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Applicability of the Consent Requirement of the Nigerian Land Use Act to the Asset Management Corporation of Nigeria Act

Published online by Cambridge University Press:  04 March 2016

Samuel I Nwatu  and
Edith O Nwosu
Samuel I Nwatu*
Affiliation:
University ofNigeria
Edith O Nwosu*
Affiliation:
University ofNigeria
*
samuel.nwatu@unn.edu.ng
edith.nwosu@unn.edu.ng
Rights & Permissions [Opens in a new window]

Abstract

The Nigerian Land Use Act (LUA), which governs contemporary Nigerian land law, provides that any disposition of land must have the prior consent of the appropriate authority under the LUA. However, the Assets Management Corporation of Nigeria Act, which regulates the disposition of eligible bank assets, contains provisions that imply that the requisite consent under the LUA is not required for the disposition of an eligible bank asset consisting of land. This article interrogates the propriety of the provisions of the Assets Management Corporation of Nigeria Act in this regard and argues that, in view of the fact that the LUA is a statute with constitutional flavour by virtue of its entrenchment in the Nigerian Constitution, the LUA's provisions supersede the provisions of any conflicting law.

Keywords

Consentcorporationgovernoracquisitiondispositionland

Information

Type
Research Article
Information
Journal of African Law , Volume 60 , Issue 2 , June 2016 , pp. 173 - 189
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Copyright
Copyright © SOAS, University of London 2016 

INTRODUCTION

The Land Use Act, 1978 (LUA) governs contemporary Nigerian land law. The LUA abolished private ownership of land and introduced a right of occupancy system, by which it created a right of occupancy as the highest form of interest in land. The LUA invests the governor of a stateFootnote 1 with near plenary powers to administer land in the state “for the use and common benefit of all Nigerians”.Footnote 2 Many contentions trail the provisions of the LUA with regard to their nature, content and scope.Footnote 3

One of the invidious provisions of the LUA relates to the sections which circumscribe the almost unfettered right of Nigerians to alienate landFootnote 4 by stipulating that, before a holder of a right of occupancy can alienate that right by way of assignment, mortgage, transfer of possession or sublease, the consent of the governor or the appropriate local government authority must be obtained. In other words, for the legal estate in property to pass to the purchaser, the vendor must first obtain the consent to the transaction of the governor or local government authority. The consent requirement has made alienation of property very cumbersome because of attendant bureaucratic red tape and lethargy. Besides, in the absence of any statutory safeguards or guidelines for the application of the consent provisions, the LUA has inadvertently created an open sesame for capriciousness and possible political vendetta for government officials, because the requisite consent can be delayed indefinitely or refused for good reason or no reason at all.

Apparently, in a bid to circumvent the problematic consent provisions of the LUA, the draftsman of the Assets Management Corporation of Nigeria Act, 2010Footnote 5 (AMCON Act) inserted certain provisions that are antithetical to the consent provisions in the LUA. The AMCON Act established the Assets Management Corporation of Nigeria (the Corporation) with the purpose of efficiently resolving the problems associated with non-performing loan assets of banks in Nigeria, by inter alia assisting eligible financial institutions (EFIs) under the act to manage and dispose of eligible bank assets (EBAs) held by the EFIs or acquired by the Corporation in accordance with the provisions of the act.Footnote 6 The AMCON Act conveys the impression that the Corporation does not need consent to acquire or dispose of EBAs; specifically, sections 34 and 39 stipulate that, upon acquisition of an EBA by the Corporation from an EFI, that asset can be disposed of by way of transfer, assignment or sale without the consent required under any enactment. In short, these provisions of the AMCON Act imply that acquisitions and alienations of real property under the act by the Corporation constitute an exception to the LUA consent provisions.

This article synoptically examines the framework of the LUA consent provisions and the extent of compliance under the AMCON Act as it pertains to the acquisition or disposition of an EBA constituting land. It contends that, because of the constitutional flavour of the LUA, any detraction from its consent provisions by the AMCON Act renders the latter unconstitutional, null and void to the extent of the inconsistency.

OUTLINE OF THE LUA CONSENT PROVISIONS

The LUA introduced the right of occupancy system without defining it. However, by its general character under the LUA, a right of occupancy simply means the right to use and occupy land. There are two types of right of occupancy: statutory and customary. A statutory right of occupancy is granted by a state governor, while a customary right of occupancy is granted by the appropriate local government authority.Footnote 7 Whether a piece of land falls within the jurisdictional competence of the governor on the one hand, or the appropriate local government authority,Footnote 8 on the other, depends on whether the land is situated in an urban or non-urban area, respectively. However, under the LUA the governor has overriding superintending powers because he can designate a hitherto non-urban area as an urban area for the purpose of gaining absolute management and control over the area.Footnote 9 The LUA recognized and saved the rights of persons who owned land in urban and non-urban areas before its commencement, by providing that such persons should continue to hold such land “as if” they had been granted a statutory or customary right of occupancy.Footnote 10 In Nigerian land law parlance, direct grants of rights of occupancy from the governor or the appropriate local government authority are labelled “express or actual grants”, while ownership rights which predate the LUA are referred to as “deemed grants”.

Sections 21, 22 and 23 of the LUAFootnote 11 constitute the pivot of the LUA's consent requirement. Section 21 makes it unlawful for a customary right of occupancy to be alienated without the consent of the appropriate local government authority, except in the case of sale of property pursuant to a court order, in which case the governor's consent is to be sought. Section 22 also makes unlawful any form of alienation of a statutory right of occupancy without the consent of the governor “first had and obtained”. Section 23 provides for the consent of the governor with regard to the sub-underlease of a lease. However, there are only two recognized exceptions to the consent provisions.Footnote 12 The first is for the creation of a legal mortgage over a statutory right of occupancy where the governor's consent to the prior equitable mortgage had previously been obtained; the second relates to the reconveyance or release by the mortgagee to the holder of a right of occupancy whose right of occupancy had earlier been mortgaged with the consent of the governor.

