Legal Nuggets (61): Whether a Party Who Has Benefited from a Contract Can Rescind from His Obligation Under Such Contract on the Pretext of Illegality.- By Adedotun Habeeb Adetunji, LL.M (M.IoD), FCAI

HOTEL & CATERING SERVICES LTD v. UNCLE T. FURNITURE CO. (NIG) & ANOR
(2018) LPELR-45887(CA)

ISSUE
ILLEGAL/VOID CONTRACT : Whether a party who has benefited from a contract can rescind from his obligation under such contract on the pretext of illegality

PRINCIPLE
"The 2nd Plaintiff testified for himself and on behalf of the 1st Plaintiff and tendered Exhibits 1, 2 and 3 among others while DW1, Theophilus Emakpor, testified on behalf of the Defendant and also tendered Exhibits A, B, C, D and E. The Plaintiffs claimed that even though they had executed the jobs which the defendant had contracted them to undertake and even though the Defendant had received their charges as in Exhibits 1, 2 and 3, taken possession of the finished products and are making use of them, she has failed, refused and/or neglected to pay. Exhibits 1, 2 and 3 comprise of the Plaintiffs' invoices in this regard. Evidence was led at the trial that established that the Plaintiffs executed jobs for the Defendant vide Exhibits 1 to 3 which were accepted and used, but not paid for. This was acknowledged by the Defendant in paragraph 3 of Exhibit 4, but she withheld the invoices. It is settled law that facts admitted need no further proof. In addition, where evidence is led by a party and there is no contrary evidence from the other party, the evidence is deemed to be true and accepted. See Okoebor V Police Council (2003) 12 NWLR (Pt. 834) 444 SC; & Akinlagun V Oshoboja (2006) 12 NWLR (Pt. 993) 60 SC. Thus, since the Appellant did not deny the contractual relationship which existed between her and the Respondents until the Respondents sought to end the contractual relationship due to lack of payment, the Appellant cannot resile from honoring her financial obligations to the Respondents by seeking to make an issue out of the Respondents failure to insert the 1st Respondent's registration number on its invoices. It is manifest from Exhibits A1-A25 (the Respondents' invoices) which had been honored over the years by the Appellant, that they also did not bear the said registration number. Yet, the Appellant never made an issue of the absence of a registration number on those invoices when it paid the Respondents the sums claimed therein. They cannot therefore be heard to complain now of the absence of a registration number on subsequent invoices presented for jobs carried out for her by the Respondents after having benefited therefrom. The law is trite that a party who induced another party to enter into a contract and has benefited from same cannot subsequently deny the validity of that contract. See Okechukwu V Onuorah (2000) 12 SC (Pt. II) 104 at 109. See also Globestar Engr. Co. Nig. Ltd Vs Mag. Holdings Ltd (2005) ALL FWLR (Pt. 256) 1309, 1326. The law is also settled that a party who has benefited from a contract cannot evade his obligations under the contract by relying on an allegation of illegality. For such an illegality to avail the party, if at all, it must be ex facie. In WCC Ltd V Batalha (2006) 9 NWLR (Pt. 986) 595 at 616, 620, the Supreme Court held: "The law is also settled that whoever intends to claim illegality as a defence must not only plead the illegality, he is also required to set out the particulars of the illegality in his pleadings. This requirement is mandatory in all cases where the contract is not ex facie illegal and the question of illegality depends on the circumstances of the case." See also on this, the decisions in: Ukah V Onyia (2016) LPELR-40025(CA) 23; Brewtech Nig Ltd V Akinnawo (2016) LPELR-40094(CA) 25; Okechukwu V Onuorah (2000) 12 SC (Pt. II) 104 at 109; Agbachi V Azubuike (2010) LPELR-3646(CA) 35; Uduma V Arunsi (2010) LPELR-9133(CA) 89. Undoubtedly, Section 659 of the Companies and Allied Matters Act ought to have been complied with by the 1st Respondent. It is true that the Respondents did not place evidence of its registration properly before the Court in the absence of a witness deposition in support of the Amended Reply to the Amended Statement of defence and Counterclaim. However, the Appellant dealt with the 1st Respondent in conjunction with the 2nd Respondent, knowing that the said invoices did not bear the