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Published online by Cambridge University Press: 28 July 2009
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.
1 See Omotunde, J., “Economic analysis, the legal framework and land tenure systems”, (1972) 15 J. Law & Econ. 259 at 261.Google Scholar
2 Omotola, J. A., Essays on the Land Use Act, 1978, Lagos, 1984, at 8.Google Scholar
3 Ogumbabi v. Abowaba (1951) 13 W.A.C.A. 222, per Verity, J.Google Scholar
4 See Park, A., “A dual system of land tenure: the experience of Southern Nigeria”, (1965) 9 J. African Law 1;CrossRefGoogle ScholarJames, R. W., Nigerian Land Use Act: Policy and Principles, Ile Ife, Nigeria, 1982, at 6.Google Scholarsee also Meek, C., Land Laws and Customs in the Colonies, Frank Cass and Co. Ltd., 1968.Google Scholar
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
8 S. 5. The meaning and nature of a right of occupancy is discussed below. Note that the power to make a grant is also entrusted to the Local Government pursuant to s. 6.
9 S.22.
10 S. 28. What constitutes public purposes are enumerated under this section.
11 Savannah Bank (Nigeria) Limited v. Ajilo (1989) 1 N.W.L.R. 305.Google Scholar
12 S. 1. See also Olawoye, C., “Statutory shaping of land and land administration up to the Land Use Act”, in Omotola, J. (ed.), The Land Use Act: Report of a National Workshop, Lagos, 1982, at 18.Google Scholar
13 For a comprehensive definition of “trust”, see Keeton, L. A. and Sheridan, G. W., The Law Trusts, Sussex, 1983, at 2.Google Scholar
14 This, according to Lord Selborne L.C., is trust in the lower sense. See Kinloch v. Secretory of State for India (1882) 7 App. Cas. 619 at 625–626.Google Scholar
15 Maitland, F. W., Equity, Cambridge, 1936, 23.Google Scholar
16 See Guerin v. R (1984) 13 DLR (4th) 321.Google Scholar This conclusion has also been reached in a line American cases. See Chambers, R. P., “Judicial enforcement of the federal trust responsibility to the Indians”, (1975) 27 Stanford L.R. 1213;CrossRefGoogle ScholarJohnson, D. M., “A theory of Crown trust towards Aboriginal peoples”, (1986) 18 Ottawa L.R. 307;Google Scholar Comment, “You can't trust the Crown: the fiduciary obligation of die Crown to the Indians: Guerin v. The Queen”, (1984) 49 Sask. L.R. 367;Google ScholarHughes, , “Can the be sued for its breach? The sad saga of United States v. Mitchell, (1981) 26 S.D.L.Reu. 447;Google ScholarNewten, , “Enforcing the federal Indian trust relationship after Mitchell”, (1982) 31 Cath. U.L.Rev. 635;Google ScholarOrme, , “Tucker Act jurisdiction over breach of trust claims”, (1979) B.R.U.L.Rev. 855.Google Scholar
17 Ibid.
18 In United States v. Kagama 118 U.S. 375 (1886), Justice Miller observed, “These Indian are the wards of the Nation. They are communities dependent on the United States … From their very weakness and their helplessness so largely due to the course of dealing of the Federal Government with them and the treaties in which it has been promised, there arises the duty of protection and the power” [emphasis supplied]. See also Guerin v. R [1984] 6 W.W.R. 481 at 494 per Dickson J.Google Scholar
19 Justice, Dickson in Guerin v. R (1984) 13 DLR (4th) at 334–335Google Scholar, found the relationship between the Indian and Crown to have established a fiduciary relationship. Contrast this with the holding of Madame Justice Wilson, who found express trust of specific land for specific purpose (Ibid. at 360–361). On the other hand, Mr Justice Estey analysed the relationship in terms of statutory agency (Ibid. at 346).
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
21 Underhill, and Hayton, , Law Relating to Trusts and Trustees, London, 1987, at 5;Google ScholarWaters, D. W., Law of Trusts in Canada, Toronto, 1984, 26.Google Scholar
22 Kinloch v. Secretary of State for India (1882) 7 App. Cas. 619;Google ScholarTito v. Waddell [1977] 3 All E.R. 129 at 216–228. Cf.Google ScholarGuerin v. R (1984) 13 DLR (4th) 321.Google Scholar
23 Waters, Law of Trusts in Canada, above, n. 21 at 26.
24 See ss. 34 and 36 dealing with the transitional provisions. The Governor can only come in when his consent is required for alienation of the affected lands. See National Bank (Nigeria) Ltd. Ajilo (1989) 1 N.W.L.R. 305.Google Scholar
25 See ss. 5, 22, 26, 28 and 29 dealing with the powers of the Governor to grant a right of occupancy, give consent to alienation of a right of occupancy, revoke a right of occupancy and in some cases compensate for revocation of a right of occupancy.
