The property in dispute in this case is plot no. 98 at No. 2 Abudu Smith Street, Victoria Island, Lagos. It is State land covered by Title Certificate No. L05166 of 1963 which was leased to late Oba Adesoji Aderemi by the Governor of Lagos State under a deed of lease dated 4 June, 1963. It was developed by the said lessee and at his death, it became vested in the 1st to 4th responde3nts who are his executors/executrix (herein called landlords)

Sometime in February, 1986, the appellant indicated its interest in taking a sublease of the said property. The landlords, acting through their solicitors, made an offer by letter dated 18th February, 1986 (exhibit A-A2) to the appellant. The letter contained details which I do not need to state in full. It is enough to say that the sublease was to be for ten years with an option for a further five years; the annual, rent was to be N75, 000.00 with effect from June 1, 1986, the first five years; rent of N375, 000.00 being payable in advance by the sub-lessee; and the landlords were to be responsible for the payment of the ground rent.

The letter stated that the property was offered in the condition in which it was a detached two-storey house together with stewards; quarters and garage, but that "you are permitted, at your own expense, to add to, alter or extend it and in other respects carry out all renovations and refurbishment you consider necessary to suit your intended use and taste, subject to you (sic) obtaining necessary planning approval and also subject to your submitting your proposals to us for our clients prior approval" In addition, there were the following two paragraphs:

"If you are in agreement with the above terms and conditions, we shall be grateful if you would kindly endorse the attached copy of this letter accordingly and return it to us. You have already deposited with us two cheques totaling N297, 500.00. In returning to us the endorsed copy of this letter, you should please let us have also your cheque for the balance of the rent.

Kindly let us know whether you will directly instruct your own solicitor or we should instruct one on your behalf to prepare a draft sublease in accordance with the above terms and conditions"

This letter was marked "subject to contract"

In reaction, the appellant accepted the offer in its letter of 20 February, 1986 (exhibit B-B1) with some requests which included the limit of 10% increase in rent after the first five years, how to determine the rent for the option period, the landlords to bear the cost of erecting a wall fence and that all necessary approvals by the Lagos State Government to be obtained by the landlord. The landlords virtually consented by their letter dated 24th February, 1986. The letter was also marked "subject to contract."

Again, the appellant wrote another letter dated 28 February 1986 (Exhibit D-D1) making further requests and forwarded a cheque for certain sum therewith for rent. The landlords by their letter also dated 28 February 1986 accepted the cheque and requests made by the appellant and further directed the appellant to instruct its solicitors to prepare a draft sub-lease agreement for approval of the parties. Again, the letter was marked subject to contract.

Appellant then proposed building a new three storey building in place of the existing building but only on a portion of the land; which was agreed to by the parties.

The plans were later approved by the Lagos State Government. They were released to the appellant on 15th May, 1989. These facts were stated in a letter dated 17th May, 1989 (Exhibit H) by the appellant's solicitors to the landlords' solicitors. A draft deed of sublease had earlier been forwarded to the landlords for execution and returned to the appellant in order to seek the Governor's consent. They took no steps to do so but simply avoided further commitment to the appellant. By June, 1989, it had become obvious that the 5th respondent had begun to assert interest in the property in question. The police had even intervened at the instance of one Lt-General T. Danjuma (rtd) who was alleged to be the chairman of the 5th respondent. It was said the 5th respondent had made an outright purchase of the property. The police subsequently reached a decision that the matter was a civil one and advised the parties to seek a peaceful resolution of the dispute. What finally emerged was that the landlords had turned their backs on the appellant and sold the property to the 5th respondent.

At the conclusion of the trial, the trial court granted most of the relief's claimed by the appellant but ignored the alternative claim for damages for breach of held further that the phrase ''subject to contract'' did not affect the transaction. On appeal to the court of Appeal, it set aside the decision of the trial court holding that there was no binding contract between the parties. It also held that failure to obtain the dismissal of the counter-claim of the 5th respondent was partially allowed.