AUCTION FRAUD: ALLEGATIONS WITHOUT PROOF IS NOT SUFFICIENT

IDEAL FINANCE LTD & Anor. v FINANCIAL OPPURTUNITY LTD. & Ors.

COURT OF APPEAL, LAGOS DIVISION            

(AUGIE, NIMPAR, TUKUR JJs.CA)

 

The 1st Respondent facilitated a loan of N1,000,000:00 for the benefit of the 1st Appellant with the plan to be repaid within ninety days. The 2nd and 3rd Appellants guaranteed both their personal and corporate properties to the 1st Respondent. The 1st Appellant could not repay the loan within the specified duration. The 1st Respondent filed a summons under the relevant Rules of the Lagos State High Court Rules 1972 at the High Court of Lagos State. The court after series of applications delivered judgment in favour of the 1st Respondent.

The office of the deputy Sheriff (3rd Respondent) was commissioned to conduct the necessary auction sale of the immovable properties of the 2nd Appellant in other to offset the judgment debt. After the sale and transfer of the 2nd Appellant’s property to the 2nd Respondent, the Appellants filed an application against the Respondents alleging that the 3rd Respondent encouraged irregularities during the auction sale. An application to set aside the sale was filed but same was struck out by the court, hence this appeal.

 

The sole issue determined by the Court of Appeal on the liability of the 3rd Respondent was:

 

Under what circumstances will the Deputy Sheriff become a necessary party as would be required to file counter affidavit after an auction sale had been carried out pursuant to his official duty and it would be proper for the court to declare the sale as irregular”

 

Arguing the issue, Learned Counsel for the Appellants argued that the advertisement for the auction exercise was to prevent fraud and give adequate notice to the public which was meant to attract the highest bidder but that the 2nd Respondent who purportedly bought the property had insider knowledge of the price being sought and therefore the sale was tainted with illegality, collusion and connivance. Learned Counsel concluded that this court has the power to set aside the sale tainted with irregularities occasioned by the 3rd Respondent.

 

Learned Counsel to the Respondents argued that in consonance with the provisions of the Sheriffs and Civil Process Act which requires that complaints relating to the wrongful sale of auctioned property must be made within 21 days after which it becomes absolute, none was made within the prescribed period. On the allegation of collusion and fraud, the 2nd Respondent submitted that no particulars were given to substantiate this fact and it was not established by evidence at the trial court as required. He urged the court to dismiss the appeal.

 

Unanimously dismissing the appeal, the Court of Appeal held that:

 

“I agree with the appellant that where there are irregularities in the conduct of auction and if proved the said auction could be vitiated. Section 47 of the Auction Law requires that a complaint be made within 21 days of the sale. The 2nd Respondent argued that the appellants did not make any application within the said 21 days. I have perused the record and I find an application by way of motion dated 28/10/97 to set aside the sale. That is a few days after the sale, on this score; I agree with the lower court that the appellants made an application within the time required.

 

Furthermore, the burden of establishing fraud, collusion and connivance rest squarely on the appellants. Like all criminal allegations in civil suits, the appellants are expected to plead adequately, supply particulars and prove same beyond reasonable doubt. The apex court held as follows:

"It is also settled that a party who intends to provecharges of fraud or charges of criminal malversation or felony must do so beyond reasonable doubt. And that before he can be allowed to prove them/ he must have set them down specifically in his pleadings.

 

See AKPUNONU V BEAKERT OVERSEAS & OTHERS (1995) 5 NWLR 393 46.

 

Per AUGIE, JCA:

“I have nothing useful to add except to say that the Appellants seem to have focused their grievance on the 3rd Respondent, who is the Deputy Sheriff of the Lagos State High Court, and mandated by law to conduct Public Auction Sales. They accused him of "fraud and collusion in the exercise of the Auction Sale", which are allegations of a criminal nature, and the law is sacrosanct that if the commission of a crime by a party to a civil suit is directly in issue, the party must prove it beyond reasonable doubt - seeAkinkugbe V. Ewulum Holdings Ltd. & Anor (2008) 4 SC 125 and Yakubu V.Jaurovel & Ors (2014) LPELR-SC. 154/2005, where Fabiyi, JSC, observed that-

"Allegation of fraud must be proved beyond reasonable doubt. Such must not leave room for speculation. It is proof in the realm of possibilityand not fantastic possibility that is required - - Standard of proof forcommission of crime in civil cases - is the same as in criminal cases - -Fraud requires a higher degree of probability in its proof. It must bepleaded with particulars adequately supplied - - A party alleging fraudmust discharge the onus of proof to the satisfaction of the Court".

In this case, the Appellants accused the 3rd Respondent of fraud that requires a higher degree of probability in its proof, and must be pleaded with particulars adequately supplied, but as far I can see, they did not supply any particulars of the alleged fraud and have adduced no evidence whatsoever to prove same”.

 

Counsel:

T.O.S. FADAHUNSI, A. EZE (MS) and A. A. JOHN (MS) for the APPELLANTS

A.B. ADEDIPE, O.O. AHAYE (MISS) for the 2ND RESPONDENT

 

This summary is fully reported at (2015) 11 CLRN

 

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