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3RD MARCH, 1978

SUIT NO. SC 102/1976

3PLR/1978/3 (SC)



[1978] NSCC 55















Land Law – Right of pre-emption in rep         ct of residue of term of years – Deed of lease – Subject to conditions of-lease – Apapa Town Planning Scheme (Western Area) 1953 Regulations 1954 – Lagos Town Planning (Apapa Town Planning Scheme) Regulations:     Cap. 133 Vol. VII of revised Laws of Lagos State of Nigeria (1973) – Lease by deed of assignment to sub-lease – Transfer by sub-lease to plaintiff/defendant – Notice of new policy – Demand for payment of 5% of consideration or valuation of land leased by defendant.

Chief F.R.A. Williams, SAW. (Miss Kesler with him) for the Appellant.

Mrs B. A. Adio for the Respondent.

ALEXANDER, C.J.N. (Delivering the Judgment of the Court ): The plaintiff/ appellant, by originating summons filed in the High Court of Lagos State, sought the determination of the following two questions –

“1.     Whether the defendant corporation has a right of pre- emption in respect of the residue of the term of years evidenced by Land Certificate No. 7147. 2. Whether the defendant corporation has a right to demand payment of 5 per cent of the consideration or valuation of the land comprised in the tide afore-said upon the assignment of the same to the plaintiff.”

The facts relevant to the determination of the two questions are not in dispute, and are set out in the affidavit evidence before the High Court and in the judgment of the learned Judge. The land which is the subject-matter of the summons is Plot No. 2055 in Scheme 2 of the defendant/respondent’s Apapa Development Scheme and is comprised in a Land Certificate Exhibit AOWI) Title No. M07147 dated 16th May, 1968, and is otherwise known as Nos. 28 and 28A Marine Road, Apapa, Lagos. The respondent, then known as the Lagos Executive Development Board, by a deed of lease dated November 23, 1956 and registered under Title No. M07147, demised the said land to the appellant’s predecessor in title, namely, Imperial Chemical Industries (Export) Limited, for a term of ninety years from September 1, 1956, subject to the terms and conditions contained in the lease and to the covenants and conditions implied by virtue of the Apapa Town Planning Scheme (Western Area) 1953 Regulations 1954 now entitled the Lagos Town Planning (Apapa Town Planning Scheme) Regulations: See Cap. 133 in Volume VII of the revised Laws of the Lagos State of Nigeria (1973).

The deed of lease contains the following stipulation –

‘That the lessee will where he sublets the whole or any part of the property here-by demised with or without the Board’s consent under and by virtue of clause 5(v) of the Apapa Town Planning Scheme (Western Area) 1953 Regulations 1954 register every such sublets with the Board within two months of the date of commencement thereof.”

The lessee, namely, Imperial Chemical Industries (Export) Limited, with the con-sent of the respondent, transferred the demised property to I.C.I. (Nigeria) Limited, by a deed of assignment dated November 14, 1967, in consideration of the sum of £20,500. The deed of assignment was registered under Tide No. MO.7147 on May 16, 1963 and effected an assignment to I.C.I. (Nigeria) Limited of all the lessee’s right, claim and interest in the residue of the term of ninety years created by the head-lease.

The sub-lessee, namely, I.C.I. (Nigeria) Limited thereafter agreed to assign its interest in the property to the appellant for the sum of N120,000.00. His solicitor therefore wrote Exhibit B to the respondent requesting the respondent’s consent to the assignment. The respondent’s Acting General Manager replied by Exhibit D on behalf of the respondent In the following terms:

This is to bring to your attention the policy of the Corporation, which took effect from 1st April, 1972, and to which wide publicity had been given that –

  1. In all cases of assignments, transfers, e.t.c. the Corporation must be given the first offer to purchase.
  2. That where the Corporation decides not to purchase such rights or Interests of the lessee, the latter (the Vendor) shall pay outgoings on the proceeds of the sale at such rate being currently charged by the lessor at the time of the sale. Such rate as at present is 10 per cent on the gross proceeds in cases of industrial and commercial buildings, and 5 per cent for residential buildings.
  3. The consent of the Corporation must first be received before any sublease, transfer assignment or before any payment is made or transaction concluded or put Into effect in respect of properties which are subject of lease from the Corporation.

