By Benita Ayo
- The Facts of the Case
A deed of Mortgage was executed between Savannah Bank and Ajilo and upon default, Savannah Bank sought to sell the property involved in the mortgage by advertising the auction sale. When Ajilo became aware of the purported sale, he went to the High Court of Lagos to sue for declaration that the Deed of Mortgage was void and also that the Auction Notice was also void.
The major grounds upon which the action was brought were that, by section 22 of the Land Use Act, 1978, the consent of the Governor of Lagos State ought to be first sought and obtained and as no consent was sought and obtained, both the Deed of Mortgage and the Auction Notice were void.
The trial Court held that failure to obtain the required consent of the Governor under S. 22 of the Act has rendered the Deed of Mortgage null and void and the mortgage transaction is illegal.
Upon an appeal at the Court of Appeal by Savannah Bank, the Court held that every right holder whether under S. 34 or S. 36 of the Land Use Act requires the consent of the Governor before he can transfer, mortgage or otherwise dispose of his interest in the Right of Occupancy. The Appeal was thus dismissed.
On further Appeal at the Supreme Court, the above position was affirmed with the Appeal dismissed.
- COMMENTS
2.2 PRINCIPLE
The general principle of law in respect of alienation of interest in property was actually derived from the provisions of Section 22 Land Use Act, 1978 which provides that;
“It shall not be lawful for a holder of 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”.
The above provision was later on interpreted in the case of Savannah Bank v. Ajilo which became the locus classicus for the legal principle that “Where a holder desires to alienate his interest in a Certificate of Occupancy, he must first obtain the Governor’s consent to make such transfer valid according to S. 22 of the Land Use Act….”
- APPLICATION OF THE PRINCIPLE ON VARIOUS CASES
The principal statute regulating land tenure system in Nigeria being the Land Use Act conferred the ownership of Land in the Federation on the Governor of each State.
The implication of this is that Freehold title to land becomes abolished with the State Government holding all Land in the State in trust for the citizens. Thus, anyone seeking to acquire interest in any landed property or seeking to alienate same by way of Assignment, Lease or Mortgage must do so after seeking and obtaining the consent of the State Governor. See S. 22 Land Use Act.
The principle has been applied by the courts in a plethora of cases some of which will be briefly discussed below.
- IMPLICATION FOR NON-COMPLIANCE
Failure to seek and obtain the requisite consent renders such transaction invalid. This was the butt of the matter in the instant case of Savannah Bank v. Ajilo which facts of the case as well as the final judicial pronouncements were stated above.
As stated earlier on, the Courts have applied the principle in the Ajilo’s case in some cases such as HARUNA v. YARO (2016) LPELR-41554 (CA) where the Court held that;
“On the issue of Governor’s consent, it is correct that the combined effect of Sections 22 and 26 of the Land Use Act is to render null and void any alienation or transfer of a Right of Occupancy or interest or right there under without the consent of the Governor first had and obtained”.
In yet another case of SIMM COMPUTER RESOURCES LTD & ANOR v. FIRST INLAND BANK (2016) LPELR-40493 (CA) the Court decided that,
“The alienation of a right in a Certificate of Occupancy under the Land Use Act is clearly covered by Section 22 of the Act. it provides as follows:
“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 without the consent of the Governor first had and obtained.”
Another relevant provision is Section 26 of the Land Use Act which says:
“Any transaction or any instrument which purports to confer on or rest in any person any interest or right over land other than in accordance with the provision of this Act shall be null and void.”
These provisions are clear and straight forward and therefore ought to be given their literal interpretation or meaning. The Section has received judicial attention in a plethora of cases and the locus classicus is the case of SAVANNAH BANK OF NIGERIA LTD v. AMMEL. O. AJILO (1989) 1 NWLR (pt. 97) 254 wherein the Court held that where a holder desires to alienate his interest in a Certificate of Occupancy, he must first obtain the Governor’s consent to make such transfer valid according to Section 22 of the Land Use Act. …………. The Supreme Court in the case of I.T.I. v. ADEREMI (1999) 6 SCNJ 1 held that there are two stages to alienation of interest in Land and they are;
- The holder may enter into a contract of sale of his right, at that stage he does not need the Governor’s consent.
- The second stage is that of alienating the right that is the stage when he assigns his right by a deed of assignment, to now vest the legal estate in the purchaser, and he needs the Governor’s consent to make the transaction valid.”
