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Real Property Security Interests in Nigeria: Constraints of the Land Use Act
Published online by Cambridge University Press: 28 July 2009
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The modern idea of secured transactions is based on the notion of economic efficiency, which implies the minimization of transaction costs while ensuring optimal returns. The efficiency theory posits that unclear definitions and unprotected allocation of property rights inhibit the production of wealth, because they raise the transaction costs of land and impede exchange. The more precisely property rights are stated and assigned, the lower the cost of establishing ownership, and the extent of one's interest in any given piece of land.1 Proceeding from the efficiency theory, contemporary commercial practice is not willing to accommodate the ancient, unnecessarily complicated system of conveyancing, which makes the taking of security in real property expensive. Thus, an efficient regime of secured transactions should be simple, fast, cheap and predictable.
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References
1 See Omotunde, J., “Economic analysis, the legal framework and land tenure systems”, (1972) 15 J. Law & Econ. 259 at 261.Google Scholar
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5 See J. Omotunde, “Economic analysis, the legal framework and land tenure systems”, above, n. 1 at 263.
6 The resulting law is the Land Use Act, 1978, which was enacted under a military regime as Decree No. 6 of 29 March 1978. See also R. James, Nigerian Land Use Act: Policy and Principles, above, n. 4 at 9.
7 See Justice Nnamani, “The Land Use Act—11 years after”, (1989) 2 Gravitas Business Law Journal, at 31. While inaugurating the Land Use Panel (the panel that inquired into the problems of land and recommended the promulgation of the Act), Shehu Yar'Adua stated in part: “Both the Anti-Inflation Task Force and the Rent Panel reports identified land as one of the major bottlenecks to development in the country and recommended various solutions … The Federal Government is fully aware of the land racketeering, the pernicious role of middlemen in land speculation and in the sometimes bitter and unending litigation in land transactions in the country …” (unpublished report of the Land Use Panel at 5). See generally Ekpu, “The role of the Local Government in the implementation of the Land Use Act: the Bendel State experience” in Adigun, A. (ed.), The Land Use Act: Administration and Policy Implication, Lagos, 1991, at 43.Google Scholar
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9 S.22.
10 S. 28. What constitutes public purposes are enumerated under this section.
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20 (1882) 7 App. Cas. 619 at 625–626. The findings by the Court that the use of trust was in the higher sense led to the failure of most of the claims in Tito v. Waddell (No.2) [1977] 3 All E.R. 129 at 238, per Megarry, V.C.Google Scholar
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34 Chap. 96, Laws of the Federation, 1958. This Act was subsequently replaced by the Land Tenure Law, 1962.
35 Nwabueze, above, n. 29 at 239. This opinion seems to be the thrust of the Supreme Court rationalization of the concept of trust in Savannah Bank (Nigeria) Limited v. Ajilo, above, n. 11 at 305.
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38 (1989) 1 N.W.L.R. 305.
39 Ibid. at 328.
40 Omotola, Essays on the Land Use Act, 1978, above, n. 2 at 20.
41 [1965] 2 W.L.R. 958 at 971. See also Hills (Patents) Ltd. v. University College Hospital Board of Governors [1956] 1 Q.B. 90, 99;Google ScholarWillis v. Association of Universities of British Commonwealth [1964] 2 W.L.R. 946.Google Scholar
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45 Ss. 21 and 22.
46 Ss. 24 and 25.
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53 Report of the Northern Nigerian Lands Committee, 1908. See also James, Ibid. 94. This view is in accord with the examination by the Privy Council of the nature of a right of occupancy under the Tanganyika Land Ordinance, 1923 (Laws of Tanganyika 1960 rev., chap. 113), where it was observed: “The intention of the Land Ordinance was to establish an entirely new interest in land, similar to leases in some respect but different in other…. The Act was intended to be a complete code regulating the respective rights of the Crown and the occupier”. See Premchand Nathu & Co. v. Land Officer (1963) A.C. 177.
54 James, above, n. 4 at 89.
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57 Omotola, Ibid. at 43.
58 This argument is akin to the indefeasibility of title registered under the Torrens system of registration. See Hinde, G. W., “Indefeasibility of tide since Frazer v. Walker” in Hinde, G. W. (ed.), The Mew Zealand Torrens System Centennial Essays, Wellington, 1971, at 35.Google Scholar
59 S. 50 defines a “holder” in relation to a right of occupancy as a person entided to a right of occupancy and includes any person to whom a right of occupancy had been validly assigned or has validly passed on the death of the holder but does not include any person to whom a right of occupancy has been sold or transferred without a valid assignment, nor a mortgagee, sublessee or sub-underlessee. “Occupier” means any person lawfully occupying land under customary law and a person using or occupying land in accordance with customary law and includes the sub-underlessee of a holder.
60 Sir Adetokunbo Adenola v. John Oni in Omotola, J., Cases on the Land Use Act, Lagos, 1983, at 131.Google Scholar
61 (1990) 2 N.W.L.R. at 745 per Belgore, J.S.C.