No consent of the Corporation will be given unless the above conditions are complied with.”

The appellant disputed the respondent’s contention that it was entitled to a right of pre-emption in respect of the residue of the term of years evidenced by Land Certificate No. MO.7147. That was the first question for determination by the High Court. It was answered in favour of the appellant and, therefore there is no appeal from this decision.

The appeal before this Court is in respect of the second question which the High Court answered in the affirmative.

The grounds of appeal filed and argued are as follows –

“1.     The learned trial Judge erred in law in failing to observe that the claim of the defendants to deduct 5 per cent on account or ‘outgoings’ was made dependent upon their decision not to exercise their right of pre-emption, having found that the defendant’s answer to the 1st question raised by the Originating Summons was in the negative.

  1. The answer given by the learned trial Judge to the second question raised in the Originating Summons was wrong in law because –

(a)     The 5 per cent of gross proceeds of sale in question was not ‘outgoings’ imposed, charged or assessed on land’ comprised in the relevant lease. (b) The relevant covenant contemplates ‘taxes, rates, charged, duties, assessment or outgoings’ charged by statue in respect of land comprised in the lease or otherwise payable under a contract binding between the parties and does not cover a unilateral imposition by the landlord upon the tenant.

(c)     The defendants have no statutory right to impose the amount claimed by them as ‘outgoings’.

  1. The imposition of 5 per cent of the gross proceeds of the sale in this case is a breach of contract binding on the respondents to this appeal:’

Learned counsel for the appellant submitted that the Acting General Manager in his letter (Exhibit D) purported to exercise arbitrary powers, without any lawful authority to do so, and that he was not entitled to lay down the conditions stipulated at paragraph 2 of his letter and to require compliance before the respondent’s consent could be given to any assignment or transfer. Learned counsel for the respondent nevertheless relied on the Lagos Town Planning (Apapa Town Planning Scheme) Regulations as supporting authority for the exercise of such powers by the Acting General Manager Regulation 5(i) reads as follows:

‘The following covenants on the part of the lessee and conditions shall, unless expressly varied or excepted, be implied in every building lease granted by the Board –

(i)      To pay all taxes, rates, charges, duties, assessments or outgoings of whatever description as may be Imposed, charged or assessed on lands comprised In such lease or the buildings thereon or upon the lessor or lessee.”

This, is of course, the crucial clause for determining the second question. Learned counsel for the appellant submitted under ground 1 that if, as found by the learned trial Judge, the respondent did not have the right of pre-emption claimed in sub-paragraph 1 of the Acting General Manager’s letter (Exhibit D) the imposition of the charges specified in subparagraph 2 did not arise at all as such imposition could, on the face of the letter, only be dependent on the waiver of an option to purchase which the respondent was not entitled to exercise.

Under grounds 2(a), (b) and (c), learned counsel for the appellant submitted that the Court ought to be concerned solely with the construction of the covenant in regulation 5(i) quoted above and that all sums “imposed, charged or assessed” pursuant to this regulation may only be “imposed, charged or assessed” under the authority of a statute or in accordance with a contract between the parties. He con-tended that even if the lessor is a public authority, unless it is empowered by statute to impose levies it cannot do so. In support of his contention he cited a number of authorities. He referred to ‘The Encyclopaedia of Forms and Precedents”, Fourth Edition, Volume 11, page 247, clause 2(1)(b) which reads as follows:

‘To pay and discharge all rates taxes and assessments duties impositions and outgoings imposed or charged during the term upon or in respect of the demised premises or upon the owner or occupier in respect thereof or payable by either in respect thereof…….”

In a footnote to this covenant it is stated that:

‘The general rule of construction is that the words ‘rates, taxes and assessments’ apply only to recurring charges; the words ‘duties’, ‘impositions’ and ‘outgoings’ include charges for permanent improvements as imposed, e.g. by the Metropolis Management Acts 1855 to 1862, the Public Health Acts, the Housing Acts, the Highways Act 1959 and similar Acts.”