In plain language, the first exception stipulates that, where the governor's consent had been obtained to the creation of an equitable mortgage, consent need not be sought for the creation of the legal mortgage in respect of the same property. The second exception means that, where the governor's consent was obtained to a mortgage, consent is not required for the mortgagee to release or reconvey the right of occupancy to the mortgagor. Apart from these two emphatic exceptions, every acquisition or disposition of a right of occupancy is subject to the suzerainty of the governor's powers under the LUA. What seems unclear under the LUA is whether consent is required for the creation of an equitable mortgage created by the deposit of title deeds accompanied by a memorandum of deposit.Footnote 13 However, section 22(1)(a) of the LUA, which dispenses with consent to a legal mortgage where consent has been obtained to the creation of a prior equitable mortgage, and section 51, which defines mortgage to include “a second and subsequent mortgage and an equitable mortgage”, make any contention about equitable mortgages being exempted from the consent provisions of the LUA at best academic.Footnote 14

It is now settled law that the requirement for consent applies to both express grants of rights of occupancy made by the local government or the governor, on the one hand, and deemed grants of rights of occupancy.Footnote 15 Also, it was for some time thought settled on earlier judicial authorities that the execution of an instrument of transfer without the requisite consent merely renders the transaction inchoate pending consent;Footnote 16 however, the Nigerian Supreme Court seems to have disturbed this position when it held in Calabar Central Cooperative & Credit Society Ltd v Ekpo (Calabar Central Cooperative)Footnote 17 that the execution of such an instrument of transfer renders the transaction invalid. However, the authors submit that this interpretation of the consent provisions neither captures normal Nigerian conveyancing praxis, which obscures the distinction between the contract of sale stage and the completion stage, nor accords with the spirit of the LUA. The requirement that the governor's consent is to be “first had and obtained” for the validity of a transaction does not mean that parties should obtain consent to their intention to negotiate before executing the instrument embodying their transaction. By the tenor of section 22(1) and (2) of the LUA, when the governor is requested to consent to an assignment, mortgage or sub-lease, it is important and necessary that there should be an instrument on which consent can be signified. To argue otherwise would make the consent provisions unworkable and amount to shutting one's eyes to the facts of life.Footnote 18 Interestingly, Calabar Central Cooperative seems to be of doubtful authority, because the Supreme Court failed to discuss, adumbrate or overrule earlier authorities on the issue. This uncertainty introduced in the law is at best unfortunate. It is hoped that the Supreme Court will at the earliest opportunity revisit and restate the correct position of the law.

It is noteworthy that the discretion vested in the governor or the local government authority is absolute. Thus, when consent is withheld, refused or delayed, the holder of a right of occupancy cannot do anything. The holder of the right of occupancy is not entitled to an explanation as to why consent has been refused or delayed, let alone challenge the exercise of the discretion in court.Footnote 19 However, there is an emerging perspective that, where there has been a delay or refusal to give consent, the right holder may be entitled to the administrative law remedy of mandamus to compel the governor to give an explanation.Footnote 20

Again, it is crucial to note that failure to obtain the requisite consent could have telling repercussions. Such alienation without consent may be null and voidFootnote 21 or be a ground for the revocation of a right of occupancy.Footnote 22 Consequently, where a right of occupancy is revoked on this ground, the holder of the right loses his right to compensation. This is because revocation for alienating without consent is a penal act, not recognized as one of the situations deserving of compensation under the act.

ACQUISITION OF ELIGIBLE BANK ASSETS UNDER THE AMCON ACT

The near collapse of the Nigerian financial system which followed the global financial crisis belied the praise and ululation that greeted the successful consolidation in the banking sector between 2004 and 2005, leading to the emergence in Nigeria of 25 perceived strong and large banks.Footnote 23 However, the Nigerian financial crisis evinced the asymmetry between size and prudent management. The 25 banks that emerged through rigorous mergers and acquisitions were, in many cases, each an amalgam of weak and poorly managed small banks with a frightening portfolio of non-performing loans. Of course, by 2008 some of the consolidated banks began to buckle under the weight of non-performing loans that they had inherited without thinking through or negligently glossing over the possible implications of such loans. If the major players had been more circumspect, adequate safety measures could have been put in place to forestall the cataclysm that ensued or the banks that were beyond redemption would have been given a decent burial rather than allowed a second bite at the cherry.

A special audit conducted by the Central Bank of Nigeria (CBN) into the activities of the existing financial institutions in early 2009 revealed deep-seated systemic failure that, according to Lamido Sanusi, the immediate past governor of the CBN, was engendered by “sudden capital inflows and macroeconomic stability, poor corporate governance and character failure, lack of investor and consumer sophistication, inadequate disclosure and lack of transparency, critical gaps in regulatory framework and regulations, uneven supervision and enforcement, weaknesses with CBN [and] weaknesses in the business environment”.Footnote 24 Consequently, nine of the consolidated banksFootnote 25 attracted the hammer of the CBN and were acquired by the Corporation, against the less admirable alternative of liquidation.

In order to salvage the Nigerian financial system, the CBN undertook various rapid response measures, including proposing the Corporation.Footnote 26 The CBN was emboldened to adopt this option following the successes recorded by the creation of a similar financial resolution vehicle in Malaysia during the Asian financial crisis, to cushion and stabilize the banking system through the purchase of non-performing loans from Malaysian banks.Footnote 27 In concept, the Corporation is intended to acquire the non-performing loans or toxic assets of these banks so as to provide them with a clean balance sheet and buoy them for mainstream banking.

