Sep 6, 2016

Redefining The Concept Of Damages For Use And Occupation Of Land And Mesne Profits - Tanimola Anjorin




Redefining The Concept Of Damages For Use And Occupation Of Land And Mesne Profits[1] -

          For starters, it should be noted that the concept of damages for use and occupation of land is a remedy available to the Landowner/Landlord in the event that a contractual tenancy ceases to exist and the tenant/occupier thereafter enjoys statutory protection under the Law[2]. By all standards, the requirement to pay compensation for use and occupation of land is only applicable to a tenant[3]


          According to the Lagos State Tenancy Law 2011, a tenant includes a sub-tenant or any person occupying any premises whether by payment of rent howsoever or by operation of law and not persons unlawfully occupying any premises under a bona fide claim to be the owner[4]. Undoubtedly, in a valid claim for damages for use and occupation, a tenancy which may be contractual or statutory[5] must exist. 

          Where a tenancy is created by operation of law, the tenant does not become a trespasser until the tenancy has become duly determined according to law[6].  This position was emphasized by the apex court in African Petroleum v Owodunni[7] as follows:
“Because a claim for ‘Mesne profits’ is based on trespass and is inappropriate in respect of lawful occupation as a tenant, it can only be maintained when the tenancy has been duly determined and the tenant becomes a trespasser…where a tenancy is created by operation of law, the status of trespasser will not arise, until the tenancy is duly determined according to law… however, the lawful use and occupation of the land and premises implies an agreement to pay damages for use and occupation of the land and premises. It is a quasi-tenancy which the law recognises…”

          This presupposes that when a person holds over having the status of a statutory tenant, he is not liable to pay mesne profits since he is not a trespasser but would be liable to pay compensation for use and occupation. This position appears to have received statutory backing. The Kaduna and Rivers landlord and tenant laws provide that, where in the absence of an express subsisting tenancy one person uses or occupies property of another person by his permission or sufferance, there shall be implied a promise by the user or occupier to make a reasonable payment for such use or occupation[8]. It goes further to provide that where an implied promise to pay for use and occupation of property arises under this edict, it shall be enforceable by action to be known as action for use and occupation[9].

          For a claimant to be entitled to compensation for use and occupation, there must have been some tenancy, express or implied, between the claimant and the defendant during the period in respect whereof the compensation is claimed and it is not enough that the claimant was really entitled to the property. For example, where the defendant occupied the property as tenant of another person from whom he obtained the possession (aside from the landlord/landowner), or as a mere wrong doer or willful trespasser, no action can be maintained. In the latter part of this paper, judicial authorities shall be reviewed to ascertain whether there is a distinction between these two concepts.
          While the concept of damages for use and occupation is well appreciated under common law and a couple of judicial authorities have tried to make a distinction, the laws on recovery of premises of most States seek to merge these two separate heads of claim without making any distinction[10]

