Abstract:
The surest way to preserve a debtor's property from dissipation is that the property be attached by a Court order against eventual disposal while proceedings are being conducted involving recovery of debt from the proprietors of such property. However, the recovery agency has to do more than just visit the Lands Registry to obtain the certified true copies of the title documents of the concerned property. The agency has to be very sure that interest in the said property, both legal and equitable, are still vested in the debtor at the time of the attachment as the court has the power to vacate the order attaching the property if it becomes clear that at the time of attaching the property, it was no longer vested in the debtor, even though the title documents at the Lands Registry still bear the debtor's name as the proprietor. This principle was upheld by the Federal High Court in the case of AMCON v Funmilayo Adeyemi (unreported, Suit No. FHC/L/CS/1696/2018 of 15 July 2020), where our law firm represented the interveners.
Introduction:
By virtue of section 49 of the AMCON Act, 2010, AMCON has the power to apply to a court, ex parte, to attach any property which it reasonably believes belongs to the debtor. As a matter of fact, the Act requires that the debtor is the bona fide owner of the property. The term bona fide implies residuary of both legal and equitable ownership in the debtor at the time of making the application for attachment. And because the application is made ex parte, the law requires that the order be served on the debtor and that the suit for recovery of the alleged debt be instituted within fourteen days of obtaining the order.
In the case of AMCON v Funmilayo Adeyemi, AMCON sought to recover a debt by means of disposing of a property, which it had obtained the court's order to attach. This article investigates the extent of the power of AMCON to maintain the order of attachment which it has obtained ex parte, especially where the right of a third party has set in.
Facts:
AMCON's case was that the defendant was indebted to the defunct Oceanic Bank International Limited in the sum of N198,197,759.49 (One hundred and ninety-eight million, one hundred and ninety-seven thousand, seven hundred and fifty-nine naira, forty-nine kobo) and that it had acquired the debt from the defunct bank. In its bid to ensure recovery of the sum in the event of obtaining judgment, AMCON applied for an interim attachment of the defendant's property and the court granted the order sought.
Meanwhile, the defendant had disposed of the property to a third party who had developed it into several units, retained a unit for himself and transferred the remaining units to three other persons. Instructively, the third party and those who acquired the property through him were in physical possession, although they had not perfected their title at the Lands Registry. Therefore, when they became aware of AMCON's lawsuit, they filed an application as an intervener to protect their proprietary interest in the suit and urged the court to sever the property from its decision so that the property would not be affected by the judgment of the Court.
Interveners' Argument:
The Interveners applied that they be allowed to join the proceedings in order to safeguard their proprietary interest in the suit. They argued that they had acquired equitable interest in the property and that, notwithstanding the fact that the title documents at the Lands Registry still reflected the name of the defendant, there was sufficient uncontroverted evidence for the court to hold that their ownership of the property deserved the protection of the court. Furthermore, the Interveners exhibited all the transaction documents which effectively transferred the property to them, to the accompanying affidavit in support of their application as interveners.
AMCON's Argument:
The Plaintiff argued that the Interveners were not parties to the suit and that they were busybodies who ought not to be allowed by the court to divert the issues before the court. The Plaintiff maintained that it did not have any cause of action against the Interveners as they were not the ones against whom it sought to recover the loan and that the property still belonged to the defendant since the title documents at the Lands Registry still bore her name. AMCON did not, however, contend that the Interveners were not in possession or that the transactions did not actually take place or that the transaction was unlawful.
Defendant's Argument:
The defendant did not react to the Interveners' application but testified in the main suit to the effect that she had sold the attached property to the interveners and exhibited the transaction documents. It is instructive to note that she was not cross-examined on this assertion as the Plaintiff chiefly relied on the Certified True Copies of the title documents of the attached property, which it had procured from the Lands Registry.
Decision of the Court:
The Court, having found that the Plaintiff indeed did not dispute that the property had been sold to the Interveners, proceeded to observe that the property in question was not mortgaged for the loan so as to put the case as one for dispute over ownership of the property or priority of the proprietary interest between the Plaintiff and the Interveners. The Court observed that the cause of action remained one for recovery of a debt and that the issue of property was ancillary. The Court therefore held that, since there was sufficient uncontroverted evidence that the property had been sold, notwithstanding that the Interveners had not perfected their title, they were perfectly entitled to the protection of the Court. The Court relied on the Court of Appeal's decision in Ecotrade v Macfoy (2015) LPELR-250205(CA) to hold that an intervener's interest, even though it is merely equitable, deserved the protection of the Court.
Comments:
This case clearly places more duty on the agency recovering a debt and who wishes that a property which belongs to the debtor be attached for its interim possession, to investigate the title of the debtor over the said property. Where it realizes that the said property is held in physical possession by some persons other than the debtor, it should investigate the status of the occupier who may be tenants, licensees or sub-lessees of the debtor and where there is a reasonable suspicion that the occupiers hold physical possession as owners, the agency has a further duty to investigate the circumstances of ownership as the sale transaction concluded after the interim attachment order was made would be invalid.
Beyond all controversies, the case firmly establishes the right of an intervener and the desirability to protect its interest even though the said interest is only equitable, and AMCON may not attach a property which does not belong to the debtor as a bona fide owner at the time of recovery.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