To achieve its redeeming mission, the AMCON Act articulates the Corporation's objectives to assist EFIs to: dispose efficiently of EBAs; efficiently manage and dispose of EBAs acquired by it; and obtain the best achievable financial returns on EBAs it acquires, having regard to the need to protect or enhance the long term economic value of those assets, the cost of capital and other costs, any directions or guidelines issued by the CBN, and any other factor which it considers relevant to the achievement of its objects.Footnote 28 Furthermore, the AMCON Act outlines the Corporation's functions to be to:

  • “(a) acquire eligible bank assets from eligible financial institutions in accordance with the provisions of [the] Act;

  • (b) purchase or otherwise invest in eligible equities on such terms and conditions as the Corporation, with the approval of the Board of the Central Bank of Nigeria, may deem fit;

  • (c) hold, manage, realize and dispose of eligible bank assets (including the collection of interest, principal and capital due and the taking over of collateral securing such assets) in accordance with the provisions of [the] Act;

  • (d) pay coupons on, and redeem at maturity, bonds and debt securities issued by the Corporation as consideration for the acquisition of eligible bank assets in accordance with the provisions of [the] Act;

  • (e) perform such other functions, directly related to the management or the realization of eligible bank assets that the Corporation has acquired, including managing and disposing [sic] assets acquired with the proceeds derived by the Corporation from managing or disposing of eligible bank assets acquired by it;

  • (f) take all steps necessary or expedient to protect, enhance or realize the value of the eligible bank assets that the Corporation has acquired, including:

    1. (i) the disposal of eligible bank assets or portfolios or portfolios of eligible bank assets in the market at the best achievable price,

    2. (ii) the securitization or refinancing of portfolios of eligible bank assets; and

    3. (iii) holding, realizing and disposing of collateral securing eligible bank assets; and

  • (g) perform such other activities and carry out such other functions which in the opinion of the Board are necessary, incidental or conducive to the attainment of the objects of the Corporation.”Footnote 29

Generally, the assets that may be used as collateral for loan facilities from banks include real property, bonds, shares and other forms of security. However, the history of securitization of bank loans in Nigeria reveals that real property constitutes the core of assets used as collateral for bank loans. By the tenor of the AMCON Act, it is the CBN that, through guidelines issued by it, designates a class of assets as EBAs.Footnote 30 When the CBN designates EBAs, the Corporation may: acquire the EBAs voluntarily;Footnote 31 mandatorily accept an offer to purchase the EBAs from the EFI if the EBAs held by the EFI are above the threshold prescribed by the CBN;Footnote 32 or compulsorily acquire the EBAs if it considers it necessary or desirable to do so, or at the behest of the Nigeria Deposit Insurance Corporation.Footnote 33 Instructively, the Corporation enters into a purchase agreement with the EFI from which the EBA was purchased, under which the EFI indemnifies the Corporation for any loss suffered should the collateral turn out to be invalid or unenforceable.Footnote 34

STATUS OF THE LUA IN RELATION TO THE AMCON ACT

In the Nigerian legal system, the status of the LUA in relation to the 1999 Constitution of the Federal Republic of Nigeria (as amended) (1999 Constitution) and other acts of the Nigerian National Assembly is a moot point. This mootness stems from the entrenchment of the LUA in the 1999 Constitution,Footnote 35 section 315(5) of which provides:

“Nothing in this Constitution shall invalidate the following enactments, that is to say –

  1. (a) the National Youth Service Corps Decree 1993;

  2. (b) the Public Complaints Commission Act;

  3. (c) the National Security Agencies Act;

  4. (d) the Land Use Act;

and the provisions of those enactments shall continue to apply and have full effect in accordance with their tenor and to the like extent as any other provisions forming part of this Constitution and shall not be altered or repealed except in accordance with the provisions of section 9(2) of this Constitution.”Footnote 36

The effect of this provision is to make the LUA an integral part of the constitution, thereby subjecting its provisions to the rigorous amendment procedures set out in section 9(2).Footnote 37 Section 47(1) of the LUAFootnote 38 contains an, understandably curious, provision that purports to place the LUA above the constitution. The LUA was enacted in 1978 by a military regime, which by its very nature is a constitutional aberration and would always claim legislative superiority over a pre-existing constitutional order. So, if the LUA is an integral part of the constitution, the exaggerated claim of section 47(1) of the LUA would be rendered unconstitutional in a constitutional democracy such as that of contemporary Nigeria and in the face of section 1(3) of the constitution, which proclaims the supremacy of the constitution. Although the issue of supremacy between the LUA and the constitution is outside the scope of this article, it must be observed that the wisdom in interpreting the conflicting provisions of section 47(1) of the LUA and sections 315(5), 1(3) and 9(2) of the constitution lies in having recourse to the legislative history of the LUA.Footnote 39 The question should not be to determine the issue of supremacy, but to discover the underlying reasons for the entrenchment of the LUA in the constitution, which was informed by the desire to save a revolutionary but embattled piece of legislation.Footnote 40

Notwithstanding the implication of the clear provisions of section 315(5) of the constitution, the Nigerian Supreme Court decided in Nkwocha v Governor of Anambra State (Nkwocha)Footnote 41 that the LUA is not an integral part of the constitution. However, the sole issue for determination by the Supreme Court in Nkwocha was whether the civilian governor of a state can exercise the powers of a state's military governor under the LUA.Footnote 42 In other words, it was not in issue whether or not the LUA is an integral part of the constitution. Therefore, the pronouncement of the Nigerian Supreme Court on the matter is obiter. Interestingly, the dictum of Kayode Eso JSC in Nkwocha has constituted the intellectual peg on which Nigerian courtsFootnote 43 and scholarsFootnote 44 have hung their submissions that the LUA is not an integral part of the constitution. According to him:

“Now, the position is, in view of all these provisions of section 274, that the Land Use Act is not an integral part of the Constitution. It is an ordinary statute which became extraordinary by virtue of its entrenchment [section 274(5)] in the Constitution, for if the Act had been part of the Constitution it would not have been necessary to insert in sub-section (5) of section 274 the words ‘Nothing in this Constitution shall invalidate’ as the draftsman of the Constitution cannot make the Constitution to invalidate part of itself, nor would it be necessary to have in sub-section (6) of section 274 that the Act shall continue to have effect as a ‘Federal enactment’ that is, a law made by the National Assembly, the Constitution itself not being a ‘Federal enactment’.”Footnote 45

On the contrary, two perceptive scholars have opined, rightly in the authors’ view, that, if the italicized words in section 315(5)(d) of the 1999 Constitution reproduced above, which are exactly the same as the words used in section 274(5)(d) of Nigeria's 1979 Constitution (1979 Constitution), are not adequate to make the LUA part and parcel of the constitution, then it is difficult to imagine words which could have done it better.Footnote 46 They argue that reference to 274(6) of the 1979 Constitution, to the effect that the LUA is to continue to have effect as a federal enactment, is only a statement of the historical fact that the LUA originated as a federal statute and does not detract from the point that the LUA can, and has been, incorporated into the constitution.Footnote 47

However, granted, for the sake of argument, that the LUA is not an integral part of the constitution as Kayode Eso JSC surmised, the unassailable fact is that the LUA sits on a higher pedestal than the AMCON Act in the Nigerian legal system and, to the extent that its provisions cannot be amended or altered except in accordance with the procedures set out in section 9(2) of the 1999 Constitution, the LUA has constitutional flavour and supersedes the provisions of any other law that conflicts with it.Footnote 48 Instructively, even Professor Nwabueze, who argued with much gravitas that the LUA is not an integral part of the constitution,Footnote 49 concedes that the mandatory constitutional directive in section 274(5) of the 1979 Constitution that the LUA “shall continue to apply and have full effect … to the like extent as any other provisions forming part of this Constitution” means that, in relation to other laws, “the Land Use Act is to have effect and operate with the same overriding supremacy as the Constitution. The provision is intended to protect the substantive provisions of the Act against implied alteration or repeal by subsequent legislation which is not enacted in accordance with the prescribed procedure”.Footnote 50

This is the inescapable implication of the entrenchment of the LUA in the constitution; otherwise, any other act of the National Assembly, such as the AMCON Act, could be used indirectly to amend the LUA, thereby rendering its provisions otiose. It follows that any provision of the AMCON Act that seeks to exempt the acquisition or disposition of EBAs should be struck down for non-compliance with the LUA.

EFFECT OF THE CONSENT PROVISIONS OF THE LUA ON THE ACQUISITION AND DISPOSITION OF EBAs

In view of the wide scope and content of the objects and functions of the Corporation, the AMCON Act invests the Corporation with exorbitant powers to acquire and dispose of EBAs. Section 6(3) of the act states unequivocally that, in the performance of its functions, of which the acquisition and disposition of EBAs are of course paramount, the Corporation may act “without the consent or approval of any other person or authority”. As if to put the matter beyond doubt that a disposition of an EBA under the AMCON Act does not require any form of consent whether stipulated in any contract, law or rule of law, section 6(3) of the AMCON Act is reinforced by section 39 which stipulates that: “[t]he Corporation may transfer, assign, sell or otherwise dispose of any acquired eligible bank asset to any person notwithstanding: (a) a contractual requirement or any requirement under any enactment for the consent of, notice to or document from, any person to the disposal; or (b) a provision of any enactment prohibiting or restricting the disposal.”

Under the LUA consent provisions, the Corporation's acquisition or disposition of an EBA must be done with the prior consent of the relevant authority. Although it may be contended that the LUA consent requirements relate to contractual alienations or dispositions of a right of occupancy over land and that an acquisition by the Corporation of an EBA amounts to a statutory acquisition and so is not within the contemplation of the LUA, the authors submit that such a proposition is dangerous. If exemption is claimed for an acquisition made by the Corporation on this ground, then a disposition made by it which is also statutory deserves no less a treatment. The powers vested in the Corporation to acquire and dispose of an EBA are statutory in nature and involve a transfer of interest in property. After all, the LUA prohibits the alienation of a right of occupancy by “assignment, mortgage, transfer of possession, sublease or otherwise howsoever”.Footnote 51 It follows that any scheme by which a right of occupancy is being transferred requires consent as stipulated by the LUA.

Gratifyingly, one does not need to belabour the argument. The AMCON Act provides that, within three months from the designation of any assets as EBAs by the CBN, the Corporation shall purchase, on a voluntary basis, such assets from any EFIs desirous of disposing of them at a value and price to be determined in accordance with the provisions of section 28 of the act, subject to any extension of the period, not exceeding three years, as the CBN may grant.Footnote 52 When the Corporation acquires the EBA, the asset vests in the Corporation and the Corporation shall exercise all the rights and powers, and become subject to all of the obligations, of the EFI from which the EBA was acquired.Footnote 53 Upon the acquisition of the EBA, all the rights and obligations between the relevant debtor and any guarantor, surety or receiver, liquidator, examiner or any other person concerned and the EFI shall cease.Footnote 54 Perhaps in anticipation of the high legal hurdles to be jumped, sub-section 34(2) of the AMCON Act provides:

“Subject to the provisions of the Land Use Act and section 36 of this Act, the vesting of an eligible bank in the Corporation and the assignment of every relevant contract relating to an eligible bank asset in the Corporation upon the acquisition of an eligible bank asset by the Corporation as contemplated in subsection (1) of this section shall take effect and be effective notwithstanding any:

  1. (a) contractual restriction on the acquisition, assignment or transfer of the bank asset or any part thereof or any contract relating thereto; or

  2. (b) requirement for a consent, notification, registration, authorization or licence (by whatever name and however described).”