     DISTINCTION BETWEEN DAMAGES FOR USE AND OCCUPATION OF LAND AND MESNE PROFITS
          Rent is different from damages for use and occupation of land and mesne profits. Rent is liquidated and ceases once the tenancy is determined while damages for use and occupation commence immediately after determination of the tenancy and runs until the court orders the tenant to vacate the property. Upon the obtention of a valid court order, mesne profit begins to runs against the occupant who is now adjudged a trespasser in the eye of the law.
          The basic similarity between these two heads of claim is that they both seek to compensate the Landowner/ Landlord either as damages for use and occupation under a quasi-contract in the case of a statutory tenant or as mesne profits under the law of tort in the case of a trespasser. Idigbe JSC defined the term 'statutory tenant' in Pan Asian African Co. Ltd. v. National Insurance Corporation[11] as:
“an occupier, who when his contractual tenancy expires, holds over and continues in possession by virtue of special statutory provision”.
          On the other hand, a trespasser according to the Merriam-Webster online dictionary is defined as:
“one who enters or remains on the real property of another wrongfully or without the owner's or possessor's authority or consent”.
          Stemming from the above, a statutory tenant is a lawful occupant while a trespasser is undoubtedly an unlawful occupant. Therefore, by all standards in our law, damages for use and occupation is different from mesne profits.
          Whether a tenant holds over at common law or as a statutory tenant under the relevant statute, the contractual obligation of payment of rent hitherto binding on the tenant becomes extinguished upon the expiration of the contractual term. However, the law, general or statutory, compensates the landlord for the loss of use and/or occupation and in appropriate cases where the tort of trespass is established, for ‘mesne profits’. The two heads of claim differ from the contractual rent in two material particulars. First, while damages for use and occupation is usually liquidated at the agreed rent[12] and certain, the quantum of mesne profit payable to the landlord in the event of adversely holding over by the tenant is unliquidated and may not necessarily follow from the amount initially fixed as rent. Secondly, while damages for use and occupation is operative during the subsistence of the statutory tenancy, mesne profit starts to run only after the expiration of the statutory tenancy and the tenant holds over.
LAGOS STATE AND RIVERS STATE LAWS AS A CASE STUDY
          The Lagos State Tenancy law 2011, has a different view as to how and when mesne profits can be claimed. First we shall look at Section 47 Lagos State Tenancy Law which defines mesne profit as follows:
“Mesne profit means the rents and profits which a tenant holds over during his occupation of the premises and which he is liable to pay as compensation to the person entitled to possession”.
          Section 31 of the Lagos State Tenancy Law also provides:
“Where mesne profits or a sum for the use and occupation of the premises are claimed, the claim shall show the rate at which such is claimed, and where it is proved, judgment shall be entered for the amount so proved”.
          The Lagos State Tenancy Law 2011 does not make a clear distinction between the period mesne profits and damages for use and occupation of premises may be claimed. By virtue of the use of “or” in Section 31, the law recognises that there is a distinction between these two concepts but it does not fully appreciate or elucidate on any of these distinctions.
          From the above underlined it means that mesne profit can only be claimed where it is proven and judgment is to be given for the amount proven. The operative words here are prove and judgment. What can therefore be deduced from Section 31 of the Tenancy Law 2011, is that for the Landlord to claim mesne profits same must have first been proven and judgment granted to the landlord. There needs to be a revision of the Lagos State Tenancy Law 2011 to make a clear distinction between these two heads of claim. The Law needs to expressly provide for what is to be proven i.e. how damages for use and occupation is to be measured, how mesne profits is to be calculated, the prevailing rent in that locality for similar premises, the need to provide expert evidence to confirm the prevailing rent amongst others.
          Asides from the Lagos State Tenancy Law, Landlord and Tenant Law Cap 75 Laws of Rivers State, 1999 does not have any specific legislation on mesne profits but only provides for damages for use and occupation. Section 101 of the Rivers Law[13] provides:
“(1) Subject to this Law or any other written Law in force in the State and in the absence of an express subsisting tenancy, where one person uses or occupies property of another by his permission or sufferance, there shall be implied a promise by the user or occupier to make a reasonable payment for such use or occupation.
Provided that no such promise shall be implied where the circumstances clearly negative it.
(2) Nothing in this section shall apply where a person uses or occupies a property without the knowledge of the owner or a trespasser or otherwise against the will of the owner”.[14]

          The effect of Section 101 and 102 of the Law is to the effect that a claim for mesne profits is impliedly subsumed under the concept of damages for use and occupation.