26 Omotola states that to refer to the Governor as a trustee is another suggestio falsi. See J. Omotola, Essays on the Land Use Act, 1978, above, n. 2 at 16.
27 Adigun, O., “The equity of the Land Use Act”, in Omotola, J. (ed.), The Land Use Act: Report of a National Workshop, Lagos, 1982, 65–66.Google Scholar
28 Ibid. at 66.
29 See Nwabueze, B. O., Nigerian Land Law, Enugu, Nigeria and New York, 1972, at 32;Google ScholarWoodman, G. R., “Allodial title to land”, (1968) 5 Univ. Ghana L.J. 89.Google Scholar
30 Sax, J. L., “The public trust doctrine in natural resources law: effective judicial intervention”, (1970) 68 Mich. L.R. 47.Google Scholar
31 Wilkins, J. and Wascom, M., “The public trust doctrine in Louisiana”, (1992) 52 La. L. Rev. 861, 862.Google Scholar The public trust doctrine seeks to provide protection of public ownership interests in certain uses of navigable waters and underlying lands, including navigation, commerce, fisheries, recreation, and environmental quality. See Johnson, R. W. et al. , “The public trust doctrine and coastal zone management in Washington State”, (1992) 67 Washington L. R. 521, 524.Google Scholar
32 See Sax, above, n. 30 at 47.
33 See Wilkins and Wascom, above, n. 31 at 864, Johnson et al., above, n. 31 at 525. The reasoning here is that because the right a state holds in public trust waterbottoms is different in character from that which the state holds in land intended for sale, a state may dispose of them only in certain circumstances. See Illinois Central Railroad v. Illinois 146 U.S. 387 at 425. And when public trust are alienated, the only interest conveyed is the jus privation or private ownership interest while the public interest or jus publicum remains with the state. See Wilkins and Wascom, Ibid. at 867.
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.
36 LSDPC v. Foreign Finance Corporation (1987) 1 N.W.L.R. 413 at 480.Google Scholar
37 Ss. 5 and 6 of the Act. Historically, the definitions of statutory and customary rights of occupancy may be traced to s. 2 of the Land Tenure Law of Northern Nigeria, 1962, which defined a right of occupancy as “a title to the use and occupation of the land and includes a customary right of occupancy and statutory right of occupancy”.
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
42 Omotola, above, n. 2 at 20–21.
43 Megarry, R. and Wade, R., The Law of Real Property, London, 1984, at 798.Google Scholar
44 Ibid. at 806. R. James has observed that the dividing line between licence as a personal right and as a proprietary interest is obscure. See Mgerian Land Use Act: Policy and Principles, above, n. 4 at 88.
45 Ss. 21 and 22.
46 Ss. 24 and 25.
47 Dewar, J., “Licences and land law: an alternative view”, (1986) 49 M.L.R. 741 at 750.CrossRefGoogle Scholar We recognize the fact that some commercial licences ar e assignable. See also Moriarty, S., “Licences and land law: legal principles and public policies”, (1984) 100 L.Q.R. 376.Google Scholar
48 Martindale, J., in Chief Etim v. Chief Eke (1941) 16 N.L.R. 42 at 50.Google Scholar
49 Agheghenv. Waghoreghor (1974) 1 S.C. 1.Google Scholar
50 Onishiwo v. Fagbenro (1954) 21 N.L.R. 3.Google Scholar
51 Agheghen v. Waghoreghor, above, n. 49 at 8.
52 Contrast this view with the opinion of James, who states that the interpretation of traditional rights in West Africa as “right of occupancy” is in direct contrast to the theory of “personal right” enunciated by the Privy Council in cases arising from some jurisdictions in Eastern and Southern Africa, and Australia. The former interpretation, he opines, has contributed to the protection of indigenous interests in land in West Africa and has greater relevance to our understanding of the modern right of occupancy, which to him is a proprietary interest rather than a personal right. See Nigerian Land Use Act: Policy and Principles, above, n. 4 at 93.
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.
55 See s. 2 of the Conveyancing Act, 1881. See also Rodger v. Harrison [1893] 1 Q.B. 161 at 169.Google Scholar
56 Omotola, Essays on the Land Use Act, 1978, above, n. 2 at 42–43. See also F. O. Awogu, “The judicial view of the right of occupancy” in Adigun (ed.), The Land Use Act: Administration and Policy Implications, above, n. 7 at 151.
