The Concept Of Plea Bargain As A Veritable Tool For Justice Or Corruption – Adebayo Oluwaseyi Olayiwola

by Legalnaija | Sep 15, 2016 | Uncategorized

The Concept Of Plea Bargain As A
Veritable Tool For Justice Or Corruption Under The Nigerian Criminal Justice
System

Introduction

The concept of Plea bargain has its origin in the
United States of America as part of their belief that society is dynamic, so
the law needs to keep up with it. The practice came about as a potent weapon in
their criminal law jurisprudence.

Plea bargain was first used in the United States
of America in the year 1973 when her Vice President, Spiro Agnew, was made to
resign on the accounts of fraud, but was later convicted of his refusal to pay
taxes. However, in the 1960s the Scholars had begun to shed light on plea
bargain but the concept was endorsed by US Supreme Court and upheld the
process in the 1970 case of
BRADY v. UNITED STATES 394 US 742, 90 S.C.T. 1463, 25 L.Ed., 2d 747 (1970).
The concept was given credence in the case of PERKINS v. COURT OF APPEALS 738 S.W. 2d 276, 282 (Tex Crim. App. 1978)
where certain number of safeguards into the bargaining process was laid down
and the court held that:

i.
The promise of a prosecutor made during
plea negotiations must be kept.

ii.
To be valid, a guilty plea had to be made
voluntary and with full knowledge of its implications.

The concept of plea bargaining in the recent times was
introduced vide The Criminal Law (Amendment) Act, 2005 in Chapter XXIA of Code
of Criminal Procedure.

In order to have a concrete insight of the said topic,
it is pertinent to define certain keywords as embedded in the topic; such words
as “Corruption”, “Criminal”, “Justice”, “Criminal Justice” etc.

What
is corruption?

It has been defined
as: depravity, perversion, or taint; an impairment of integrity virtue, or
moral principle; especially the impairment of public official’s duties by
bribery.

Who
then is a criminal?

Simply put, a criminal is one who has committed a
criminal offense.

What
is justice?

Justice has been defined as “the fair and proper
administration of laws.

Meaning
of Plea bargain:

The concept of Plea bargain in Criminal cases refers to
pre-trial negotiations between the defendant through his/her Counsel and the
prosecution during which the accused agrees to plead guilty in exchange for
lesser punishment. Also, a plea bargain/plea agreement is an agreement in
criminal cases whereby the prosecutor offers the defendant the opportunity to
plead guilty, usually to a lesser charge or to the original criminal charge
with a recommendation of a lighter punishment than the maximum sentence.

Plea bargain has also been referred to as a deal offer
by a prosecutor as an incentive for a defendant to plead guilty. It is also
referred to as a negotiated agreement between a prosecutor and a criminal
defendant whereby the defendant pleads guilty to a lesser offence or to one of
the multiple charges in exchange for some concession by the prosecutor, usually
a more lenient sentence or a dismissal of the other charges.

Types
of Plea bargain

Plea bargaining though relatively novel to Nigerian
Criminal Justice System is already being practiced in other countries across
the globe for a long period of time. In fact, this concept is a norm in the
United State of America as stated above whereby 75% of the Criminal cases get
decided on plea bargaining. Hence, the types of plea bargaining is as follows:

CHARGE
BARGAIN: under this type, the accused has the option of
pleading guilty to a lesser charge or to only some of the charges filed against
him. For instance, a defendant charged with burglary may be offered the
privilege to plead guilty to “attempted burglary”; or a defendant charged with
assault and molestation; may be offered the opportunity to plead guilty to just
the molestation charge.

SENTENCE
BARGAIN: this occurs when a defendant is told in advance what
his sentence will be if he pleads guilty. For instance, if a defendant is
facing serious charges and is afraid of being convicted with maximum sentence,
he may plead guilty and be punished with an acceptable sentence which limits the
severe punishment accrued to the defendant.

According to Lord Justice Denning M.R in one of his
dictums where he said and I quote: “Justice is rooted in confidence, and the
confidence is destroyed when a right thinking person walks away thinking the
Judge is biased in the case”.

Also, the legal maxim “Fiat Justitia Ruat Coleum” meaning “let justice be done even if
heaven will fall”

In line with the aforesaid, it is highly fundamental to
ask this question: why bargaining with an accused defendant and not allowing the law to
take its full course (simplicita) on anyone who is alleged and found guilty of
embezzling, stealing or looting public funds which belongs to all the citizens
(innocent tax payers) of the nation?

Conversely, it is quite shocking and alarming that the
concept promotes bargain with an accused defendant all in the name of ensuring
that both parties do not loss out at the end of the day. At this juncture, it
is ideal to critically examine the aims and objectives of this concept to wit;
a country like Nigeria where most public office holders loot and embezzle
public funds with full guts and confidence at the detriment of the masses
without considering their plights and havoc such heinous act bring on them.

Not only this, the concept (plea bargain) which
promotes bargain between the prosecutor and the defendant (accused) whereby an
agreement is reached and the defendant plead guilty to some of the offences
charged with before trial and enjoys lesser sentence. This kind of arrangement
is of no doubt berated our criminal justice system and judicial system, knowing
well that the judiciary is being referred as to “the last hope of a common man”
and it is highly imperative for the judiciary to dispense the carrot and stick
of justice without any fear, favoritism or partiality. Going by this concept,
this cannot be obtained under our criminal justice system due to the fact that
its preempt true justice on one hand and limits the Court (Judges) on the other
hand from implementing the full measures of law as provided for in our various
Criminal Statutes against any erring criminal and such it is nothing but a
mockery of our criminal justice system and a clog in the wheel of progress of
the judiciary in dispensing true justice.

According to the words of Prof. G.S. Pande, in his article Criminal Justice; these
were some of the observations and suggestions, he opined and they go thus:

“Punishment for an offence must be
according to the gravity of the offence, personality of the offender, the
nature of his guilt and other relevant circumstances. It need not be
retributive alone. Reform and rehabilitation of the criminal, wherever feasible
without unduly endangering the social life, is necessary, but for offences
which pose a real treat to the normal life in the society and which are of
cruel nature, detriment punishment must be awarded. If punishment is
inadequate, there is every likelihood of repetition.”

Typical illustrations to buttress this assertion are
not far fetched, but I shall mention just a few. Precisely, December 18^th,
2008, the Federal High Court sitting in Enugu delivered a judgment in the case
involving former Governor of Edo State in person of Lucky Igbinedion where he
was charged for looting N4.4 billion
public funds belonging to the State, acquiring of palatial houses and
properties for himself within and outside the country at the detriment of the
people of Edo State who ought to be the beneficiaries of the funds. While
delivering his judgment, Justice Abdul
Tafari only fined the former Governor a paltry sum of N3.5million out of
the said huge amount embezzled with no option of jail time for egregious crime
of plundering the Edo State treasury for solid eight years in office. The
concept (plea-bargain) was also used during the case of the former Inspector
General of Police (IGP), Chief Tafa Balogun who was convicted for just six
month and has his properties confiscated after he pleaded to bargain.

Also, in the case of F.G.N v. Alamieyeseigha
involving the Ex-Governor of Bayelsa State where he was charged for looting the
fund belonging to the State; the concept of plea bargaining was adopted and
delivering his judgment; Justice
Mohammed Shuaibu of the Federal High Court in Lagos State order as follows:

That
in respect of the properties in the Charge Sheet (Information Sheet), they are
hereby forfeited to the Complainant (Federal Republic of Nigeria). The proceeds
after sale would be forfeited to Bayelsa State couple with six months
imprisonment. This is of no doubt ridiculous and far
below the crime committed by the accused person and no wonder Mr.Babafemi the
former spokesman of the Economic and Financial Crimes Commission (EFCC) told
Nigerians at the behest of his boss Mrs. Farida Wazari ( now former
Commission’s Chairman) in the wake of Chief Cletus Ibeto’s arrest that:

“Also, the chairman of the commission
(as she then was), Mrs. Farida Wazari,
expressed opposition to plea bargain strategy being used by the anti-corruption
agency, saying it was wrong and unhelpful in the crusade against corruption in
Nigeria”.

