Nigeria: Unexhausted Improvements Vis-À-Vis Unexhausted Economic Interest In Land Subject Of Compulsory Acquisition: A Case Of Deliberate Legislative Discrimination

Last Updated: 9 May 2016
Article by Benedict Oregbemhe

Introduction:

The basic reason for payment of compensation for compulsory acquisition of private property for overriding public purpose is to restore a party, who has been deprived of ownership and enjoyment of property, to an economic position that approximates the status occupied prior to the acquisition. Compensation is thus payable based on the "principle of equivalence". The "principle of equivalence" simply means the right of a land holder to be put, so far as money can do it, in the same position as if the land had not been taken from him.2 In other words, he gains a money value not less than the loss imposed on him in the public interest but not greater than the loss suffered. It is in line with this principle that section 44 of the Constitution of the Federal Republic of Nigeria 19993 (as amended) ("the 1999 Constitution") provides that no immovable property or any interest in or any right over an immovable property shall be compulsorily acquired for overriding public purpose without prompt payment of compensation.

The right of people to freely acquire, use and dispose of property is the foundation not only of prosperity but of freedom itself.4 This right to own and acquire immovable property anywhere in Nigeria is an inalienable right of all Nigerians. In view of the above, payment of compensation upon public acquisition of land or revocation is a constitutional right and not a privilege.

Deliberate Legislative Discrimination between Unexhausted Improvements and Unexhausted Economic Interest in Land Subject of Compulsory Acquisition

Section 28 of the Land Use Act5 ("the Act") provides that:

"If a right of occupancy is revoked for the cause set out in paragraph (b) of subsection (2) of section 28 or (c) of subsection (3) of the same section, the holder and the occupier shall be entitled to compensation for the value at the date of revocation of their unexhausted improvements." (Emphasis added)

The import of section 28 of the Act is to the effect that compensation for compulsory acquisition of private property for public purpose is only payable for "unexhausted improvements" made on the land by the land holder or occupier. Conversely, a holder or occupier of an "unimproved" or "undeveloped" land is not, under the Act, entitled to any compensation for the compulsory acquisition of his land for public purpose. Therefore, it means that compensation is payable not for the bare land but for the "unexhausted improvements" made on the land by the holder or occupier. It is the labour or efforts expended on the land that qualifies for compensation when the land is compulsorily acquired for public purpose.

It should be noted that the philosophical basis for non-payment of compensation for "unimproved" land buttresses the fact that ownership of all lands in Nigeria is vested in the Governor of each State who holds same in trust for the benefits of all Nigerians and upon compulsory acquisition of such lands, the government only takes back what originally belongs to it.6 The same school of thought believes that if no labour or effort is expended on the land, the government need not pay compensation to the land holder or occupier of the land.

Under section 29(4)(a) of the Act, the holder or occupier of an "unimproved" land, compulsorily acquired for public purpose is only entitled to an amount equal to the rent, if any, paid by the holder or occupier during the year in which the right of occupancy was revoked.

On the other hand, if the holder or occupier fails to pay the ground rent during the year the right of occupancy was revoked, the holder or occupier is not entitled to compensation and if the holder or occupier is in arrears of ground rent, he is still under a duty to pay the ground rent as revocation of right of occupancy does not extinguish any debt due to the government under or in respect of such right of occupancy.7

Criticisms of the Legislative Discrimination between "Unexhausted Improvements" and "Unexhausted Economic Interest"

Land is the greatest asset of man and a means of wealth creation. Land is indispensable to human and economic development. It is the most vital resource without which no meaningful societal development can be made. Land is a man's free gift of nature but acquired at a great cost, expense and labour. Land acquisition and purchase in Nigeria is expensive and problematic coupled with the bureaucratic bottle-neck involved in perfection of title.

The purchase and acquisition of land in Nigeria and Lagos in particular is a costly venture. A prospective purchaser of land expends money on searches to determine if the land is free from government acquisition and if the land is free from any encumbrances, he also spends money on land evaluation, agency and legal/solicitor's fees. In the case of a swampy land, a large sum of money is expended on sand-filling the land. Money is also expended on clearing, surveying, preparing plans and drawings/designs and securing Town Planning Approvals. A considerable sum is also expended on land charting, land information certificate and obtaining governor's consent to land transactions.