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.
65 Re Brown (1954) Ch. 39; Thompson v. Richardson (1872) 6. I.R. EQ 596.Google Scholar
66 Bates v. Donaldson [1896] 2 Q.B. 241;Google ScholarShanly. v Ward (1913) 29 T.L.R. 714. See generally Megarry and Wade, The Law of Real Property, above, n. 43 at 713–717; James, above, n. 4 at 124.Google Scholar
67 James, Ibid., answers this question in the affirmative.
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
84 This opinion seems to be supported by James, above, n. 4 at 131.
85 Thompson v. Salah [1972] 1 All E.R. 530.Google Scholar See especially Megarry, J., at 533. See also Farrand, J. T. (ed.), Emmet On Title, London, 1983, 18th ed. at 876.Google ScholarDoed-Pitt v. Laming (1822) 22 RR 512, Kasumu, above, n. 70 at 95. This argument may also be advanced for the Registration of Title Law of Lagos State which equally permits the creation of a charge on a property by way of legal mortgage.Google Scholar
86 Crusoe d. Bkncowe v. Bigby 95 E.R. 1030.
87 James, above, n.4 at 132–133.
88 LSDPC v. Foreign Finance Corporation (1987) 1 N.W.L.R. 413.Google Scholar
89 Solanke v. Abed (1962) 1 All N.L.R. 230.Google Scholar
90 Yowuren v. Modern Signs (Nigeria) Limited (unreported judgment ID/511/78).
91 The rule on the consequences of illegality is capable of producing harsh results, particularly as a party may be “guilty” without being morally blameworthy. In England, recent authorities therefore suggest that the defence of illegality should be approached pragmatically: Eum-Diam Ltd v. Bathurst [1990] Q.B. 1, 35.Google Scholar It was stated here that the courts should not assist the plaintiff where to do so “would be an affront to the public conscience”. However, in another English case it was observed that such vague criteria are “very difficult to apply”. See Pitts v. Hunt [1990] 3 All E.R. 344, 362.Google Scholar For the consequences of illegality, see generally Treitel, G. H., The Law of Contract, London, 1991, 377;Google ScholarCheshire, , Fifoot, and Furmston, , Law of Contract, London, 1991, at 375–379.Google Scholar
92 Savannah Bank (Nigeria) Ltd. v. Ajilo, above, n. 11.
93 Solanke v. Abed, above, n. 89, per Unsworth, J.; see also Kasumu, “The question of consent to alienation”, above, n. 70 at 97, Omotola, Essays on the Land Use Act, above, n. 2 at 30–31.
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
100 Above, n. 11 at 329 per Obaseki, J.S.C.
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
103 F. Adeoye and H. Ogunniran, “The socio-economic implication of the consent provisions of the Land Use Act”, in Adigun (ed.), The Land Use Act: Administration and Policy Implications, above, n. 7 at 83.
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.
105 See Oluyede, P., “A decade of a statutory monster: The Land Use Act”, in Ajomo, M. (ed.), New Dimensions in Nigerian Law, Lagos, 1989.Google Scholar
106 See Fekumo, J., “The land market under the Land Use Act”, (1989) 2 Gravitas Bus. L. Rev. 22;Google ScholarSmith, O., “The efficacy of agricultural charge as a form of security in Nigeria”, (1989) 2 Gravitas Bus. L Rev. 69.Google Scholar
107 Alienation of land may enhance efficiency of its use, but group-imposed restraints on alienation can be justiiied when they bar a transfer that could harm others more than it benefits the parties to the transaction. See Ellickson, R., “Property in land”, (1993) 102 Yale LJ. 1315 at 1376.CrossRefGoogle Scholar See also Radin, M., “Market inalienability”, (1987) 100 Harv. L. Rev. 1849;CrossRefGoogle ScholarRose-Ackerman, S., “Inalienability and the theory of property rights”, (1985) 85 Colum. L. Rev. 931.CrossRefGoogle Scholar Family and communal prohibition against alienation of land in most African customary laws is intended, among other reasons, to protect the interests of the future generation. See Meek, C., Land and Custom in the Colonies, London, 1968, at 113;Google ScholarNwabueze, B., Nigeria Land Law, Enugu, Nigeria and New York, 1972, at 53;Google ScholarElias, T., Nigerian Land Law and Custom, London, 1962, at 172;Google ScholarK., Bentsi-Enchill, Ghana Land Law, London, 1964, at 46 n. 5 and accompanying text.Google Scholar