But it was scandalous that after the judgment that was
handed down on the former Edo State Governor, Lucky Igbinedion on December 18,
2008 by Justice Abdul Tafari at the Enugu Federal High Court to hear the same
Mr. Babafemi in a press statement saying that the outcome of the exercise at
the court in Enugu fall short of the Commission’s (EFCC) expectation. He said
and I quote:

“It is believed that the essence of a
plea bargain is not only for suspects to forfeit the proceeds of crime but that
such should go with a sentence which will serve as deterrence.” “In view of
this development, the Chairman of the EFCC (as she then was), Mrs. Farida
Wazari has instructed the commission’s Counsel to file an appeal against the
verdict immediately.” “The Commission will rather go the long way of
prosecution than to settle for a plea bargain verdict that has no bite or will
not serve any deterrence purpose.”

The above statements definitely are not the words of
the writer of this article but that of the then spokesman of EFCC and they
revealed the lacuna attached to the concept of plea bargain and its shaky
foundation which may not be able to combat corruption under our criminal
justice system in Nigeria as a nation.

It is therefore imperative to ask how far the
Commission has lived up to the above assertion or statement…I humbly want the
readers of this piece to supply the necessary response whether in the negative
or positive i.e. whether the Commission can be given pass mark or not.

Another criminal case where the concept was adopted was
that of the former MD/CEO of the just acquired Oceanic Bank Plc in person of
Mrs. Cecelia Ibru who was charged for money laundering, embezzlement and
financial recklessness and after she pleaded guilty to bargaining arrangement. Justice Dan Abutu sitting at the
Federal High Court in Lagos State only sentenced her to a jail term of 18
months, six months on each of the three count charges to run concurrently for
illegally acquiring cash and assets worth N191
billion.

It is crystal clear that all the aforesaid are pointing
to just one fact and this I like to couch inform of a question: can
there be said to be true and genuine justice with the use of the concept of
plea bargaining in our Nigerian Criminal Justice if truly we are sincere about
warding off corruption and promoting justice in our country? In my humble view, it is a “Res
Ipsa Loquitor” meaning “the fact speaks for itself”.

It is my humble opinion as the write of this piece that
the concept (plea bargain) cannot be used to get rid of corruption in our
country nor could it promotes true criminal justice either. It amounts to a
mere mockery of our criminal justice system and pose a big threat to the
country’s effort in combating corruption (if truly there is any such ambition).

Recommendation

If truly Nigeria as a country is sincere and ready to
fight corruption and promote justice, the issue of plea bargaining concept
introduced into our criminal justice system needs to be reviewed. The
government particularly the legislative arm must look into the law critically
and carryout thorough evaluation of the merits and demerits of the concept to
our criminal justice system and proffer necessary solution by passing into law
cogent amendment of the concept or total abolition of it. The judiciary which
is tagged the last hope of the common man needs also to be watchful and be
cautious in delivering judgment in respect of the concept; in order not to keep
bringing its standard to dispute.

Our court(s) or judiciary is meant to stand for true
justice and need not be swayed away by the concept “plea bargain” but the
courts should ensure that sound and effective judgment devoid of fear,
favoritism and partiality is dispensed at all times.

This writer is therefore, of the opinion that the
concept of plea bargaining needs to be given clinical evaluation and total
overhauling if Nigeria as a nation is truly committed to fighting corruption
and promoting justice on all facets.

Conclusively, I will like to end this piece with the
words of Honourable Justice Morki (JSC)
in the case of ALTIMATE INVESTMENT LTD v. CASTLE & CUBICLE LTD (2000), ALL FWLR
(Pt. 117) at pages 151-152 where he said and I quote:

“…It is important to mention that this
is a time when the Nigerian nation is fighting the difficult battle against
corruption in all its ramifications. All hands should be on deck to eliminate
or eradicate this social ill. Corruption or corrupt practices, if not checked,
threaten the peace, order and good government”.

AUTHORITIES

Altimate Investment Ltd v, Castle & Cubicle Ltd
(2000), All FWLR (Pt. 117) at pages 151-152.

Black’s Law Dictionary, Seventh Edition. Pg.348, 380,
869 & 1173

Brady v. United States. 397 US 742, 90 S.C.T. 1463,
25L, Ed, 20 747 (1970)

Economic and Financial Crime Commission Act, 2004 (As
amended)

F.G.N v. Alamieyeseigha. The punch Law Report, Friday
July 27 2007 P.4

National Institute of Law Enforcement and Criminal
Justice, Plea Bargaining in the United States (Washington DC U.S. Government
Printing Office, 1978)

Perkins v. Court of Appeal 738 S.W. 20 276 (Tex Crim.
App. 1987).

Adebayo
Oluwaseyi Olayiwola

(N.D Bus. Admin. & Mgt. FEDPOLY Ede; LL.B O.A.U; B.L

Photo Credit – Here

Risk of Doing Business in Nigeria; Depth of Local Knowledge is Key – Prince-Alex Iwu

by Legalnaija | Sep 14, 2016 | Uncategorized

Nigeria currently sits pretty as the 20th
largest economy in the world going by purchasing power parity index, at least.
It is projected by PWC to be the 9th largest economy in 2050 a few billion
dollars behind Japan and Russia in 7th & 8th respectively. Even as the
engines of growth slowdown into a recession caused largely by a cocktail of
policy and political misdirections, trade in Nigeria in the 2nd quarter of 2016
grew by as much as 49%. Nigeria is a place to do business, because there are
over 180 Million potentials for success.

Both foreign investors and local businesses
doing business in Nigeria require a depth of local knowledge about the policy,
economic and political environment. Secondly, local knowledge must be valuable
by translating into viable business relations that help businesses achieve
goals, such as dealing with trigger-happy regulators or revenue officers.

I read over the past week a post by the
founder of Hitv, explaining the sad circumstances surrounding the unfortunate
collapse of the free to air satellite tv company. Of all the issues that led to
the collapse of Hitv, none was more striking as “the delay in obtaining the
loan needed to pay for the English Premiership TV rights” which came a day
after the rights had been sold, effectively killing the company. More on this
later.

I read somewhere that China is a compliance
rainforest, so also is Nigeria. Entering into a country fills businesses with a
lot of concern about the local partner to engage. The risks of getting it wrong
can be devastating, as we found from the Unaoil scandal. But there is no way of understating the
importance of local partners who understand the terrain. Even for local
businesses, the difference between a failed business venture and a successful
one usually turns on the knowledge of the terrain. One recent case supremely
illustrates this point.

Sometime in 2014, massive development began
in one of the choice locations in Nigeria, Falomo Ikoyi. The developers were
building a grand shopping mall in the very heart of Lagos, and they did not
seem to be sparing any expense. Vibrations from the foundation work
reverberated some hundred feet away in buildings close-by and a billboard just
outside displayed a picture of the state-of the art edifice. Shortly after May
2015, work ground to an abrupt halt; what had happened? There was a new
Sherriff in town, who had different ideas. 2015 was an election year, there was
going to be a new Governor and the guys who were spending millions on the
property might have saved all the investors the loss of the huge funds sunk
into the project if they had the presence of mind to consider all the
possibilities. A sound risk assessment should have involved an analysis of the
following:

1. political
risks of commencing such huge project a year into 2015 elections which had been
tagged as the most hotly contested in Nigeria in many decades

2. an analysis
of the consequences of victory by each contestant

3. the
ramifications should the opposition party win

In other countries this might be
unnecessary; government is a continuum, therefore a change of government should
have little or no bearing on already concluded contracts, and in any case there
must be available remedies in the event of infringement of an investor’s rights
(and indeed in Nigeria there are “remedies”). But the reality is that it is not
always a simple matter in Nigeria. A robust country-entry risk assessment must
consider all the preceding possibilities to avoid getting an investor in and
leaving them stranded in the courts.