The clear implication of this provision when read together with sections 6(3) and 39 of the AMCON Act is that, if the EBA acquired by the Corporation is land, the land shall vest in the Corporation notwithstanding any requirement for consent. It is submitted that, if section 34(2)(b) means what it says, then it contradicts the earlier deference of the AMCON Act to the LUA as evidenced by the opening words of subsection 34. The draftsman was seemingly torn between acknowledging the need to obtain the consent of the appropriate authority for a valid acquisition by the Corporation and the desire to free the Corporation from the shackles of obtaining such consent. The opening words of the subsection, stating “[s]ubject to the provisions of the Land Use Act and section 36 of this Act”, unarguably carry the implication that the provisions of the AMCON Act are subordinate to the provisions of the LUA, at least so far as the issue of consent is concerned.Footnote 55 If this is correct, then section 34(2)(b) cannot exempt the acquisition by the Corporation of land, the subject matter of an EBA, from the consent provisions of the LUA.

However, if the intention of the draftsman was to extricate EBA acquisitions or dispositions from the LUA consent requirements because of perceived attendant bureaucratic problems, the authors submit this may possibly be achieved through either of the conveyancing techniques or devices espoused in section 36 of the AMCON Act, to which, fortunately, section 34(2)(b) is subject. In the interest of clarity, section 36 of the AMCON Act provides:

  • “(1) Upon acquisition by the Corporation of an eligible bank asset secured in whole or in part by landed property or by collateral or security interest which restricts the alienation or contract as a matter of law (in this Act referred to as ‘Restrictive Collateral’), the eligible financial institution from which such Restrictive Collateral is acquired shall hold such Restrictive Collateral, as bare trustee, in trust for and the sole benefit of the Corporation and shall at the sole direction of the Corporation realize or otherwise deal with such Restrictive Collateral as may be directed by the Corporation and shall turn over all proceeds received from such realization or dealing to the Corporation.

  • (2) Where the Restrictive Collateral contains a power of attorney in favour of the eligible financial institution concerned, such eligible financial institution shall, as an attorney, act at the sole direction of the Corporation and in so acting as attorney shall, if so instructed by the Corporation appoint the Corporation as receiver or receiver-manager over the Restrictive Collateral, and such appointment, whether by deed or otherwise, shall, notwithstanding anything in the Restrictive Collateral or any other law, be deemed to be valid and effectual.”

Now, since the LUA prohibits alienation of a right of occupancy over land without consent, landed property constitutes restricted collateral. Section 36 presents the Corporation with two alternative courses of action. The first is to constitute the EFI as a bare trustee to hold in trust for the Corporation; the second is to direct the EFI, where the EFI has a power of attorney in its favour, to appoint the Corporation as receiver or receiver-manager. These two devices do not seem to offend the LUA consent requirements because they do not constitute a transfer or disposition of land but are only a means to achieving that purpose.Footnote 56

CONCLUSION

The right to alienate property is unarguably the main index of ownership. Even more profoundly so is the right to alienate property without any fetters. With the commencement of the LUA, the requirement for consent to any alienation of land has become part of the contemporary Nigerian land tenure system. This requirement has constituted a major drawback to the practical implementation of the lofty aims of the LUA, as well as constituting a conveyancer's nightmare. The bureaucratic problemsFootnote 57 and the high costFootnote 58 of obtaining consent in many states of Nigeria have led legal practitioners and conveyancers to explore every avenue to circumvent the LUA's consent provisions. Consequently, it has become fashionable for property owners to have a power of attorney as their root of titleFootnote 59 and to encounter endless registrations of powers of attorney in respect of the same property. The only time most property owners remember to execute or register a proper document of title, such as a deed of lease, assignment or a certificate of occupancy, is when they wish to obtain a loan facility from a financial institution, because that will invariably be a condition precedent to processing their loan applications.

One, therefore, understands the unenviable task of the draftsman of the AMCON Act who, apparently, was torn between achieving the seamless acquisition and disposition of EBAs on the one hand, and remaining faithful to the LUA's overarching consent provisions on the other. Admittedly, to discharge the onerous tasks entrusted to the Corporation under the AMCON Act, there is a need to remove every obstacle in the path of the Corporation, but it is regrettable that this cannot be achieved by the simple legislative act of making provisions in the AMCON Act that are inconsistent with those in the LUA.

This article has shown that, in the hierarchy of norms in the Nigerian legal system, the LUA sits higher than the AMCON Act. As a result, the AMCON Act, which by virtue of its sections 6 and 39 derogates from the LUA's consent provisions, does not provide the Corporation with any valid statutory warrant or cover to acquire or dispose of EBAs without the requisite consent. The only internal mechanisms under the AMCON Act that can assist the Corporation lie in section 36, which enables the Corporation to constitute the EFI as a trustee for the Corporation or to direct the EFI to appoint it as a receiver or receiver manager. Beyond these two devices, which do not offend the LUA's consent requirements because they do not amount to a transfer, a constitutional amendment would be required to dispense overtly with the consent provisions. Unfortunately, this is a laborious process, and past efforts to amend the LUA have not yielded dividends.Footnote 60 While waiting for an auspicious time when the LUA's consent provisions will be amended, conventional wisdom dictates that the Corporation should stick to the internal safeguards provided by section 36 of the AMCON Act; otherwise the days ahead may witness a flurry of litigation challenging the Corporation's power to acquire or dispose of EBAs without the consent of the appropriate authority.