requisite registration number and even serially effected payments on several of those invoices. Can the Appellant now refuse to meet up with her obligations and yet receive benefit from the apparent wrong which she had been aware of and still continued to contract with the 1st Respondent based on the same invoices afflicted with the deficiency subsequently raised? That is the essence of the Judgment of the learned trial Judge. I do not think the doctrine of equity and fair play will allow that to happen. In Chitty on Contract, 25th Edition at page 620, paragraph 1147(3), the learned author opined thus: "The Courts have also been sensitive to the fact that non-enforcement may also result in unjust enrichment to the party to the contract who has not performed his part of the bargain, but who has benefited from the performance of the other party." This is relevant when taken in the context of the findings of fact by the learned trial Judge at page 310 to 311 of the Record inter alia as follows: "In any case, the evidence to the effect that the defendant accepted the jobs done via the same invoice from the same source; is in possession and has put same to use is not challenged. But for the fall out, ... defendant had taken benefit from the same services of the plaintiffs through the same source of invoice he now faults. Can she now turn round to say that the invoices are tainted with illegality because they do not bear the 1st plaintiff's registration number? I share the sentiments of Ornguga of counsel that it will be inequitable to take advantage of the contract and then turn round to seek to rubbish same. It is a clear case of sour grapes." The learned trial Judge rightly relied on the express evidence of the DW1 in this regard where he stated: "The invoices were not signed upon inspection. If the jobs were satisfactory, the manager could sign the invoices and the job could then be paid for. The signature is evidence that the job was satisfactorily executed." In the case of Adedeji V National Bank of Nigeria (1989) 1 NWLR (Pt. 96) 212 at 226, Akpata, JCA (as he then was) held as follows: "It is morally despicable for a person, who has benefited from an agreement to turn round and say that the agreement is null and void. In pursuance of the principle that law should serve public interest, the courts have evolved the technique of construction in bonam partem. One of the principles evolved from such construction in the interpretation of statutes is that no one should be allowed to benefit from his own wrong... As Widgery L.J. said in Buswell V Godwin (1971) 1 All ER 418 at 421, 'the proposition that a man will not be allowed to take advantage of his own wrong, is no doubt a very salutary one, and one which the Court would wish to endorse.' The effect is usually that the liberal meaning of the enactment is departed from where it would result in wrongful self benefit." Thus, where a contract is not ex facie illegal and the question of illegality depends on the surrounding circumstances, then as a general rule the Court will not entertain the question of its illegality unless it is raised in the pleading. In such circumstances, evidence adduced in support of the un-pleaded illegality goes to no issue. See Okagbue V Romaine (1982) 5 SC 133 at 156. However, where a contract is ex facie (id est, on its face) void or illegal, the Court will take notice of that fact and refuse to enforce the contract even though same is not specifically pleaded. The Court will not close its eyes to it against the illegality as it is the duty of every Court to refuse to enforce such a transaction even where illegality has not been pleaded. See AG Abia State V Phoenix Environmental Services Nig Ltd (2015) LPELR-25702(CA) 33 per Ekanem, JCA. In the instant case, it is not the Appellant's case that the contract between the parties was clearly ex facie illegal. Instead, she seeks to impugn the contract and resile from her obligations on grounds which impugn either the integrity of the Respondents and/or the documents of the contract, i.e. the invoices presented for payment after the successful completion of the contract. Thus, based on the state of the law vis-a-vis the facts of the case, I agree with the Respondents that a party who has taken benefit of a contract cannot turn around to say that the contract is invalid." Per SANKEY, J.C.A. (Pp. 11-18, Paras. D-E)