This point is also further illustrated by
another interesting instance from Lagos. During the 2015 elections, one of the
campaign promises of one of the gubernatorial aspirants was that his
administration would discontinue a 30-year concession of the Lekki-Epe
expressway to a company known as Lekki Concession Company (LCC). LCC had
been awarded a 30year concession to manage and collect toll on the road in
order to recoup the (somewhat unbelievable) N50 billion it allegedly spent on
the “expansion” (emphasis on expansion) of the 29km road. LCC is clearly a
special purpose vehicle by a band of investors who had invested in the project.
Imagine the panic and concern among shareholders of the investor companies when
they learnt of the campaign promise of a major aspirant to discontinue the
concession. A sound risk officer would have identified the threat long before
it came mainstream, and suggested ways of managing the risks to minimise the
LCC’s exposure. In the LCC case, I learnt that certain steps were taken which
satisfied the investors, although fortunately, the favourable candidate won.

On the second point, a local partner must
go beyond reeling out country-entry requirements and post incorporation
obligations. Such a partner must be proactive. Hitv effectively went
underground because a loan came 24 hours late. Imagine a scenario where someone
in Hitv had a network of contacts that they leveraged to ensure all the bank’s
internal processes were seen to timelously? Perhaps we might have still had
Hitv around giving DStv a reason to be customer-friendly. In my experiences,
with respect to regulators, a business can be shut down with the attendant loss
of revenue because a local partner either did not know how to or whom to
engage.

As I write, a government project that has
arguably gulped billions in funds is lying abandoned in Illubirin, Lagos
because there is a new administration in power. Imagine if some banks
bankrolled such massive project? In Rivers State, the new administration has
abandoned a mono-rail project that gulped billions of state funds. Had
investors’ funds been involved what would have been their remedy?

A local partner must not just know the law
and the processes, he must know the terrain, understand how it works and where
to go to get things done. As with everything in business, great care must be
taken to select an ethical local partner to avoid a Unaoil type scandal.

Prince-Alex Iwu is an associate at Aelex Legal Practitioners & Arbitrators

Ed’s Note – This article was originally published
here.

Photo Credit – here

Ivie Omoregie: Governor’s Consent & Perfecting Title to Your Landed Property

by Legalnaija | Sep 14, 2016 | Uncategorized

In
light of the recent devaluation of the naira, there has been a lot of emphasis
placed on PROPERTY. Many Nigerian’s in diaspora (living outside of
Nigeria…) have used this opportunity to buy the kind of property they may
have been eyeing for some time but previously unable to afford.

Effectively,
with the current value of the naira, when compared to this period 3 years ago,
any property which is bought in Nigeria right now, calculated in a foreign
currency, would be half the price that it might have previously been, or as I
like to term it “Buy 1 Get 1 Free’.

Aside
from home owners, long term tenants with lease agreements exceeding 3 years
have an obligation to register their interest, thus enabling anyone who might
wish to deal with the property, in any manner, to see their interest. I always
advise friends and relatives who take up commercial properties in which they
conduct significant renovations about the importance of having long term leases
and then registering their interest in same. As we recently saw with the
demolition of property being rented by the Nuli Juice Company in Lagos State
because of a breach perpetrated by the owner of the property, registration of interest
would have created an obligation for the relevant state authorities to notify
the registered lease hold tenants.

A
lot of people, possibly because of the costs involved and the fact that
fundamentally perfection of title to the property may not affect the status
quo, tend to omit, or rather not appreciate the importance of registering their
interest.

LANDED PROPERTY

The
importance of property in the development of any country is undeniable; many
believe it is the surest form of security, and if done right often yields
significant returns. I cannot over stress the relevance of proof of title to
property in protecting one’s interest and the degree of control a person has
over said property.

I
am sure we have all heard of instances where an issue with proving title to a
particular property has surfaced, and there was an urgent need to establish
ownership as two or more people claimed to have conflicting interests.

Property
law in Nigeria tends to support the party who is able to “better prove” title,
thus where 2 or more parties claim to have interest in a property, the law will
tend to side with the party who has the best form of title.

TITLE TO PROPERTY

The
Land Use Act (The “Act”) vests all title to land in the Governor of the state
in which the land is situate, who in turn holds the land on trust for the
people of that state. The Act disallows any person from claiming unlimited
interests in any land (i.e freehold interest), as all interest is subject to
the superior title of the Governor. The initial grants of statutory rights of
occupancy are for a period of 99 years; it has a striking resemblance to the
concept of lease hold interest operating in the United Kingdom.

For
a better understanding I would like to highlight the fact that in Nigeria the
first person to occupy a piece of land which has never been occupied by any
other person is entitled to the grant of a Certificate of Occupancy (“CofO”). This
gives that person the right to occupy that piece of land. Where this person
wishes to transfer the entirety of her/his interest or a significant part
thereof to another party, that party must obtain the consent of the Governor
before the interest can be validly transferred, (however in reality the buyer
processes and pays for perfection; aside from this allowing the buyer to
attentively pursue the application, it also forms a reassurance that due
process has indeed been followed).

The
best form of title an individual can have is the registration of interest in
the property with the respective land registry of the state in which the
property is situated. Registration of title serves as constructive notice to
subsequent dealers in a property that an interest in the property has been
transferred; however, does not only protect the owners’ rights, it facilitates
property purchase transactions and also enables the said piece of property to
be used as collateral for a loan.

To
perfect your title in land, the following three steps are required: –

1. Governors
Consent;

2. Stamping –
payment of the relevant fee’s;

3. Registration at
the respective land registry.

GOVERNORS CONSENT

The
power of the Governor to give his/her consent in certain transactions is
provided for in Section 22. of the Act and it states:

“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, and transfer of possession,
sublease or otherwise howsoever without the consent of the Governor first had
and obtained”

This
power confers on the Governor the right to consent to any of the transactions
stipulated in the Act provided that they are valid. However, if the initial
consent has been obtained fraudulently, the Governor may revoke same
immediately.

In
essence, where a property owner has a valid right to occupy a property, making
him/her the equitable interest holder of the property, when such owner decides
to resell, mortgage, grant an interest in the property for long periods of time
(3 years or more) or carry out other transactions prescribed by the Act on the
property, the consent of the Governor must be obtained as the property is held
on trust by the state government. Failure to obtain the required consent
renders the transaction null and void, thus the rights of any third party
unenforceable.

STAMPING

Stamping
is essentially the payment of the applicable government levies for the
transaction. The amount that is to be paid by the purchaser for the transaction
may be a fixed nominal fee or may be ad valorem, which means it would be a
percentage of the cost of the transaction, i.e the purchase price of the
property. In the case of landed property the rate at which the document is
stamped would tend to be ad valorem. Failure to stamp the transaction documents
renders the documents unacceptable for registration at the relevant land
registry as well as meaning the documents would be inadmissible as evidence in
court.

CONCLUSION

One
of my uncles is the first born male in his household, thus under Benin Native
Law and Custom automatically inherited his father’s property in Benin; the
family house. He collects rent from some tenants and the family tends to use
the property for various activities; however, being as he has no intentions
what so ever of selling the property or ever residing there he has just left
it. The issue with this is that the property will never yield its full
potential if simply left there. He cannot even develop the property as a
prerequisite for most development permits is a need to attach a copy of the
title documents to the application.

A
lot of people understandingly avoid the entire process of perfection of title
because of want of not having to deal with government officials, and more
importantly not having to pay the extra costs attached to such perfection.