It will be seen from the above that all charges of this nature are properly imposed by statute.

In Henman v. Berliner (1981) 2 K. B. 236, Sankey J. said at page 239:

“In considering the meaning of ‘outgoings’ it is necessary to remember that a covenant of this character must be assumed to relate only to matters which may be reasonably supposed to have been contemplated by the parties as being within the purview of the contract.”

In our view, it could not have been within the contemplation of the original par-ties to the head-lease and certainly not within the contemplation of any assignee that the head-lessor could unilaterally and arbitrarily Impose charges under the guise of “outgoings”, on the other party, at the rate of 5 per cent or even higher on the gross proceeds of an assignment or transfer of a residential building amounting in this case to N6,000.00 being 5 per cent of N120,000.00 by a mere letter (Exhibit D) unsupported by any statutory authority.

In Attorney-General v. Wilts United Dairies Limited 37 T.L.R. 884, the Court of Appeal cited with approval the following passage from the judgment of Chief Justice Wilde in Gosling v. Veley 12 O.B. at 407:

‘The rule of law that no pecuniary burden can be imposed upon the subjects of this country, by whatever name it may be called, whether tax, due, rate or toll, except upon clear and distinct legal authority, established by those who seek to impose the burden, has been so often the subject of legal decision that it may be deemed a legal axiom, and requires no authority to be cited in sup-port of it.”

Learned counsel for the respondent submitted that regulation 5(1) of the Regulations is wider in scope than the usual covenant and that the words “of whatever description” appearing therein have the effect of extending the meaning or the word “outgoings” to include the cost of development and maintenance of property, incurred by the developer, that is by the head-lessor in this case, for the benefit of the lessee. Learned counsel referred to the “wide powers” given to the Corporation, the lawful successor of the respondent, under section 4 of the Lagos State Development and Property Corporation Law, Cap. 61. After a careful scrutiny of the provisions of this rather lengthy section we observe that although ft deals with the functions of the Corporation, it nowhere expressly or by necessary implication confers power on the Corporation to impose a charge of a percentage of “out-goings” on an assignee or transferee of lease by a mere letter of notification. Learned counsel attempted also to invoke the provisions of section 10(2) of the Interpretation Law, Cap. 57 of Lagos State which provides as follows:

“An enactment which confers power to do any act shall be construed as also conferring all such other powers as are reasonably necessary to enable that act to be done or are incidental to the doing of it.”

In answer to these submissions of counsel for the respondent based on section 4 of the Lagos State Development and Property Corporation Law and section 10(2) of the Interpretation Law and, also, counsel’s attempt to extend the meaning of the word “outgoings” to include a charge or levy on the “gross proceeds” of the sale of the rights or interests of a lessee or assignee, we must express our opinion that they are without any merit or substance whatever. Further, we are quite un-able to accept these submissions in the light of the Indisputable authorities cited by learned counsel for the appellant, with whose submissions we entirely agree.

We hold, also, that the reasons given by the learned Judge in his judgment to the effect that “upon the assignment of the term the assignee takes the term with the burden, that is, the ‘new charge’ because it is a lessee’s covenant and ft runs with the land”, are unsupported by any authority cited by him. Indeed, the question here is whether or not the so-called “new charge” of 5 per cent of the proceeds of the transaction in question (that is, 5 per cent of the consideration or valuation of the land, the subject-matter of these proceedings) was validly imposed as “outgoings”, or at all, by statute or under contract, or otherwise. We are firmly of the opinion that it was not, and that it is a transparent attempt on the part of the respondent to impose an illegal levy.

This appeal is accordingly allowed. The decision of the High Court in respect of the second question raised in the originating Summons is set aside, and the said question is accordingly answered in the negative. It is further ordered that the respondent to pay to the appellant the costs of this appeal assessed and fixed at N159.00.

Appeal allowed.


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