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SCENERIOS WHERE A COURT WILL BE WARY OF SETTING ASIDE AN AUCTION SALE PURSUANT TO A MORTGAGE

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Dictum

The court will also be wary to set aside an auction sale where the scenario indicates that the under mentioned facts are shown to the satisfaction of the court: 1) That the mortgagor did mortgage the property in dispute to the mortgagee. 2) The loan or any installment has become payable. 3) Notice of demand of repayment of roan from the mortgagee to the mortgagor. 4) The power of sale under the mortgage agreement has arisen. 5) Pre-condition of notice of sale is given to the mortgagor by the mortgagee or his agent. 6) The power of sale was exercised and the title in the property passed to the purchaser. Gbadamosi v. Kabo Travel Limited (2000) 8 NWLR Pt. 668 Pg. 243. Oguchi v. F.M.B. (Nig.) Ltd. (1990) 6 NWLR Pt. 156, Pg. 330. Bank of the North v. Alhaji Mumuni Muri (1998) 2 NWLR Pt. 536 Pg. 153. Akande v. F.B.N. (2004) 8 NWLR Pt. 875 Pg. 318.

— O.O. Adekeye, JSC. Agboola v UBA (2011) – SC.86/2003

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NON-COMPLIANCE WITH AUCTIONEERS LAW ONLY GIVES RISE TO DAMAGES

An auction sale of mortgaged property is however valid despite the non-compliance with auctioneers law. Thus, any irregularity in the sale is remediable to the mortgagor in damages. See OKONKWO V. C.C.B. (NIG) PLC. (Supra). In ABDULKADIR V. MOHAMMED (2019)12 NWLR (prt. 1687) 450 at 496, it was held that except where the sale of a mortgaged property by auction is tainted with fraud and collusion, any irregularity in an auction sale in breach of the auctioneers Law and Land use Act cannot vitiate the sale.

— M.L. Shuaibu, JCA. FBN v Benlion (2021) – CA/C/31/2016

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INDEBTEDNESS GAVE RISE TO THE AUCTION SALE

I do not think it has been denied that the 3rd respondent is the mother of the said Chief Kalu. It is not also disputed that Chief Kalu was the Chairman of the Board of Directors of the bank. But I think a few matters ought to be put right. First, what gave rise to the auction sale was not the making of the Chairman, Board of Directors. It was the failure of the appellant to settle his indebtedness with the bank. Second, auction sale attracts all and sundry. It affords an opportunity for anyone able to meet the challenges of an auction sale to participate in it unless he is precluded by any regulation, agreement, undertaking or by virtue of his special position in relationship with the transaction from so participating.

– Uwaifo JSC. Okonkwo v. Cooperative Bank (2003)

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NOTICE OF PUBLIC AUCTION

Although some aspects of this provision have become anachronistic owing to socio-political changes, it cannot be denied that the purpose of the provision is for the mortgagee to give adequate notice to the public of the proposed sale. It is not a notice intended to be given to the mortgagor. This is to ensure that a true public auction, where everyone interested in the property may have the opportunity to bid for it, is conducted for a fair deal, devoid of unconscionable bargain through connivance or collusion. This is not a notice which can be waived by the mortgagor. Actually, it does not lie with him to do so as it is not meant for him.

– Uwaifo JSC. Okonkwo v. Cooperative Bank (2003)

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BAD FAITH ON THE PURCHASER OF MORTGAGE PROPERTY

The law of sale by auction or auction sale protects the purchaser and that is the basis of the principle of law that a mortgagor’s right essentially is in damages. The law has an important qualification and it is that the purchaser must have bought the mortgaged property in good faith, that is bona fide and not in bad faith, that is mala fide. The sympathies of the law on the purchaser will vanish the moment the court comes to the conclusion that the purchaser bought the property in bad faith. Bad faith on the part of the purchaser is a matter of fact to be deduced from the totality of the purchasing or buying conduct of the purchaser. Bad faith taints or better still, destroys a mortgage sale and therefore the property in the sale.

– Niki Tobi JSC. Okonkwo v. Cooperative Bank (2003)

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