However, I must stress that
in case of any issues with the premises, said perfection would be for your
benefit and as the perfection of title ensures the completeness and validity of
most transactions.

Ivie Omoregie is a commercial lawyer, with experience and
keen interest in projects and transactions work within the Sub Saharan African
region. Called to practice in England and Wales and Nigeria.

Ed’s Note – This article was originally posted here.

Happy Eid Mubarak

by Legalnaija | Sep 12, 2016 | Uncategorized

Efficiency, Liquidity and Profitability in the Nigerian Power Sector; The Challenges Faced – Chukwudi Ofili

by Legalnaija | Sep 9, 2016 | Uncategorized

Nigeria,
Africa’s biggest oil producer, continues to experience challenges within the
power sector despite the huge outlay of funds and unprecedented reforms in the
power sector. The bottleneck in the power sector adds to already existing
issues such as the slump in oil prices and the foreign exchange issues that are
currently threatening Nigeria’s role as a destination for investors. The
challenges in the power sector are largely attributed to a lack of funds on the
part of the generating companies (GenCos) and the distributing companies
(DisCos).

It
is incontrovertible that another major challenge is the shortage of gas supply
to power plants as a result of the impact of pipeline vandalism in the
Niger-Delta region of the country. The power sector reform is anchored on the
use of gas-to-power systems in order to meet the power needs of the country.
The availability of gas to ensure consistency in power supply has been a great
challenge. This challenge is a result of inadequate infrastructure needed for
gas gathering, processing and transportation. The negative effects of saboteurs
and vandals in gas production affect the availability of gas. This presents a
major challenge to power generation growth projections.

On
the one hand, sabotage is a plague that continues to hamper the growth of the
Nigerian power sector. On the other hand, there is an ever-increasing need for
the DisCos to generate funds to improve infrastructure – i.e. their
distribution and transmission equipment. Therefore, in addition to raising
funds there are security challenges faced by the GenCos and DisCos.

The
challenge of adequate funding for the GenCos is best illustrated with the
challenges currently being faced by the Nigerian Bulk Electricity Trader
(NBET). NBET has recently entered into about 14 Power Purchase Agreements
(PPAs) with the GenCos. The NBET is indeed over-stretched as evidenced by the
huge debt portfolio it has with the GenCos.

Against
the backdrop of the many challenges facing the Nigerian power sector, it has become
imperative for the GenCos to significantly improve power generation while the
need to ensure supply of sufficient gas to bolster power generation cannot be
over-emphasised. Similarly, for the DisCos, there is a need to improve
liquidity to utilize improved technology for power distribution. To achieve
these objectives, it is pertinent that the stakeholders in the value chain
reach a consensus on probable solutions to the conundrum facing the sector. The
writer has attempted, in the following paragraphs, to provide some options that
may be adopted as a panacea to the many issues hampering the projected growth
of the sector.

Internal Corporate Governance

The
Power sector is made up of three mutually exclusive, but necessary parts –
generation, transmission, and distribution. In Nigeria, the GenCos and DisCos
have been privatized, while transmission of power is still managed by the
government. There is an increasing need to ensure that the GenCos and DisCos
are efficiently and effectively managed. It will, therefore, be helpful if the
management board of the GenCos and DisCos consists of at least one
representative of some of the key multinational oil companies – the end buyers
of power or gas. To the extent that they are a vital part of the value chain as
the users of power and gas, it is in their best interest to
ensure that the GenCos and DisCos are efficiently managed to achieve the
set targets for the GenCos and DisCos in the value chain.

Infrastructure Improvement

To
efficiently and effectively generate electricity, the GenCos and DisCos need to
improve the quality and capacity of existing infrastructure. It is also
imperative for the DisCos to identify key equipment required to generate and
distribute power to meet capacity and demand. A proper metering system with
improved standard of meters needs to be utilised. To adequately reach the
capacity of the power plants and meet the distribution needs of end users, it
is germane that the generation, transmission and distribution equipment are
updated to meet international industry standards. There is no doubt that
achieving this requires adequate funding as the GenCos and DisCos are already
financially stretched after having to use a larger portion of initial funds received
from financial institutions to acquire assets and licenses from the regulatory
agencies.

Funding and Liquidity Improvement

A
key challenge in the power sector is inadequate funds for the GenCos and, to a
larger extent, the DisCos to effectively meet generation and distribution
targets. It has become apparent that there is a pressing need for the GenCos
and DisCos to seek alternative sources of funding. Notwithstanding, the fact
that the N300 Billion intervention fund of the CBN has as its objective, fast-tracking
the development of electric power projects, especially in the identified
industrial clusters in the country; and serving as a credit enhancement
instrument to improve the financial position of the Deposit Money Banks (DMBs),
the DNBs are unable to provide adequate funding to service the investment needs
of the power sector. This is largely attributable to the fact that the bulk of
funding received from the DMBs was used for the acquisition of different power
assets with little or no funds left for operations and infrastructure
improvement. With the benefit of hindsight, perhaps a better strategy to have
been adopted by the Nigerian government would have been to conduct a financial
due diligence exercise on the GenCos and DisCos with a view to ensuring that
they had sufficient funds to: (i) purchase the relevant assets; and (ii)
adequately fund their operations. As security to ensure that the funds are not
utilised for purposes other than declared, the funds could have been housed in
an escrow account with the mechanics for disbursement from such account agreed
upon issuance of the relevant licenses.

Going
forward, the DisCos will have to do the following where they intend to put
forward proposals to international and domestic financial institutions to
provide facilities:

· Ascertain
the load within their distribution network;

· Ascertain
the amount of power required to be generated and distributed to meet the power
demands within their distribution network;

· Ascertain
the source of power to be distributed;

These
help to develop a good project model to attract both equity and debt investment
in the GenCos and DisCos.

Conclusion

There
is no doubt that the attempts by successive Nigerian governments to reform the
power sector are bold steps towards the rapid development of the economy.
However, the challenges and issues examined in the foregoing paragraphs will no
doubt significantly affect the aims and objectives of the reform. It is,
therefore, imperative that the government tackles these issues and challenges.
The challenges and the proposed solutions mentioned here are by no means
exhaustive, however, implementing the few options mentioned above will create a
peaceful environment for new investors to operate.

Chukwudi Ofili is a Senior
Associate in the corporate and commercial, banking and corporate finance; and
energy and natural resources practice groups of Bloomfield Law Practice.
He advises on matters such as local and foreign currency syndicated
lending, leases transaction/structured/project finance, structured trade
finance, energy and natural resources, due diligence issues and advisory
services, foreign investment advisory services, taxation and real estate.

Ed’s Note – This article was originally published here.

Reform of the Nigerian VAS Industry: The Good, The Bad & The Ugly – Detail Commercial Solicitors

by Legalnaija | Sep 9, 2016 | Uncategorized

A. Introduction

A
value added service (VAS) is any service other than voice calls provided over a
mobile network to subscribers. In Nigeria, VAS is big business and the most
popular VAS is probably caller ring back tunes. The Nigerian VAS industry,
estimated to be worth $200 million in 2014, now has a value of $1 billion. Due
to rapidly declining average revenue per user for voice calls, which since 2004
has decreased from just over $15 per month per subscriber to a new low of $4
due to the current economic crisis, mobile network operators (MNO) have
increased efforts to generate revenue through VAS.

Since
MNOs control the gateway to subscribers, they currently take the lion’s share
of revenue generated in the VAS ecosystem, which includes content providers,
and VAS providers (VASP) licensed by the Nigerian Communications Commission (NCC).
This has led to disgruntlement, particularly among content providers, who have
been lobbying the NCC to intervene for some time.