62 (1985) 2 N.W.L.R. at 528.
63 This decision has been criticized as being legalistic and a total negation of the policy behind the Land Use Act. See P. A. Oluyede, Modern Nigerian Land Law, Ibadan, Nigeria, 1989, at 297. In defence of this judgment, it has been asserted that the courts are courts of law, not of policy and for the courts to be concerned with policy alone is for them “to travel a voyage of discovery not of law”. See Awogu, “The judicial view of the right of occupancy” in Adigun (ed.), The Land Use Act: Administration and Polity Implications, above, n. 7 at 153.
64 See below.
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68 Nwabueze, Nigerian Land Law, above, n. 29 at 637. The position of Nwabueze is akin to the argument of Casner and Leach that the policy against restraints on alienation is … based upon the belief that restraints remove property from commerce, concentrate wealth, prejudice creditors, and discourage property improvements. See Casner, A. and Leach, W., Cases and Text on Property, Boston, 1969, at 1008.Google Scholar See also Volkmer, R., “The application of the restraints on alienation doctrine to real property security interests”, (1975) 58 Iowa L.Rev. 747 at 750.Google Scholar
69 Acquisition of Land by Aliens Law 1971, chap. 1, Laws of Lagos State; Native Lands Acquisition Law, chap. 80, Laws of Western Nigeria.
70 Nwabueze, above, n. 29 at 11. See also A. B. Kasumu, “The question of consent to alienation—effect on development” in Omotola (ed.), The Land Use Act: Report ofa National Workshop, above, n. 12 at 93. A similar remark was made by Mugerwa who argues that the laws were passed to protect the natives against “the wiles and trickery of the immigrants”. See Mugerwa, “Land tenure in East Africa—some contrasts”, (1966) East African Law Today, 106. See generally, James, above, n. 4 at 124–126.
71 Ss. 21, 22 and 23 of the Act.
72 Omotola, Essays on the Land Use Act, above, n. 2 at 26.
73 S. 21 provides that no transfer of land or any interest to which the section applies can be effectual without the consent of the Governor or the Local Government as the case may be. S. 36(5) provides that no land to which this section applies shall be sub-divided or laid out in plots and no such land shall be transferred to any person by the person in whom the land was vested as aforesaid.
74 Omotola, Essays on the Land Use Act, above, n. 2 at 28–29. See also James, above, n. 4 a t 130–131.
75 S. 22 provides: It shall not b e lawful for the holder of a statutory right of occupancy granted by the Governor to alienate his right of occupancy or any part thereof by assignment, mortgage, transfer of possession, sublease or otherwise howsoever without the consent of the Governor first had and obtained.
76 S. 34(2) provides: Where the land is developed [before the commencement of the Act] the land shall continue to be held by the person in whom it was veste d immediately before the commencement of this Act as if the holder of the land was the holder of a statutory right of occupancy issued by die Governor under this Act.
77 Omotola, Essays on the Land Use Act, above, n. 2 at 27. This view is shared by James, above, n. 4 at 130 and C. O. Olawoye, “Statutory shaping of land law and land administration up to the Land Use Act” in Omotola (ed.), The Land Use Act: Report of A National Workshop, above, n. 12 at 19.
78 Omotola, Ibid. at 27.
79 Kasumu, “The question of consent to alienation—effect on development”, above, n. 70 at 94.
80 (1989) 1 N.W.L.R. 305.
81 Ibid. at 335.
82 Kasumu, “The question of consent to alienation—effect on development”, above, n. 70 at 94.
83 171 E.R. 1144. This decision was followed by Palles, C.B., in the Irish case of M'kay v. M'Nally (1879) vol. iv. L.R. 438, Good Behere v. Bevan 105 E.R. 644.Google Scholar
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86 Crusoe d. Bkncowe v. Bigby 95 E.R. 1030.
87 James, above, n.4 at 132–133.
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94 Above, n. 11.
95 Ibid. at 324.
96 A. Adesanya, “The land as security after the Land Use Act: the banker's view” in Adigun (ed.), The Land Use Act: Administration and Policy Implications, above, n. 7, 120 at 128.
97 [1971] 1 All E.R. 418.
98 Ibid. at 421.
99 (1989) 1 N.W.L.R. 212. See also Solanke v. Abed, above, n. 89. Contra Dickson v. The Solicitor General of Benue/Plateau State (1974) 5 S.C. 21.Google Scholar
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101 Nnamani, “The Land Use Act—11 years after”, above, n. 7 at 39.
102 Nigerian land law at present may be said to be making progressive retrogression to the position in the early days when bankers used to be averse to accepting land as security. We are informed by J. W. Gilbart that “the rule of the banker is never to make any advance, directly or indirectly, upon Deeds, or any other dead security”. There were, however, certain exceptions to this rule which he laid down. See Gilbart, J. W., The Logic of Banking, London, 1865, 194.Google Scholar
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104 K. Oluwajana, “The Land Use Act and the banking industry”, in Adigun (ed.), The Land Use Act: Administration and Policy Implications, Ibid. at 113.
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