References

1 There are 36 states in the Federal Republic of Nigeria.

2 See sec 1 of the Land Use Act, cap L5, Laws of the Federation of Nigeria 2004 (LUA).

3 For instance, there are questions as to whether or not the LUA nationalizes land. See Omotola, JA “Does the Land Use Act expropriate?” (1985) 3 Journal of Private and Property Law 1Google Scholar; RW James Nigerian Land Use Act: Policy and Principles (1987, University of Ife Press) at 33; Umezulike, IA “Does the Land Use Act expropriate? Another view” (1986) 5 Journal of Private and Property Law 61Google Scholar; Fekumo, F “Does the Land Use Act expropriate? A rejoinder” (1988/89) 10–11 Journal of Private and Property Law 5Google Scholar; IO Smith Practical Approach to Law of Real Property in Nigeria (2nd ed, 2007, Ecowatch Publications Ltd) at 475. As to whether the LUA is superior to the constitution, see Adeoye, FO “The Land Use Act 1978 and the 1979 Constitution: The question of supremacy” (1988/89) 10–11 Journal of Private and Property Law 33Google Scholar; A Kalu “The Land Use Act and 1979 Constitution” in JA Omotola (ed) Essays in Honour of Judge TO Elias (1987, University of Lagos Press) 106; Osipitan, T “The Land Use Act and the 1979 Constitution: Conflicts and resolutions” (1991) 2/3Justice 59Google Scholar; Nwatu, SI “Resolving the conflicts between the Land Use Act and the constitution: The role of legislative history” (1998–99) 7 The Nigerian Juridical Review 173Google Scholar. On the potency of the certificate of occupancy, see JA Omotola Essays on the Land Use Act 1978 (1984, Lagos University Press) 42; IO Smith “The certificate of occupancy: Nature and value” in IO Smith (ed) The Land Use Act: Twenty Five Years After (2003, Faculty of Law, University of Lagos) 170. On the nature of the right of occupancy, see FO Adeoye “The nature of right of occupancy under the Land Use Act, 1978” in JA Omotola (ed) Issues in Nigerian Law (1999, University of Lagos Press) 105; Umezulike, IA “Leases and sub-leases under the Land Use Act: Existing or extinguished” (1993) 3/4Justice 29Google Scholar. On the extent of the governor's power to give consent to alienations of rights of occupancy or to revoke a right of occupancy, see AB Kasunmu “The question of consent to alienation: Effect on development” in JA Omotola (ed) The Land Use Act: Report of a National Workshop (1982, Lagos University Press) 93; Sholanke, OO “When a revocation is not a revocation under the Nigerian Land Use Act” (1990) 1/8Justice 75Google Scholar; Umezulike, IA “When a revocation is not a revocation under the Land Use Act: A rejoinder” (1991) 2/9Justice 63Google Scholar.

4 Before the commencement of the LUA, an owner of land in the southern part of Nigeria could alienate land without requiring government consent. The southern part of Nigeria refers to the states of Abia, Akwa Ibom, Anambra, Bayelsa, Cross River, Delta, Ebonyi, Edo, Ekiti, Enugu, Imo, Lagos, Ogun, Ondo, Osun, Oyo and Rivers. The only instance where consent was required was in the case of alienation to an alien. See, for instance, sec 4 of the Acquisition of Land by Aliens Law, cap 2, Laws of Eastern Nigeria, 1963.

5 The Asset Management Corporation of Nigeria Act, No 4 of 2010 was signed into law on 19 July 2010. It has now been amended by the Asset Management Corporation of Nigeria (Amendment) Act, No 4 of 2015, which was signed into law on 26 May 2015.

6 See the long title and secs 1–4 of the AMCON Act.

7 See LUA, secs 5 and 6 respectively.

8 There are 774 local government authorities in Nigeria.

9 See LUA, sec 3.

10 Id, secs 34(2) and 36(2).

11 For ease of reference the three sections are reproduced here: “21. It shall not be lawful for any customary right of occupancy or any part thereof to be alienated by assignment, mortgage, transfer of possession, sublease or otherwise howsoever - (a) without the consent of the Governor in cases where the property is to be sold by or under the order of any court under the provisions of the applicable Sheriffs and Civil Process Law; or (b) in other cases without the approval of the appropriate Local Government.” “22. It shall not be 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: (1) Provided that the consent of the Governor - (a) shall not be required to the creation of a legal mortgage over a statutory right of occupancy in favour of a person in whose favour an equitable mortgage over the right of occupancy has already been created with the consent of the Governor: (b) shall not be required to the reconveyance or release by a mortgage [sic] to a holder or occupier of a statutory right of occupancy which that holder or occupier has mortgaged and that mortgage with the consent of the Governor: (c) to the renewal of a sub-lease shall not be presumed by reason only of his having consented to the grant of a sub-lease containing an option to renew the same. (2) The Governor when giving his consent to an assignment mortgage or sub-lease may  require the holder of a statutory right of occupancy to submit an instrument executed in evidence of the assignment, mortgage or sub-lease and the holder shall when so required deliver the said instrument to the Governor in order that the consent given by the Governor under subsection (1) may be signified by endorsement thereon.” “23. (1) A sub-lease of a statutory right of occupancy may with the prior consent of the Governor and with the approval of the holder of the statutory right of occupancy, demise by way of sub-underlease to another person the land comprised in the sub-lease held by him or any portion of the land. (2) The provisions of subsection (2) of section 22 shall apply mutatis mutandis to any transaction effected under subsection (1) of this section as if it were a sub-lease granted under section 22.”