In
March 2016, the NCC issued a consultation paper on Procedures and Guidelines
for the Provision of VAS in Nigeria, a new framework for the VAS industry
which seeks to address the above issue. Officially though, the reasons cited
for the review of the current regulatory framework were the numerous complaints
received by the NCC relating to unsolicited VAS marketing messages, the use of
short codes for fraudulent purposes, and anti-competitive practices.
Furthermore, the VAS market is approaching maturity, according to the NCC.
Therefore, this new framework is intended to stimulate growth and innovation in
the market.

The NCC issued the existing regulatory framework – The License Framework for
Value Added Services – in April 2011. The main objective of the existing
framework was to implement appropriate safeguards for the use of VAS and the
approach there was one of light-touch regulation. The proposed framework
is a big departure from the existing framework, however it is a mixed bag of
good, bad and ugly. The good is that the NCC is taking a more holistic approach
to regulation of the industry and is making clear attempts to increase consumer
protection and ensure a fairer revenue allocation within the value chain.
However, the framework contains a few ambiguities and in parts is currently
lacking the detail required to implement it effectively. That is the bad. The
ugly is the level of additional regulation, which is going to increase the cost
of doing business for market players and ultimately may discourage new entrants
to the market. The framework may also encourage a new concentration of power in
the hands of a few, which is also an issue. In this article, we discuss each of
these aspects in turn.

B. The Good

i.
The NCC’s
holistic approach to regulation

In the existing framework, there is some recognition
of the roles of the different market players – VASPs, application providers,
VAS aggregators, and MNOs, however the focus was entirely on VASPs. Under the
proposed framework, the NCC recognises these roles and redefines them so that
each player understands its responsibilities and obligations in the market.

Therefore, going forward the VAS value chain will be
divided into three segments, each comprised of VAS & Content Developers (Developers),
VAS Hosting Service Providers (VHSP) and MNOs. Developers will own the content
and applications provided to subscribers through platforms owned by VHSPs. The
VHSPs will also provide transmission links to the networks of the MNOs, which
provide access to subscribers.

However, certain VAS will be reserved for MNO because they are either network
dependent or best provided by MNOs. These are ring tones, caller ring back
tunes and cell-ID location based VAS. Players are otherwise free to achieve
vertical integration, that is operate in more than one segment of the market
provided that an MNO, intending to expand to VAS development, must incorporate
a subsidiary with separate accounting and governance for this purpose and must
connect to networks through a VHSP. VHSPs that wish to operate in other
segments must maintain a separate account for each line of business.

ii Increased Consumer Protection

The existing VAS framework focuses almost entirely
on consumer protection, however the proposed framework goes much further in
terms of the quality of content and service requirements, regulation of
marketing messages and anti-competitive practices.

a) Promoting competition in the market

Promotion of competition in the market is a strong
theme of the proposed framework. Strong competition encourages innovation,
drives a higher quality of service, and ultimately may lead to lower prices. As
stated above, MNOs will be prevented from operating as Developers unless they
incorporate a subsidiary for this purpose. Most importantly, this subsidiary
will be required to connect to the networks through a VHSP like any other
Developer. The potential for MNOs, with their deeper pockets, to eliminate
competition from small Developers is evident and this is what the NCC is trying
to prevent.

The NCC will be able to prevent vertical integration in the market to preserve
or promote competition. Market rules will be implemented to curb abuse of
market power and other anti-competitive practices. A large section of the new
VHSP licence is dedicated to such practices which will be prohibited going
forward. These include cross-subsidisation, which is where a VHSP
vertically-integrated with a Developer charges an excessive price for its
hosting and transmission services to other Developers and either charges its
own Developer a lower fee for the same services, or sets the price of the
content produced by its Developer so low to gain an advantage within the
market. Other banned practices are the formation of cartels to fix prices,
discriminatory pricing and predatory pricing, where a VHSP sets the price of
its services below cost to eliminate the competition. Also, the NCC has not
ruled out the possibility of regulating prices charged to subscribers if
consumer protection so requires.

b) Quality of content and service

The quality of content (QoC) and quality of service
(QoS) requirements under the existing framework are limited to obligations on
VASPs to implement measures to ensure that VAS transmitted contains no sexually
suggestive or explicit material, and to comply with the 2012 Quality of Service
Regulations (QoSR). The problem is that the targets and key performance
indicators (KPIs) in the QoSR were formulated mostly for voice calls and data
services provided by MNOs. The VAS KPIs subsequently formulated by the NCC only
addresses delivery failures, incorrect feedback and multiple billing, all by
SMS and MMS, whereas VAS may be transmitted through other bearers including
interactive voice response (IVR) and unstructured supplementary service data (USSD).
These issues are addressed to some degree in the proposed framework.

Content that is unethical, inciting or illegal will
not be permitted. Content must also be of acceptable quality, accurate and of
good legal standing. The proposed framework sets out minimum QoS technical
standards to be met by VHSPs and MNOs relating to bit error rate, access or
login time, download speed, maximum processor loads and dropped access. The NCC
also sets minimum performance specifications for VHSPs. These relate to the
memory capacity of a VHSP’s platform, the VHSP’s transmission bandwidth, its
traffic-handling capacities including number of concurrent users, transactions
per second, and applications that it can host. Finally, the NCC imposes a
minimum availability of service of 99% on the VHSPs.

c) Curbing unsolicited marketing messages and mis-use of bulk messaging

Nigerian subscribers are inundated with unsolicited marketing messages daily
and complaints have been made to the NCC for years. MNOs point the finger at
VASPs for the unwanted messages.

Under the proposed framework, MNOs and VHSPs will be jointly responsible for
curbing the practice. Also, unsolicited marketing messages may only be sent as
an end-of-call notification. They may no longer be made by SMS, IVR, voice
calls or those vexing recorded messages. Any subscriber that gives a do not
disturb notice cannot be sent any marketing in any form.

MNOs are prohibited from routing traffic or sending
content from any short code or directory number which has not been issued by or
on behalf of the NCC. They are also enjoined from switching any messages which
do not contain the registered telephone number of the sender, and in the case
of bulk messages, the identity of the VHSP sending them. MNOs and VHSPs are
encouraged to implement technical measures to detect and block spam messages,
though ultimately it is the VHSP that will be liable for any scams, and illegal
or subversive messages sent via its bulk SMS platform.

iii. Fairer Revenue Allocation

The predominant distribution model in the VAS
industry at present is based on revenue share. As gatekeepers to the market,
MNOs reserve for themselves a high percentage of revenues. This can range
between 60% and 95% depending on the type of content and the channel of
distribution (SMS, MMS, IVR, USSD) used. This leaves a small amount to be
shared between the VASP and content provider. For certain content industries,
particularly music, which are heavily dependent on VAS to distribute their
content, the situation is untenable.

In the new framework, the NCC proposes to separate the transport cost from
the product cost and selling price of VAS. The transport cost is
the cost of airtime or data for subscriber messages to the VHSP server and the
transport of the VAS to the subscriber, whereas the product cost is the
cost of developing the VAS, while the selling price is the product cost
plus costs of hosting, distribution, branding and advertising, and bill
collections and accounting. The transport and product costs will be allocated
exclusively to the MNOs and Developers respectively. The other components of
the selling price may be allocated to the VHSP as agreed with the Developer.

Each component of the selling price has a weighting
based on international benchmarks. Product cost is 40%, hosting and
distribution costs are 20% and 10% respectively, while branding &
advertising and bill collections & accounting are each 15%. This means that
in the future, Developers may retain between 40% and 70% of the selling price
while the VHSPs’ share may range between 30% and 60%. If the VAS is paid for
through an MNO’s airtime and billing systems, the MNO will keep 15% of the selling
price in addition to the transport cost. However, these weightings serve as a
guide, which the parties can contract out of. If the parties fail to agree the
weighting, or a party so requests, the NCC may intervene. This may prove to be
an invaluable recourse for content providers outmatched by an MNO with stronger
bargaining power.