- EXCEPTIONS OR CURRENT LEGAL POSITION IN VIEW OF SAVANNAH BANK v. AJILO
It is viewed from a different standpoint that the legal stance in Savannah Bank v. Ajilo rather promotes sharp practices such as a party benefitting from his own wrong.
This was exactly the situation in Savannah Bank v. Ajilo where the Defendant in this case sought to prevent the Plaintiff from selling off the mortgaged property in an auction sale by invoking the provisions of Section 22 Land Use Act, 1978.
While still conceding the fact that where a person in alienating his interest in property must seek the consent of the State Governor in order for such alienation to be valid, the failure to obtain the said consent before executing the Deed of Conveyance does not in itself invalidate the transaction. It only makes the transaction inchoate or incomplete.
See for instance the case of HARUNA v. BANK OF AGRICULTURE LTD & ORS (2016) LPELR-40467 (CA) where the Court concluded that,
“The Courts have held that there is nothing in the Land Use Act preventing the execution of an instrument before the consent of the Governor is obtained. It simply means that the agreement entered into is inchoate (Incomplete) until the Governor’s consent is sought and obtained.”
Also in YARO v. AREWA CONSTRUCTION LTD & ORS (2007) LPELR-3516 (SC), it was held that;
“The 3rd Respondent has raised the question of Section 22 of Land Use Act, concisely, the section requires that Governor’s consent to the mortgage deal has to be first had and obtained otherwise the contract is void. I think with respect that the 3rd Respondent’s objection is lame in that as decided in Awojugbagbe v. Chinukwe & Anor (Supra), it is after the mortgage has been executed that obtaining of the Governor’s consent falls due. It is normally after the parties have agreed that the Deed of Assignment is prepared and sent for Governor’s consent. The instant mortgage therefore has not fallen foul of Section 22 of the Land Use Decree.”
In practice, whenever interest in property is transferred from the owner to a buyer, the relevant Deed of Conveyance is prepared and executed between the parties prior to obtaining the consent of the State Governor. The courts have held that this procedure does not invalidate the transaction but rather, no interest has yet passed to the buyer.
See the case of AWOJUGBAGBE LIGHT INDUSTRIES LTD v. CHINUKWE & ANOR (1995) LPLER-650 (SC) for instance where the Supreme Court held that;
“A close study of Section 22(2) of the Land Use Act clearly confirms that it does recognise cases where some form of written agreement or instrument executed in evidence of the relevant transaction is submitted to the Governor in order that the necessary consent under Section 22(1) may be signified by endorsement thereon. This being so, I do not conceive that it can be argued with any degree of seriousness that there is anything unlawful in the entering into or execution of Exhibit E before the Governor’s consent was obtained as this procedure is expressly covered by Section 22 (2) of the Land Use Act. The legal consequence that arises in such a situation is that no interest in land passes under the agreement until the necessary consent is obtained. Such an agreement so executed becomes inchoate until the consent of the governor is obtained after which it can be said to be complete and fully effective. I am therefore of the firm view that Section 22 (1) of the Land Use Act prohibits the alienation of a Right of Occupancy without the consent of the governor first had and obtained but does not prohibit agreement to alienate or in respect of terms and conditions for the purpose of effecting such alienation if and when the Governor gives his consent to the transaction in issue.”
CONCLUSION
Finally, it has been discussed that a party seeking to alienate his interest in property whether in part or in whole as is the cases with Assignment, Leases or Mortgage, must first seek and obtain the consent of the State Governor. This does not however mean that he cannot execute a document evidencing the transaction as could be gleaned from the aforementioned authorities. See HARUNA v. BANK OF AGRICULTURE LTD & ORS (SUPRA).
However, what this implies is that notwithstanding the execution of a document of conveyance, the transfer is incomplete until the requisite consent is sought and had and this is usually in practice done by endorsement in the column for it within the document of conveyance.
Finally, the implication of a party’s failure to seek and obtain the Governor’s consent in property transactions according to the aforementioned case of HARUNA (SUPRA) is that the transaction is incomplete rather than null and void as was the case in Savannah Bank v. Ajilo. It is only where the transaction has been perfected (Consent sought and obtained) will the transaction be complete.
Benita Ayo is a legal practitioner based in Lagos and be contacted on WhatsApp: 08063775768 or email: [email protected].
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