          ANY PRACTICAL JUSTIFICATION FOR THE DISTINCTION?
          In appreciating the distinction, it must be noted that damages for use and occupation is only applicable to a statutory tenant. The follow up question is: Can mesne profit be claimed against a statutory tenant? Under common law and judicial precedents, a statutory tenant cannot be liable to pay mesne profits. Professor I. O Smith SAN in his work also submits that it is a misnomer to claim mesne profits from a statutory tenant[15]. He opined that since a claim for mesne profits can only be maintained when the tenancy has been duly determined and the tenant becomes a trespasser, the concept of mesne profit is only applicable after the determination of the statutory tenancy and an order to deliver vacate possession has been obtained. Where the defendant remains in possession after the date mandated by the court and execution does not follow immediately, liability of the tenant may then lie in mesne profits for it is only on such rare occasion that his occupation can be said to be wrongful and there after become a trespass.[16]  

          A practical justification for a distinction between these two heads of claim is founded on the fact that while damages for use and occupation is classified under a quasi-contract between the landlord and the tenant being a tenant protected by statute, a claim for mesne profits can only be founded under the law of tort. Another practical justification for the distinction is that the measurement of liability under these two heads of claim differs. The liability of a statutory tenant is usually measured at the rate of the rent fixed under the expired or terminated contractual tenancy while a tenant adversely holding over at common law is a trespasser liable to pay mesne profits which is usually unliquidated and need not be the equivalent of the amount of rent fixed under the expired or terminated contractual tenancy but rent obtainable in similar premises within the same locality. 

ATTITUDE OF THE NIGERIAN COURTS
          The judicial authorities on the point are conflicting. This is due to the fact that different judges have given their own independent judgements and opinion on the subject matter of mesne profits. It is worrisome that in recent times, lawyers and our courts (particularly the magistrates’ court) have failed to appreciate the distinction between these two heads of claim which is why a claim for ‘mesne profit for use and occupation’ at the agreed rent is usually prayed for and the same granted by some courts[17]. We shall however analyse some of these different views vis-à-vis the relevant statutory provisions.

          The earliest reported decision on in this regard appears to be Yekinni v. Etti[18], where De Lantang CJ observed:

 “A tenant who holds over under the Rent Restriction Act is not a trespasser and does not become one until he disobeys an order of the court ordering him to give up possession. Strictly speaking therefore rent should be claimed up to the date of the order of possession and mesne profits thereafter. In practice it is immaterial whether the claim is labelled rent or mesne profits as there is usually no monetary difference between rent and mesne profits”.
          The decision above appeared to have been based on the Rent Restriction Act which was the applicable law at that time. However, Section 18(2) of the Rent Control Law 1976 (Lagos) suggests that the two items of claim may be different. It provides as follows:
“If mesne profits are claimed and the writ or plaint shows that the rate at which such mesne profits are claimed is the same as the standard rent of the premises, judgment shall be entered for the ascertained amount as liquidated claim and if the mesne profits are claimed at the rate of the said rent up to the time of obtaining possession the judgment shall be extended to include such claim and shall be a second alternative in Form J”.

          Further, the learned Chief Judge stated that mesne profits are recoverable, not from the determination of the tenancy, but from the date the tenant is ordered to vacate possession by a competent court. But the provisions of the rent control statutes are to the contrary. For example, Section 13 of the Rent Control and Recovery of Premises Act, Abuja provides that the amount claimed under any writ or plaint for arrears of rent and mesne profit shall be treated as one claim[19]

          The above law clearly states that mesne profits, may and can be claimed from the determination of the tenancy or any day appointed for hearing, or any day named in the plaint. In other words, it must not be from the date of judgement.
          In Adebajo Vs Tennessee Nig Ltd[20] a tenant who was granted a one-year term with expiry in January 1966 failed to surrender the key until August 1966. The Supreme Court held that the landlord was entitled to compensation for the tenant’s use and occupation of the premises from February to August 1966. Elias CJN (as he then was) observed:

“where a tenant holds over after the expiration of lease he is liable to the landlord an amount adjudged by the court to be due for the use and occupation of the premises concerned’.