C. The Bad

Now that we have been through the good, we can
discuss the issues with the proposed framework.

i. Riddled with Ambiguities

The first is that as currently drafted the framework
is riddled with ambiguities. For example, the QoC requirements are open to
various interpretations. It is unclear what “inciting” content or content of
“good legal standing” is, and by whose standard will unethical content be
judged. The framework describes accurate content and applications as content
which is free of default, bugs and inaccuracies. However, no technology is ever
guaranteed to be free of errors or run uninterrupted. System crashes are
inevitable. Also, facts which are considered accurate today may, by a
significant change of opinion, be considered inaccurate tomorrow. Therefore,
stating that content should be capable of substantiation at the time of
publication would be preferable.

Even more confusing is where the framework provides that Developers and VHSP
may be required to refund subscribers where the VAS provided is faulty or
inaccurate and “a clear case of negligence is established.” The
reference to negligence is unhelpful here since it is for the NCC to set the
standards rather than rely on the general standard of care of negligence. Also
it is unclear whether negligence is to be established by the subscribers in a
court of law or the NCC before a refund may be claimed. If subscribers must go
to court before receiving a refund, it is unlikely any refunds will be made as
the time and expense of litigation will far outweigh the compensation to be
obtained.

Two of the QoS standards are particularly vague. The bit error rate must be
such that it “will not introduce noticeable degradation in the quality of
the message” and download speed should be “high enough to avoid
subscriber apathy.” Furthermore, the VAS availability standard of 99% is
set without a definition or method of calculating availability. For the VAS to
be considered unavailable, must there be a complete system failure or must a
percentage of subscribers experience performance issues? When calculating
downtime, do VHSPs exclude downtime for scheduled maintenance and force
majeure? All these make a difference to the level of availability in real
time.

ii.
A Non-Definitive
Guide

The second issue with the framework is that it is
non-definitive. The details of quite a few aspects are to be confirmed.

For instance, most of the provisions relating to competition are to be fleshed
out in market rules. This is to be expected since conducting a market study and
devising competition-based rules is a complex task which is likely to take
several months. That said, the uncertainty may discourage investments,
particularly by current players looking to expand to other segments of the
market. They may take the view that it is prudent to wait for the market rules
rather than invest now and later be required to divest their holdings under the
rules.

Other details which will be confirmed include the short code plan which will
prescribe the procedure for allocation of short codes to VHSPs. In the future,
short codes will be allocated to VHSPs which in turn allocate them to
Developers. Also, all operator USSD codes for accessing basic customer services
are to be harmonised across all networks. The details of this will be published
when the industry working group on short codes releases its recommendations.

In both the existing and proposed frameworks, market players are requested to
implement a code of conduct for the provision of VAS without more. Neither
framework contains a deadline by which the code should be implemented or
consequences of failure to implement the code, which is probably why no code
has been implemented to date. In other jurisdictions, the threat of additional
regulation, if a code is not implemented by a certain date is usually
sufficient encouragement for the industry to implement a code.

A key aspect missing from the framework are the
sanctions applicable for breach of the obligations imposed on the players. For
example, there are no sanctions prescribed for breach of the rules on bulk
messaging and unsolicited marketing. Note that the existing VAS framework does
prohibit sending unsolicited messages and spam. Therefore, the current
marketing malpractice was not brought about by a lack of regulation, rather it
was a lack of enforcement, and this aspect is not yet addressed in the proposed
framework.

D. The Ugly

The issues described above are actually of less
concern than the additional red tape that the NCC intends to introduce and the
new oligopoly that may result from the new licensing regime.

i. More red tape

There is a requirement that Developers be registered
as a body corporate, which is unduly restrictive. While many creatives
incorporate companies as a vehicle to run their affairs, many operate as
partnerships or individuals under a business name. Then, VHSPs will be required
to submit licence agreements with Developers to the NCC for approval. It is not
evident what purpose the approval of such agreements would serve, and this
appears to be regulation for regulation’s sake. However, the most
flagrant instance of this is the creation of a class licence for Developers.
The details of the Developer class licence are yet to be confirmed. However,
the idea alone has been met with strong resistance from industry players, such
as the Wireless Application Service Providers Association of Nigeria.
Introducing this class licence goes against the line that the NCC has taken in
the past which is that the NCC does not licence or regulate technology. The
class licence will therefore be an additional barrier to entry to the market
for Developers.

ii. The Potential for a New Oligopoly

VASPs are most fearful that having succeeded in
wresting power from the MNOs through the separation of transport cost from the
VAS selling price under the proposed framework, some of the other changes in
the framework will give rise to a new oligopoly at the VHSP level. It is
reported that the VHSP licence fee will be ₦10 million for a five-year licence. VASPs have
complained that at ₦2 million a year this is prohibitively high, and
fear that many of them may be unable to obtain a VHSP licence and instead will
be relegated to Developer status. Therefore, only a few will be able to obtain
the licence. This, coupled with the fact that VHSPs will be the gatekeepers to
the MNOs’ networks and responsible for allocating short codes to Developers
going forward, may lead to a new concentration of power akin to that of the
MNOs, which goes against the pro-competition objective of the reforms.

E. The Way Ahead

Despite the shortcomings of the proposed framework,
the NCC is to be lauded for finally intervening in the market and attempting to
address the various imbalances and malpractice. However, the NCC must remain
mindful that its two main functions are first the facilitation of investments
in the Nigerian communications industry and second the protection of consumers.
Over-regulation will discourage investments and competition, therefore a
balance must be struck. We agree with industry players that further
consultation must be undertaken prior to finalising the framework, in order to
address its shortcomings in a manner which fulfils the NCC’s mandate. The
consultation paper is available here.

Detail
Commercial Solicitors is distinct as Nigeria’s first commercial solicitor firm
to specialize exclusively in non-courtroom practice. Based in Lagos, Nigeria’s
business capital, DETAIL is totally committed to its clients’ business
objectives and reputed for dealing with the minutiae. Email: info@detailsolicitors.com

Ed’s Note – This article was originally
published here.

Possession Vs Ownership – Prince O Williams -Joel

by Legalnaija | Sep 9, 2016 | Uncategorized

The word possession in
land law often coincides with ownership. Although the two words are often
confused and majority of people take these words to mean the same thing but
possession is not the same as ownership. Possession means having physical
custody or control of a property with an intention to continuously retain the
property, while ownership is the exclusive legal right to possesses something.

With the help of an illustration, I will further explain the difference between
ownership and possession. For instance, where there is a land purchased and
owned by Mr. Adamu, squatters on such land other than Mr. Adamu are possessors.
Mr. Eze using Mr. Adamu’s land for farming is in possession of Mr. Adamu’s land
while Mr. Adamu remains the owner of the land.

Another illustration is in
the case of a landlord and tenant. A tenant has possession of a landlord’s
house and not ownership. The landlord owns ownership of the land. However, a
wrongful possessor could be protected by law even against the true owner of the
property. For instance, the law will protect a tenant that was forcefully
ejected from his house by the landlord even when the tenant is in arrears of
his rent.

A person can either
possess a land lawfully or unlawfully.

INSTANCES OF LAWFUL
POSSESSION:

The relationship between a landlord
and a tenant; after all necessary agreement has been met by the tenant to
the landlord, the tenant is said to lawfully possess the house.

A person that has the consent of the
owner to stay on the property is said to lawfully possess the land.

A person that has occupied a land for
years without disturbance and claim to the land is said to lawfully
possess the land and such person can sue any trespasser on the land even
if the land is not legally owned by such possessor.

INSTANCES OF UNLAWFUL
POSSESSION:

A tenant that has not met with the
terms and conditions of the tenancy agreement and is in arrears of his
rent, is in unlawful possession of the property.

A trespasser on a property is said to
own an unlawful possession of the land or property.

