Real Estate Contract: Mr. Dan Ngerem v. Crown Realties Plc [2021] 4 NWLR (Pt. 1767) 476

What was the Contract?

Crown Realties Plc (“The Respondent”) entered into a contract to sell six houses in Crown Estate, Lekki, Lagos to Mr. Dan Ngerem. The houses were sold off-plan (they were yet to be constructed). It was agreed that the houses would be completed within 9 months from the date of the initial deposit. Following these assurances, Mr. Ngerem paid the agreed initial deposit of N39.08 Million.

Unfortunately, Crown Realties failed to complete the houses at the agreed time. The company completed the houses 6 months after the due date. Mr. Ngerem condoned the breach of contract and the contractual relationship continued as if there had been no breach. Upon completion of the houses, Crown Realties wrote to Mr. Ngerem, informing him that the houses had been completed and demanding for the balance of the purchase price.

How the Dispute Emerged

On his part, Mr. Ngerem was unable to pay the balance of the purchase price to Crown Realties. Instead, he proposed to pay the balance in installments. To this end, he paid a deposit of N34 Million, which amounted to a total of N73.08 Million.

When Mr. Ngerem presented further payment, the company returned the cheque and revoked the contract on the ground that Mr. Ngerem was in breach of the payment terms of the contract which did not stipulate payment by installments.

The company applied N28.1 Million of the payments made by Mr. Ngerem as payment for one house, out of the 6 houses. The company proposed to refund the N44.9 Million balance after selling the other properties. For undisclosed reasons, Crown Realties sold the remaining five houses to other interested buyers but failed to refund Mr. Ngerem’s money.

Aggrieved, Mr. Ngerem sued Crown Realties before the High Court of Lagos State. He claimed a refund of the N44.9M, an order of specific performance and damages for breach of contract. among other reliefs.

How did the Nigerian Courts view the Contract?

The trial Court dismissed Mr. Ngerem’s claims on the ground that both parties were caught up in a mixed show of contract breaches. While Crown Realties breached the contract by not delivering within the 9-month period, Mr. Ngerem waived the breach by accepting delivery of the houses after the additional 6-month period. In the same vein, Mr. Ngerem breached the contract by not paying the balance, instead, he opted for payment by installments. The trial Court held that Mr. Ngerem was not entitled to damages for breach of the contract.

Dissatisfied, Mr. Ngerem appealed to the Court of Appeal. The Court agreed with the trial Court’s position on contract breaches by both parties. It held that Mr. Ngerem had the option to treat the contract as breached the moment Crown Realties failed to deliver within the agreed time. This would have entitled him to damages for the breach. But he ignored the breach and kept the contract alive by subsequently proposing to pay the balance by installments. Failure to pay the balance forthwith was also a breach in itself.

The court held that Mr. Ngerem was entitled to a N44.9 million refund. This is because he never received value for the payment. This was due to the revocation of the contract and subsequent sale of 5 houses to other purchasers.