          In Oshinfekun Vs Lana[21] a monthly tenant held over after a valid determination of his tenancy. In an action to recover possession, the landlord joined a claim for $108.65.8d as compensation for the use and occupation of the premises during the period of 13 months he held over. The landlord’s action was dismissed for claiming the wrong relief. This is quite different from the decision handed down by Odesanya J in Dafe Vs Macaulay[22] where the landlord claimed a sum as compensation for use and occupation instead of arrears of rent. Although the learned Judge gave the landlord’s counsel a swipe, he remarked;
‘The description of rent as money due for use and occupation did not occasion and could not in any case have occasioned any miscarriage of justice’
          Notwithstanding the argument that the tediously technical aspect of real property law should not be permitted to adversely affect a landowner in his just claim, the law still remains that the court cannot grant a relief which has not been asked by the Claimant[23].
          The Supreme Court in African Petroleum Ltd v. Owodunni[24] while delivering the lead judgment succinctly explained the distinction thus:
“…In order to be able to decide the second issue, it is necessary to consider the followings namely:
(i) Would the plaintiff be entitled to mesne profit or to damages for use and occupation of the premises? Or are the two expressions interchangeable?
(ii)When could the claim for mesne profit or for damages for use and occupation properly begin to run?
(iii) What is the right measure?
Now According to Wharton's Law Lexicon (14th Ed.) at p. 652: "Mesne profits" are the rents and profits which a trespasser has or might have received or made during his occupation of the premises, and which therefore he must pay over to the true owner as compensation for the tort which he has committed. A claim for rent is therefore liquidated, while a claim for mesne profit is always unliquidated.
It follows therefore that a claim for mesne profit is inappropriate when the occupier is still a tenant. It can only be maintained when his tenancy has been duly determined and he becomes a trespasser. In this respect, a statutory tenant such as the defendant, though merely a protected tenant cannot properly be adjudged to be liable for mesne profit unless and until his tenancy has been duly determined according to law. On the other hand, where a tenant who entered upon a premises lawfully occupies the land or premises of another without an agreement with or consent by the true owner, what he has to pay is not rent, because as there is no longer a demise, he no longer has an estate, he will not pay mesne profit because he is not a trespasser. Rather, he will be liable for damages for his use and occupation of the land or premises. The action arises out of an implied agreement to pay out of what may be called a quasi – tenancy rather than a relationship between a landlord and a tenant (see Woodfall: On Landlord and Tenant (21st Ed.) p.666. See also Rochester (Dean and Chapter v. Pierce) (1808) 1 Camp 466.
So, the defendant would be liable for damages for use and occupation. He could not be liable for mesne profits because the element of wrongful and tortuous occupation was absent. In the circumstances, for the Court of Appeal to have made an award as "mesne profits for use and occupation" was an error. But it did not lead to a miscarriage of justice”.
          The court also went further to make a fine distinction between the commencement date for calculating mesne profits and damages for use and occupation. The apex court held thus[25]:
Another area of difference between mesne profits and damages for use and occupation is the date of commencement. Mesne profits start to run from the date of service of the process for determining the tenancy (see Canas Property Co. Ltd. v. K.L. Television Services Ltd. (1970) 2 Q.B. 433. But damages for use and occupation start to run from the date of holding over the property, the function of the court being to ascertain an amount which may constitute a reasonable satisfaction for the use and occupation of the premises held over by the tenant. The previous rent may sometimes be a guide, but may not be conclusive.”. 
          From the plethora of judicial authorities cited above, there are clear distinctions between these two concepts and pitiably, they are yet to be appreciated by subsequent legislations and lower courts despite the established doctrine of stare decisis[26]

RECOMMENDATIONS
          It is noteworthy that these two heads of claim need to be redefined from the current statutory and judicial interpretation which fail to actually create a laudable distinction. The laws should be revised to actually make damages for use and occupation apply when the tenant holds over at the expiration of the contractual and statutory tenancy. The reason for this suggestion is that damages for use and occupation should be calculated against a trespasser at a higher rate putting into consideration the going rate in similar apartments and also to place a penalty in the form of a high interest rate from the period of holding over till delivery of judgment.