12 See LUA, sec 22(1)(a) and (b).

13 See Okuneye v First Bank of Nigeria Plc [1996] 6 NWLR (pt 475). Compare with Ezejiofor, G “The consent requirement of the Nigerian Land Use Act” (1998) 40/1Journal of African Law 101Google Scholar at 109.

14 IA Umezulike ABC of Contemporary Land Law in Nigeria (2013, Snaap Press Nigeria Ltd) at 188.

15 See Savannah Bank Ltd and Another v Ammel Ajilo [1989] 1 NWLR (pt 97) 305. It was earlier touted that deemed grant holders of a right of occupancy are exempted from the consent provisions. See BO Nwabueze “The Land Use Decree and bank securities” (paper delivered at a workshop organized by the Nigerian Institute of Bankers in Lagos, Nigeria, 23 June 1978); see also Omotola Essays on the Land Use Act, above at note 3 at 27–28.

16 See International Textile Industries (Nigeria) Ltd v Aderemi [1999] 8 NWLR (pt 614) 268 and Awojugbagbe Light Industries Ltd v Chinukwe [1995] 4 NWLR (pt 390) 379.

17 [2008] 6 NWLR (pt 1083) 362. This view had earlier been seriously canvassed in Umezulike, IA “The heady question of execution of mortgage deed before consent: Awojugbagbe Light Industries Ltd v PN Chinukwe, evaluated” (1993) 4/3Justice 69Google Scholar.

18 Omotola, JA “Effects of the governor's consent subsequent to execution of mortgage” (1992–93) 16–18 Journal of Private and Property Law 73Google Scholar at 77.

19 See Nwatu, SI “The right to a fair hearing under the Land Use Act, 1978” (2000–01) 8 The Nigerian Juridical Review 196Google Scholar at 209.

20 See ADH Ltd v Minister for Federal Capital Territory [2013] 8 NWLR (pt 1357) 493.

21 LUA, sec 26.

22 Id, sec 28(2).

23 The banks that survived the consolidation exercise are Access Bank, Afribank, Diamond Bank, EcoBank, Equitorial Trust Bank, Fidelity Bank, First Bank Plc, First City Monument Bank, First Inland Bank, Guaranty Trust Bank, IBTC-Chartered Bank, Intercontinental Bank, Nigeria International Bank, Oceanic Bank, Platinum Bank, Skye Bank, Spring Bank, Stanbic Bank, Standard Chartered Bank, Sterling Bank, Union Bank, United Bank of Africa, Unity Bank, Wema Bank and Zenith Bank Plc.

24 L Sanusi “Growth prospects for the Nigerian economy” (26 November 2010), available at: <http://www.bis.org/review/r101210e.pdf> (last accessed 17 January 2016).

25 The nine banks are Afribank Plc, Bank PHB Plc, Finbank PLC, Intercontinental Bank Plc, Oceanic Bank Plc, Union Bank Plc, Spring Bank Plc, Wema Bank Plc and Equitorial Trust Bank Ltd (a privately owned bank).

26 The establishment of an asset management corporation was part of the reform agenda of the former CBN governor, Charles Soludo, on whose watch the consolidation exercise in the banking sector was consummated, but for apparently inexplicable reasons was not pursued. Two possible explanations are that the CBN leadership was still basking in the euphoria of a successful consolidation exercise and, more importantly, the ominous signs of the strains and stresses in the financial sector were thought to be more apparent than real.

27 Indeed, during a week long (22–26 March 2010) study tour of Malaysian financial institutions by the CBN board of directors, the CBN and Bank Negara (the Malaysian central bank) signed a memorandum of understanding to share expertise and exchange relevant information in the discharge of their core mandates. A CBN statement noted: “The study tour enabled the team to understudy the success of the Malaysian regulator in the area of financial crisis management which has direct contextual relevance to the Nigerian situation.” The statement further noted that “Malaysia is a developing country that has achieved widely acknowledged economic success and the Bank Negara has had an effective financial stability framework since the Asian financial crisis in the 1990s. The banking and financial reforms the country undertook successfully, provide a benchmark for the current banking reforms of the CBN.” See “CBN signs strategic partnership memorandum of understanding with Malaysian Central Bank” (31 March 2010) Economic Confidential, available at: <http://economicconfidential.com.ng/2010/03/cbn-signs-strategic-partnership-with-malaysian-central-bank/> (last accessed 18 January 2016).

28 AMCON Act, sec 4. For a vivid discussion of AMCON's objects, see Nwosu, E and Shekwogaza, A “A legal interpretation of the Asset Management Corporation of Nigeria” (2014) 29/4Journal of International Banking Law and Regulation 239Google Scholar.

29 Id, sec 5.

30 Id, sec 24.

31 Id, sec 25(1).

32 Id, sec 25(2).

33 Id, sec 30.

34 Id, sec 32.

35 The entrenchment of the LUA and other statutes enumerated in sec 274(5) of the 1979 Constitution (now sec 315(5) of the 1999 Constitution) is one of the major reasons which has impelled the protagonists of constitutional autochthony to deny that constitution the garb of an autochthonous constitution. They argue inter alia that, because the subsection was neither adumbrated nor inserted by the Constituent Assembly or the Constitution Drafting Committee that debated and drafted the constitution, respectively, the military government's unilateral and arbitrary insertion of the subsection deprived the constitution of the character which would qualify it as an act of the people of Nigeria. See A Ojo Constitutional Law and Military Rule in Nigeria (1987, Evans Brothers Publishers) at 77–78. For discussions on the constitutional autochthony debate, see BO Nwabueze The Presidential Constitution of Nigeria (1982, C Hurst and Co) at 2–7; and KM Mowoe Constitutional Law in Nigeria (2008, Malthouse Publishers Ltd) at 11–12.

