor's title, which was commenced after the purchase (from the vendor) unless he was a party to the action; in the case in hand, Ashiru conveyed to the appellant in January, 1966, but the judgment relied upon in support of the doctrine of estoppel by "standing by" was delivered on 6th May, 1974, and based on Suit HCJ/16/71 commenced on the 6th day of July, 1971.

The reason for the submission according to learned Counsel is that the appellant (as a purchaser, prior to the commencement of the action relied upon in support of the operation of the doctrine) is neither a party of the proceedings in HCJ/16/71 nor, in the circumstances stated above, a privy in estates to his vendor (Ashiru). Learned Counsel did not refer us to any authority for his submission. We think, however, that the authority for the submission is the dictum of Romer J. (as he then was) in Mercantile Investment & General Trust Co. Vs River Plate Trust, Loan & Agency Co. (1894)1 Ch 578 at 595 said the learned Judge:

"Moreover, if the claim of the plaintiff company could be regarded as one affecting land, notwithstanding that no registration of that claim had been made in Mexico, which alone could validly bind the land there, then the English Company would be entitled to say that they were purchasers of the land prior to that action, notwithstanding that their title may also not have been perfected by registration. A prior purchaser of land cannot be estopped as being privy in estate by a judgment obtained in an action against the vendor commenced after the purchase."

Although a statement made obiter, it has the authority and weight of a very learned and respected Judge and has, in fact, been the basis for the ratio decidendi of a large number of judgments dealing with specific issues to which the statements dealing with specific issues to which the statement properly applies, and has also received approval in a considerable number of authoritative text books on the specific point to which it bears any relevance; the learned authors of Everest & Strode's Law of Estoppel (the 3rd and current edition, 1923) rely on the dictum for their statement that:-

"privies in estate are not bound by a judgment unless it precedes the execution of the interest which is to be estopped, and therefore a purchaser of land cannot be estopped as being privy in estate by a judgment obtained in an action against the vendor commenced after the purchase" See Everest & Strode Law of Estoppel, 3rd Edition P.56)

The doctrine of estoppel by "standing by" is, however, founded on justice and common sense and it applies where it will be against justice and common sense to allow a person who stood by and watched another fight his own battle intending (or in circumstances where the inference can reasonably be drawn that he so intended) to take the benefit of the championship, in the event of success. One way of looking at the facts in these proceedings lies in trying to get a just and proper answer to this question: who would have taken the benefit of the decision of Olu Ayoola J. in HCJ/16/71 had Ashiru succeeded? Certainly, it was not Ashiru who many years before the commencement of the proceedings "purported to" have, and believed that he had, transferred the legal estate in the disputed property; undoubtedly, it was Ogundiani (the appellant) who stood to gain. As stated by Coussey J.A., in a case in which the facts are, substantially, not dissimilar "they (i.e. in those proceedings, the appellant) cannot now be heard to complain that they (i.e. Appellants in that case) were not parties (in the previous suit)" - (Coussey J.A. in Esiaka & Other Vs Obiasogwu & Others 1952 14 WACA 178 at 180-1, see also G.B. Amancio Santos Vs Ikosi Industries Ltd. & Epe Native Administration (1942) 8 W.A.C.A. 29 particularly at 34 and 35).

Where, therefore, as here, there has been merely a colourable or purported transfer of legal estate or, where, as here, the purchaser got only a questionable legal (and it must be remembered that we have earlier on made it clear that on the doctrine of lis pendens, Ogundiani did not get a legal estate) there is no room for the application of the much respected dictum of Romer J. in Mercantile Investment Co. (Supra) so as to oust the application of the doctrine of estoppel by "standing by". Until the transfer of the legal estate is, in fact complete and lawful, the purchaser must be affected by a decision bearing on the title of his vendor notwithstanding that the decision was given in an action commenced after the purported or colourable transfer by the vendor to the purchaser of the legal estate. A particularly interesting aspect of the decision in HCJ/16/71 is that although the appellant knew full well not only of the nature of the claims in the said proceedings but also of the decision of Olu Ayoola J he did not even intervene by exercising his right of appeal; for, in the circumstances of the proceedings, he could have availed himself of the provisions of the law whereby a person interested in (or whose interest could be affect by) a judgment in any proceedings in court, although not a party therein, can appeal from such a judgment (see Hariet Johnson Vs Bafunke Aderemi (1955) 13 W.A.C.A. 297 P.C.). Rather than appeal from the said judgment and in that way endeavour to terminate any possible adverse affect the decision in those proceedings could have against him, the appellant stood by and about a month later embarked on a completely new action - the case in hand. We are in no doubt that under the doctrine of "estoppel by standing by." Ogundiani (the appellant) is estopped from relitigating the issue relating to the vendor's title in the disputed property which, as between Ashiru (his vendor) and Oshikoya Arawo Lawson Araba (the first respondent and purchaser from the Bank, (the second respondent) was settled in HCJ/16/71; and the learned trial Judge, in our view, rightly so held.

The only remaining submission of learned Counsel for the appellant which calls for our consideration is that relating to the issue of fraudulent conveyance or disposition of the disputed property. There is abundant evidence that the disposition of the property in question by Ashiru was fraudulent and that the appellant was thoroughly involved and "knee-deep" in the fraud. Although he, on his own evidence knew that the outstanding debt for which the property was meant to serve as security was, at the time of the sale to him over N1500 (i.e. N3000) yet he bought the disputed property for only N200 (i.e. N400); the learned trial Judge was convinced (and we agree with him) that the appellant lied when he said that the property was either in a dilapidated state or nearly burnt down (and on this issue there is considerable equivocation between his pleadings and oral testimony). The disposition was, therefore, subject to the Bank's right to avoidance of the same under the provisions of Section 181 of the Property & Conveyance Law Cap.100 in Vol.5 of the 1959 edition of the Laws of Western Region of Nigeria applicable to these proceedings. Under the section aforesaid the conveyance is only voidable but not void (as was provided in the earlier Statute of Elizabeth - (1571) 13 Elizabeth Cap 5 - which until 1959 had force and effect in Western Region of Nigeria). Being voidable at the instance of the creditor or "party prejudiced" it has to be avoided by action in court and until avoided it remains operative. Chief Williams, learned Counsel for the appellant has submitted (and we agree with him) that there being no cross-action, cross-claim or cross-prayer, in these proceedings, by the Bank to have the sale or conveyance by Ashiru to Ogundiani set aside, the learned trial Judge erred in law in the first part of his decision. The matter, however does not rest there; for we have held that under (1) the doctrine of lis Pendens, (20 the doctrine of estoppel by "standing by" the appellant's claims ought to be dismissed.