BINEZ HOTELS LIMITED v. BUREAU OF PUBLIC ENTERPRISES & ANOR
SUPREME COURT
(OGUNWUMIJU; JAURO; SANKEY; OGBUINYA; UMAR: JJ.SC)
FACTS
Binez Hotels Limited (“the Appellant”) acting through Future View Securities Limited (“the 2nd Respondent”) entered into an agreement to purchase 13,000,000 ordinary shares in Nigerian Cement Company Nkalagu Plc, representing 10% of the company’s issued share capital, for the sum of ₦7,020,000.00. The shares were owned by the Federal Government of Nigeria and were listed on the Nigerian Stock Exchange. Following the Appellant’s payment by cheque, Bureau of Public Enterprise (“the 1st Respondent”) conveyed the approval of the transaction by the National Council on Privatisation, indicating that the sale had received the requisite governmental approval.
Before the transaction could be perfected, however, the necessary share transfer forms required to effect the transfer of the shares were never executed. The National Council on Privatisation subsequently cancelled the ongoing negotiations for the sale pursuant to its statutory powers. Thereafter, the shares were sold to the Ebonyi State Government in accordance with the applicable privatisation framework, and the Appellant’s cheque was promptly returned through the 2nd Respondent without value. Dissatisfied with the cancellation of the transaction and the subsequent sale of the shares, the Appellant commenced an action by originating summons seeking declarations that it had acquired a valid interest in the shares and challenging the Respondents’ actions.
The trial Court in a well-considered ruled in favour of the 1st Respondent and dismissed the suit in its entirety. Aggrieved by the decision of the trial court, the Appellant appeal to the Court of Appeal which likewise dismissed and affirmed the decision of the trial Court. Further aggrieved by the concurrent decision of the Court of Appeal, the Appellant appealed to the Supreme Court for a final determination of the dispute.
One of the issues for determination was: Did constructive trust regarding the shares not arise immediately upon making of the contract of sale for same between the Appellant and 1st Respondent, and in selling the shares to the Ebonyi State Government did the 1st Respondent therefore not commit a breach of the said trust and thus obligated to deliver to the appellant proceeds of the resale together with all accrued interest at a rate not less than that applicable to loans by commercial banks?
ARGUMENT
Learned Senior Counsel for the Appellant contends that a valid and binding contract for the purchase of the shares was concluded once the Appellant paid the agreed purchase price and the transaction received the requisite governmental approval. He argues that the subsequent execution and registration of the share transfer documents were merely procedural steps required to perfect the transfer and did not affect the existence or validity of the underlying contract. According to Senior Counsel, once the agreement was concluded and the purchase price paid, it acquired an equitable interest in the shares which the Respondents were bound to recognise and protect.
Learned Senior Counsel further submits that, upon the conclusion of the transaction, the 1st Respondent held the shares on its behalf and was under an obligation to complete the transfer. It argues that the 1st Respondent assumed the position of a constructive trustee and was therefore precluded from dealing with the shares in a manner inconsistent with the Appellant’s equitable interest. He submitted that the subsequent cancellation of the transaction and sale of the shares to the Ebonyi State Government amounted to a wrongful breach of that obligation and finally urged the Court to hold that the cancellation could not extinguish the rights which had already accrued in its favour.
In response, learned counsel for 1st Respondent argues that no concluded sale ever came into existence. He maintained that the transaction never progressed beyond negotiations and remained an agreement to sell, which was lawfully terminated before completion. According counsel, the cancellation effectively brought the negotiations to an end and prevented any proprietary interest from passing to the Appellant. He further submits that because the necessary steps required to complete the transfer of the shares were never fulfilled, ownership remained with the Federal Government, which was consequently entitled to dispose of the shares to the Ebonyi State Government and finally submits that no trust or fiduciary obligation could arise from an incomplete and unperfected transaction.
Learned counsel for the 2nd Respondent similarly submits that although negotiations had progressed and the essential elements of a contract may have been present, the transaction was never completed in the manner required for the transfer of shares. Counsel relied on the fact that the Appellant’s cheque was returned without being presented for payment as evidence that the consideration was never received and the transaction was never consummated. Counsel also argued that the Appellant acquired no ownership or equitable interest in the shares. It was his submission that if the Appellant suffered any loss, its remedy lies only in a claim for damages or refund and not in an assertion of title to the shares and urges the Court to dismiss the appeal.
DECISION OF THE COURT
In resolving the issue, the Supreme Court held that:
Where parties have entered into a valid agreement such as a contract for sale, the law may treat the seller as holding the property in trust for the buyer until the transaction is fully completed, even though the legal title has not yet been formally transferred.
The Supreme Court explained that, in such an instance, the court will infer the existence of a constructive trust between the buyer and the seller which is an equitable remedy imposed by the court to prevent unfairness in situations where one person holds property in circumstances in which it would be unconscionable for that person to retain it for their own benefit, irrespective of whether the parties intended to create a trust.
In instant case, the Supreme Court held that the 1st Respondent was not holding the shares on trust for the Appellant since the transaction or contract of sale was not completed. Although there had been discussions and steps towards the sale of 13,000,000 shares, the transaction was never completed. The Appellant’s cheque was returned uncashed, and the share transfer was never effected. Since the purchase price was not received and the transfer of the shares was not completed, the Appellant did not acquire ownership of the shares. The Court noted that the outcome might have been different had the 1st Respondent cashed the cheque but subsequently refused to complete the transfer of the shares.
Issue resolved in favour of the 1st Respondent.
Chief Chijioke Okoli, SAN (with him, Chief Isaac Anumudu,Esq.; Lawrence Unumudu, Esq.; Kingsley Ezengwoke, Esq.and A. Nosagba, Esq.) – for the Appellant
Ayo Olanrewaju, Esq. (with him, Tolani Layi-Babatunde, Esq.;Kehinde Salimon, Esq. and Abdulrahman M. Sani, Esq.) – forthe 1st Respondent
Uwaifo L. Ogedengbe, Esq. – for the 2nd Respondent
This summary is fully reported at (2026) 6 CLRN in association with ALP NG & Co.
See www.clrndirect.com ; www.alp.company.