Granted that the Act vests ownership of lands on the Governor of each State of the Federation, it is submitted that holders or occupiers of "unimproved" lands ought not to be deprived of compensation in the event of compulsory acquisition. Land holding being a means of wealth creation and the best form of investment, coupled with the pivotal role that lands play in the social economy of a nation, the real economic value of an "unimproved" land ought to be the yardstick for measuring payment of compensation. It is submitted that depriving a land holder of compensation on the excuse that the land is not "improved" upon, despite the huge costs incurred in the acquisition and purchase of land in Nigeria, is (to say the least), unjust and punitive.

Sections 43 and 44 of the 1999 Constitution vis-à-vis non-compensation for "unexhausted" Economic Interest in lands, Subject of Compulsory Acquisition

Section 43 of the 1999 Constitution grants to every Nigerian, the right to acquire and own immovable property anywhere in Nigeria whilst section 44 provides that:

"No movable property or any interest in an immovable property shall be taken possession of compulsorily and no right over or interest in any such property shall be acquired compulsorily in any part of Nigeria except in the manner and for the purpose prescribed by a law that, among other things-

(a)requires the prompt payment of compensation therefor..."

Sequel to this constitutional provision, there is no distinction made by the 1999 Constitution, between "improved"/"developed" and "unimproved"/"undeveloped" immovable property in Nigeria. The 1999 Constitution used the phrases (i) "any interest in an immovable property", (ii) "no right over or interest in any such property shall be acquired compulsorily" and (iii) "prompt payment of compensation therefor." Based on the words as used in these sections of the Constitution, a holder of an "unimproved" or "undeveloped" land ought to be entitled to compensation on the basis that the holder possesses a modicum of interest or right over the immovable property subject of compulsory acquisition.

A cursory look at section 44 of the 1999 Constitution will show that once there is an interest or right over a property compulsorily acquired for public purpose, the holder becomes automatically entitled to a prompt payment of compensation. It is submitted that once the governor issues a certificate of occupancy upon perfection of title, the holder named therein acquires an interest or right over the said property covered by the certificate of occupancy. It is this interest or right as evidenced by the certificate of occupancy that section 44 of the 1999 Constitution seeks to protect from deprivation without compensation.

Section 44 of the 1999 Constitution does not seek to protect the "improvements" or "developments" on the land but the right holder's interest in or right over the immovable property, no matter how minute or small that interest or right may be. In view of the constitutional provisions, it is submitted most respectfully that restricting the right to receive compensation on the basis of "unexhausted improvements" is grossly inconsistent with and a violation of section 44 of the 1999 Constitution. It is our considered opinion that the improvements on the land should attract additional compensation to the value of the land at the time of acquisition for public purpose.

In conclusion, we advocate that based on sections 43 and 44 of the 1999 Constitution, compensation ought to be paid to a land holder once his interest in or right over the property is taken away, interfered with, or extinguished by way of compulsory acquisition for overriding public purpose. Consequently, the provisions of sections 28 and 29 (4)(a) of the Act amount to legislative discrimination against economic interests in or right over immovable property in Nigeria, expressly guaranteed by the 1999 Constitution.

Footnotes

1 Benedict Oregbemhe, LL.M (Unilag), BL (Nig. Law Sch.), LL.B (Uniben). Senior Associate at SPA Ajibade & Co., Lagos, Nigeria.

2 http://www.fao.org/3/a-i0506e.pdf , accessed on 8/3/16

3 Cap. C23 LFN 2004

4 "Property Rights and the Constitution": Cato Handbook for Policy Makers, Cato Institute, 7th ed., available at http://object.cato.org/sites/cato.org/files/serials/files/cato-handbook-policymakers/2009/9/hb111-34.pdf , accessed 21/2/16

5 Cap. L5 LFN 2004

6 Section 1 of the Act

7 Section 32 of the Act

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