36 Emphasis added.

37 The 1999 Constitution is essentially a rigid constitution. Sec 9(2) provides that a proposal for a constitutional amendment must be supported by two-thirds of all the members of each house of the National Assembly (ie the Senate and the House of Representatives) and approved by a resolution of both houses by no fewer than two-thirds of the 36 states of the Federation of Nigeria. For a discussion of the procedure for amending the 1999 Constitution, see DIO Ewelukwa “The amending process under the 1999 Constitution” in IA Ayua, DA Guobadia et al (eds) Nigeria: Issues in the 1999 Constitution (2000, Institute of Advanced Legal Studies) 324.

38 Sec 47 provides: “(1) This Act shall have effect notwithstanding any thing to the contrary in any law or rule of law including the Constitution of the Federation or of a State and, without prejudice to the generality of the foregoing, no court shall have jurisdiction to inquire into: (a) any question concerning or pertaining to the vesting of all land in the Governor in accordance with the provisions of this Act; or (b) any question concerning or pertaining to the right of the Governor to grant a statutory right of occupancy in accordance with the provisions of this Act; or (c) any question concerning or pertaining to the right of a Local Government to grant a customary right of occupancy under this Act. (2) No court shall have jurisdiction to inquire into any question concerning or pertaining to the amount or adequacy of any compensation paid or to be paid under this Act.”

39 Nwatu “Resolving the conflicts”, above at note 3 at 188.

40 The LUA overturned pre-existing landholding structures and scuttled their feudal inclinations. Naturally, such a revolutionary piece of land reform legislation was resented by the land owning class. This explains the hostilities which greeted the enactment of the act and deafening calls for its repeal. The military regime that enacted the LUA less than 18 months before handing over the reins of power speculated that, because of the revolutionary nature of the act, it would be repealed once a democratic regime was in place. In order to ensure the survival of the revolutionary but embattled legislation, the military regime in its wisdom incorporated the LUA into the constitution so as to make its amendment or repeal difficult.

41 (1984) 1 SCNLR 634.

42 The LUA was enacted in 1978 by a military regime as the Land Use Decree but, with the return to constitutional democracy on 1 October 1979, it became an issue whether civilian governors could exercise powers reserved for military governors under the decree.

43 The decision in Nkwocha has been followed in Kanada v Governor of Kaduna State [1986] 4 NWLR (pt 35) 377 and Lemboye v Ogunsiji [1990] 6 NWLR (pt 155) 210.

44 See Smith Practical Approach, above at note 3 at 473; AO Bello “Constitutional entrenchment of the Land Use Act: An argument for excision” in Smith (ed) The Land Use Act, above at note 3, 1; CO Adekoya “Land Use Act and constitutional matters arising” in Smith (ed), id, 19. This view also holds that, since the LUA is not an integral part of the constitution, where any provision of the LUA is inconsistent with the provisions of the constitution, such provisions of the LUA shall be null and void to the extent of the inconsistency. However, Osipitan argues that, where the constitution recognizes the validity of an existing law, the existing law cannot be declared void if its provisions conflict with those of the constitution. He insists “that the provisions of section 274(5) of the [Act] [sic] Constitution, to the effect that ‘nothing in this Constitution shall invalidate’ the Act, has the added advantage of preserving the validity of the provisions of the Act, even where they conflict with the constitutional provisions”. See T Osipitan “Public law and the Land Use Act 1978” in Omotola (ed) Issues in Nigerian Law, above at note 3, 84 at 90.

45 Nkwocha, above at note 41 at 652. The case was decided under the 1979 Constitution. Sec 274(5) of the 1979 Constitution is the same as sec 315(5) of the 1999 Constitution.

46 Ezejiofor, G and Okafor, I “Jurisdiction to entertain judicial proceedings under the Land Use Act” (1994–97) 6 The Nigerian Juridical Review 21Google Scholar at 30.

47 Ibid.

48 This view was ventilated by Oluwa J in Attorney General of Lagos State v National Electric Power Authority, suit no LD/372/81, judgment delivered on 5 July 1982, High Court of Lagos.

49 BO Nwabueze Federalism in Nigeria under the Presidential Constitution (1983, Sweet and Maxwell) at 156.

50 Id at 179 (emphasis original).

51 LUA, secs 21 and 22 (emphasis added).

52 AMCON Act, sec 25.

53 Id, sec 34(1).

54 Ibid.

55 Where the phrase “subject to” is used in a statute, it subordinates the provisions of the subject section to the section or statute empowered by reference thereto and that is not intended to be diminished by the subject section. See Nigerian Deposit Insurance Corporation v Okem Enterprises Ltd [2004] 10 NWLR (pt 880) 107; Balonwu v Governor of Anambra State [2009] 18 NWLR (pt 1172) 13.

56 However, there is authority to the effect that an irrevocable power of attorney which is framed with wide powers to the donee as if it were a conveyance amounts to an attempt to circumvent the consent requirement, so requiring the consent of the appropriate authority for its validity. See Ejukorlem & Co Ltd v Chief Inspector of Mines (1957) NRNLR 200; Dickson v Solicitor General of Benue Plateau State (1974) 1 ANLR (pt 1) 276.

57 Applications for consent have been known to be delayed for up to two years or more.

58 Generally, most states assess consent fees ad valorem.

59 A power of attorney is not a document of title but only an instrument of an agency relationship.

60 For instance, on 18 February 2009, the Yar’ Adua administration sent a bill to be cited as the Land Use (Amendment) Act, 2009 or the Constitution (First Amendment) Act, 2009 to the National Assembly. The bill was specifically intended to extricate mortgage transactions and subleases from the consent provisions of the LUA. As at the time of writing, nothing has been heard about the bill. It seems that enthusiasm waned with the death of President Yar’ Adua.