A person that has occupied a land
without the consent of the owner is said to have unlawful possession of a
land.

It is, however, important
to note that ownership gives right to possession while possession does not give
right to ownership. Now you know there is a difference between ownership and
possession.

Ed’s Note – This article
was originally posted here.

Of Reforms, Revolutions and the Ministry of Trade & Investment: Amendment of the Companies and Allied Matters Act

by Legalnaija | Sep 8, 2016 | Uncategorized

“In the sense that he
tackled the stifling role of government in our economy, Bibi was not a reformer
but a revolutionary. A reform happens when you change the policy of government;
a revolution happens when you change the mindset of a country…” Ron Dermer
speaking about the financial-sector reforms implemented by Benjamin “Bibi”
Netahanyu in Israel in 2003.

The decision by the
Corporate Affairs Commission (Commission) to “review and to bring the Companies
and Allied Matters Act (CAMA) in conformity with global trends” is definitely
commendable. The CAMA is our view, the most critical piece of legislation in
the discourse around increasing FDI flows in Nigeria because of its primary
relevance to the ease of doing business and ease of investing in Nigeria. It is
refreshing to note that the Federal Government has also prioritized a possible
review of the operations of the Commission as same forms part of the reasons
for seeking emergency powers from Nigeria’s National Assembly. It certainly
would not be an exaggeration to submit that the revival of our economy can
depend, partly on the ongoing review of the CAMA.

The approach adopted by the
Commission in welcoming proposals from professional communities is also commendable
and we hope that the collation of the proposals and the debate around the final
amendments to the CAMA will be as robust and intellectually driven. Given the
state of our economy and the need for economic revival, we affirm that ongoing
reforms must go beyond merely scratching the surface. We affirm that in
reviewing certain legislations and policies, government must be open to the
level of innovation necessary to leapfrog economic revival. If that means yanking
off all that we have been used to and starting on a new note then so be it.
Government must not shy away from doing what is best in the interest of our
dear country.

A review of some of the
changes that have already been proposed by the Commission, confirms clearly
that the Commission is positioning itself to be a more efficient regulator. One
of the proposals that we consider very strategic to the growth of
entrepreneurial activity, is our proposal for a separate legal structure
(typically referred to as the ‘One-Man Company’) that comes with the full
complement of a lower tax rate relative to the prevailing income tax rate,
lesser compliance requirements and the benefit of limited liability and
separate legal personality. The One-Man Company essentially combines some of
the benefit of a sole proprietorship and that of a limited liability company
and has been adopted in varying forms in various jurisdictions, from UK, to US
and to India as a strategy for promoting the growth of small and medium scale
enterprises and driving growth in the venture capital/private equity space.
Some of the other proposals which we consider strategic at a time of economic
revival as this include (a) clarification of the rules around ‘doing business’
in Nigeria, a principle which has been subject of litigation in a number of
cases; (b) the denomination of share capital in currencies other than the
Naira; (c) review/abolishment of rules around non-voting/non weighted shares;
(d) review/abolishment of the rules around financial assistance by a company
for the purchase of the company’s own shares; and (e) a creation of a framework
for valuation of sweat equity.

Beyond the substantive
legal issues that are subject of ongoing reforms, what is far more concerning
to us is the administrative machinery/structure for the implementation of the
CAMA, as reviewed. Legal and policy reforms can hardly achieve desired
objectives where there is no corresponding innovation around the administrative
machinery for implementing reforms. A number of proposals have been put forward
by the Commission to its administrative structure. Currently, it is being
proposed that there should be a board for the Commission and also that
nominations to the board should be accepted from the Accounting profession and
from the Institute of Chartered Secretaries and Administrators of Nigeria
(ICSAN). However, the question that we ask is: should there not be a more
elaborate debate around the administrative/implementation structure of the
Commission? We answer this question in the affirmative, especially in the light
of developments in other jurisdictions. Here are some possible legal
structures:

Trading Fund Status

A Trading Fund is
essentially a financial and accounting framework established by law to enable a
government ministry, agency or department (MDA), or part of an MDA, to adopt
certain accounting and management practices that are adopted in the private
sector. A number of attributes differentiate a Trading Fund from a typical
MDA. These include (a) A Trading Fund operates on a self-financing basis and
does not thrive on subvention or funding from the legislature to finance its
daily operations. Consequently, staff cost and other expenses are paid out of
the revenues of the Trading Funds (b) A Trading Fund does not normally aim to
make a ‘profit’ and the fees charged by a Trading Fund are usually for the full
cost of services provided or on a cost recovery basis. A Trading Fund will
usually fix its fees and charges in accordance with own financial target, which
is normally to earn an average rate of return on capital employed at a
pre-agreed, often regulated percentage, the primary objective being the need to
achieve a reasonable rate of return based on the fixed assets employed. (c) As
opposed to the practice whereby operating surpluses are remitted to the Government,
surpluses are retained as reserves and can be re-invested to enhance existing
services and explore new business opportunities (d) A Trading Fund has
significant flexibility in human resources and staffing.

It is important to note
that a Trading Fund remains part of the Government in the sense that its assets
would remain government assets and its staff would remain civil servants. The
underlying philosophy of a Trading Fund is that an institutional change would
provide the appropriate flexibility in management of resources and help nurture
a new working culture that will improve services in terms of both quality and
cost-effectiveness. A number of jurisdictions have introduced the concept of
trading funds as part of public service reforms aimed at driving a more
customer-focused service culture and achieving sustainable improvements in
efficiency, cost effectiveness and in developing new services. The trading fund
model has been used with considerable success in a number of jurisdictions and
across a number of traditional government agencies including immigrations, post
offices, and corporate and public registries, The Companies House in UK is
organised as a Trading Fund. Without a doubt, the Trading Fund structure can be
used for other government MDAs as part of ongoing economic reforms. From a
structural standpoint, the implementation of a Trading Fund will require
passing a bill into law and the execution of requisite framework and service
level agreements between the relevant MDA, here the Ministry of Trade and
Investment and the Commission.

Registry Operator
Licensing

It is also possible to
restructure the Commission in such a way as to decouple the ‘registry’ function
of the Commission from its core regulatory functions. This structure has the
potential of making the Commission a more efficient regulator as it will enable
the Commission to focus more on its core functions of administering the Act and
also strengthening its capabilities to conduct investigations into the affairs
of any company where the interests of the shareholders and the public so
demand. Under this structure, the Commission will grant a Registry Operator’s
License, (either on a regional basis or a unitized basis) to a private
information technology/data company, seeing that the operation of a registry is
increasingly a technology/digitization-based function. This is usually by way
of a long term contract with a negotiated service level functionality based on
predefined/objective criteria. The model shares some of the contracting features
of the standard public-private partnership model but will require a number of
legal innovations to make the model sustainable. Key considerations include
data ownership, data retention and data privacy rights, retention of critical
functions by the government, management of intellectual property rights, and
management of software rights. It is also possible to implement a state-backed
guarantee as a security option in the event of a default in the integrity of
the companies’ register. This model will not only generate significant revenue
for the Commission through royalties and/or sign-on payments, as the case may
be, but also improve the delivery of services to Nigerian businesses, whilst
also ensuring that the Commission is re-engineered to effectively carry out its
core statutory responsibilities.

The argument that
privatisation will lead to unemployment is in our view, mostly, a failure of
contract and negotiation. An Operator’s License will typically be structured in
such a way as to make extensive provisions for employee training and employee
retention based on objective re-certifications, with a clear positioning that
work is available for members of staff who are ready to adapt to changing
circumstances and meet the new demands of their jobs. In this event, the
Commission can, in the public interest, back-out the cost of such
re-examination out of royalty/sign-on payments. If anything, a modern registry
will minimize capital investment, bring more businesses into the formal economy
and encourage entrepreneurial activity.