Alternatively, parties to any agreement relating to land or property may insert provisions in the agreement which will expressly state the consequences of holding over to include the mode of computation of damages for use and occupation. This is a more reliable and effective way to prevent tenants or occupiers from holding over after the expiration of their tenancy and not having to pay adequate compensation to the landlord/landowner after several years of litigation.


By: Tanimola Anjorin


[1] Tanimola Anjorin holds a bachelor’s degree in History and International Studies from Lagos State University. He thereafter obtained a Bachelor of Laws degree from Lagos State University and was called to the Nigerian Bar. He is also an Associate of the Chartered Institute of Arbitrators (UK) Nigeria Branch.
[2] The applicable law is the Recovery of Premises Law of the various states. For the purpose of this paper, I shall consider the laws of Lagos, Rivers States and Abuja.
[3] The requirement for tenancy under the law is lawful occupation. See Ibiyemi Odunje v Nigerian Airways Ltd (1987) NWLR Pt. 55 P.126
[4] There are corresponding provisions in the interpretation sections of the Recovery of Premises Law of other states.
[5] A tenancy is said to be contractual where the consent of the landlord is granted and statutory where the tenancy is necessitated by operation of law.
[6] See Omotosho v Oloriegbe (1988) 4 NWLR Pt. 87; 225
[7] (1991) 8 NWLR Pt 210 P. 418 Para B
[8] . Section 101 (1) of Landlord and Tenant Law Cap 75 Laws of Rivers State, 1988 and section105(1) of Recovery of Premises Law, Kaduna State
[9] Section 105 of the Landlord and Tenant Law Cap 75 Laws of Rivers State, 1999 and section 109 of the Kaduna State Law
[10] See section 101 and 102 of the Landlord and Tenant Law Cap 75 Laws of Rivers State, 1999; Section 31 of the Lagos State Tenancy Law 2011
[11] (1982) 9 SC at p.13
[12] The Supreme Court per Ariwoola JSC in Ayinde v Lawal &Ors (1994) 7 NWLR Pt. 356 p. 263 held that: “ …It is the duty of the court to ascertain an amount which may constitute a reasonable satisfaction for the use and occupation of the premises held over by the tenant. It has been held that while previous rent may not be conclusive, it may sometimes be a guide…”
[13] Landlord and Tenant Law Cap 75 Laws of Rivers State, 1999
[14] Section 102 of the Landlord and Tenant Law Cap 75 Laws of Rivers State, 1999 provides for who is liable for payment for use and occupation
[15] Smith, I. O The Status and Liability of a Tenant Holding Over Under the Rent Control & Recovery of Premises Law in Nigeria (1992)3 Nos (9-10)
[16] A trespasser is a person in wrongful occupation of land or premises and does not acquire lawful occupation by his act of trespass.
[17] Anyanwu v Sangosanya: Suit No. MCY/2491/15 (Unreported) where the claim was made for possession and mesne profits at the agreed rent from the determination of the tenancy until possession is given up.
[18] (1964) ANLR 482, (1964) ALL NLR 69
[19] This is a faulty legislation which needs to be revised so as to appreciate the clear distinction between these two separate claims. See also Section 20 of the then Rent Control Law of Lagos 1976 which contains similar provisions.
[20] (1974) 1 ALLNLR 24
[21] (1958) WNLR 122
[22] (1975) CCHCJ 381
[23] Ativie v Kabelmetal Nig Ltd. (2008) 10 NWLR Pt. 1095 P. 309
[24] (1991) 8 NWLR (Pt.210)391 per Nnemeka-Agu JSC
[25] African Petroleum v Owodunni (Supra)
[26] Stare decisis et non queta movere - stand by what has been decided and not to disturb and unsettle things which are established. See Adesokan v Adetunji (1994) 5 NWLR Pt. 345; Okeke v Okoli (2000) 7 NWLR Pt. 642 p. 654 Para D-F
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