Decentralization of
Companies’ Regulation

For some reason, it
appears that this proposition will be dead on arrival. The proposition is quite
simple. Why should companies’ regulation be a matter for the Exclusive
Legislative List? Why should trademarks, copyrights/intellectual property
regulation be a matter for the Exclusive Legislative List? The Federal
Government may need to urgently, revisit the economics of legislative power, as
part of legal and structural reforms in a time of economic revival. The Federal
Government needs to travel light. It is now no longer a question of political
power but that of economic sense. Whilst decentralization of companies’
regulation will not by itself drive efficiency as a number of innovations will
still have to be implanted by state registries, decentralization will engender
competition amongst state registries and can drive efficiency.

The foregoing propositions
are examples of the trends we see globally in business registration and regulation.
A number of other innovations have also been implemented in corporate
registries around the world as part of public sector reforms to save costs and
drive efficiency. In Belgium, all statutory registers have been merged into a
single database under the auspices of one registrar. In Gibraltar, a private
sector company has been appointed as Assistant Registrar with full authority to
run the country’s companies’ registry. In addition to partnering with local
agencies saddled with responsibility of promoting entrepreneurship to register
new businesses, South Africa has merged the companies’ registry with the
trademarks registry to form the Companies and Intellectual Property
Registration Office. In India, a public partnership under a BOT arrangement
with a private sector operator was used to strategically develop new systems,
set-up and operating additional facilities and introducing online facilities.

The point has to be made
that there is no one-size-fits-all approach. Indeed, a variety of legal
structures can be used to implement far-reaching reforms in business
registration and regulation. However, certain goals must, in our view, be of
priority to the Commission, namely (a) substantive and administrative reforms
must be data-driven and subject to market-testing procedures; (b) the
Commission must seek to attain the highest possible standards of register
integrity; (c) the Commission must aim to reduce the burdens associated with
the provision of filing and search services; (d) the Commission must aim for digital
transformation and to become a 100% digital organisation, it should be possible
to register a business in 5-7 easy steps online; (e) the Commission must
engender an open data approach which should, amongst other things, make the
Companies’ Register, subject to relevant restrictions, accessible online.

By : Olubunmi
Abayomi-Olukunle

Olubunmi Abayomi-Olukunle
is a Managing Partner at Balogun Harold, a law firm focused on private equity
and venture capital transactions and emergig high growth-tech companies.
Olubunmi can be reached on olu@balogunharold.com and on 08060817371

Ed’s Note – This article
was originally published here.

Policy And Regulatory Challenges Posed By Convergence In The Broadcasting Industry – Yahaya Maikori

by Legalnaija | Sep 8, 2016 | Uncategorized

Since the earliest days, the telecoms
and broadcasting industries were seen as entirely separates industries. As
such, the regulatory regimes that developed around them were based on specific
technology platforms, with different rules for each distinctly perceived
industry. This approach was widely followed around the world.

The current framework of regulation has
worked well for many years until. new developments in interactive digital
broadcasting and the roll out of high speed Internet infrastructure – the
fast-changing environment has brought about convergence of both industries.

So what is “convergence”? The Webster
dictionary defines convergence as “act of moving towards uniformity or union”
or “the merging of distinct technologies, industries, or devices into a
unified whole” .If we apply this definition to the broadcast industry we can
see that the ongoing process of convergence between the broadcast and the
telecommunications industry.

1. EXAMPLES

In order to identify some of the
regulatory issues related to convergence, we need to consider two existing
convergent systems and their implications – VoIP and IPTV , which are
already deployed and in commercial use around the world.

While VoIP allows a cable television operator
or ISP to enter the voice telephony market, which traditionally has been the
mainstay of telcos, IPTV allows telcos or ISPs to begin television-broadcasting
services. Convergence can thus enable the entry of telecom firms into
broadcasting or broadcasters into telecom service provision.

In each case, the firm making the
entry will be subject to different regulations if they are regulated on the
basis of the service they intend to provide. For example, if a telco starts to
offer IPTV based television broadcasting, it might have to follow content
regulation guidelines that otherwise are usually absent in telecom services. On
the other hand, if a cable operator begins to offer VoIP based telephony, it
might have to offer emergency services connectivity (e.g. 911 service in the
United States). However, these rules are not entirely clarified for such new
entrants because these entrants do not fall squarely into the traditional
categories.

The development of convergent services
by telecommunications and broadcasting operators is principally fuelled by the
wish to maximize profit through the provision of a wide range of multimedia
products and services to the consumers, made possible through digital
technology revolution.

As the process of convergence continues
it raises specific regulatory challenges given the merging of firms,
sub-sectors, and facilities between telecommunications and broadcasting affects
not only the carriers, but also regulatory authorities. The fundamental source
of this challenge is the need to reconcile different regulatory philosophies in
the sub-sectors of both industries. On the one hand, broadcasting is
heavily regulated, and is less competitive, and often has a merged content
carriage setup. Telecom services, on the other hand, are regulated to a lesser
extent, with little to no control exerted over content, a greater emphasis on
carriage regulation, and with competition in most markets.

Hence, applying regulation based on
existing regulatory regimes to new emerging convergent services may not be
effective in being able to bring about desired regulatory results which makes
it appropriate to conduct a health-check of our regulation, to ensure that it
remains coherent, and that the current delineations remain appropriate, and to
guard against a range of possible risks.

So what have the challenges been or
what are the changes going to be for regulators and policy makers as we move
into a more converged environment?

Authorizations and licensing

In traditional regimes, authorization
and licensing of service providers could be based on the type of service
(voice, data, and video) or technology (cellular, fixed telephony, terrestrial
broadcasting). However, in a converged setting, it is difficult to maintain
these boundaries because of the overlaps that arise: broadcasters (e.g. cable
companies) are offering telecom services (Internet, voice), while telecom
services (e.g. phone companies) are offering broadcasting services (IPTV).
Further, cellular operators are providing mobile television services.

Competition (ownership)

Traditional broadcasting industry rules
about media ownership have restrictions on the monopoly of one owner on both
different media (known as concentration limits) and across different media
(cross-ownership limits). These limits are in place to enable diversity in the
content and ideas presented by the media. Some countries have regulations in
place that do not allow firms to have both telecommunication and broadcasting
operations. While in the US the efficacy of these line-of-business restrictions
is dependent on how services are defined in the context of multiple plays. For
example, regulators would need to decide if video provided to mobile terminals
is considered broadcasting or whether VoIP is a complete substitute for
analogue voice services.

Additionally, regulators must also
ensure that convergence in terms of mergers and acquisitions does not hamper
competition. As evident now, markets may have very intense consolidation
activity throughout the media industry, and in the near future, in the telecom
industry as well. As firms merge, it is important that convergence across
sectors, such as cable television and mobile telephony, or in one sector, such
as content production and distribution, does not result in a monopolistic
market structure.

Market access

Convergence allows new entrants the
means to enter into protected markets. In provision of TV over IP, for example,
cable and terrestrial broadcasters will spar with telcos about whether their
heavily regulated and restricted sector should be opened up. Similarly, the
bundling of video, voice, and data in packages by cable companies will mean
another threat to telecoms providers who are used to a monopoly over voice, and
have had to deal with Internet telephony.

Such a shift changes the competitive
environment and radically alters existing revenue streams and sector economics.
For example, in the U.S.A. in 2005, the number of Verizon’s fixed telephone
subscribers declined the most in the New York metropolitan area, where it faces
the most competition from cable operators offering voice services. In a
shifting environment, it is essential that governments reduce regulatory risk
and the possibility of discretion Convergence
opens up the possibility of greater competition that will benefit consumers
with aggressive pricing, increased availability, and competitive service
packages.

However, it also opens up closed or
restricted markets to new entrants. Market access has typically been heavily
regulated, with governments often charging high licensing fees or taxes to
traditional service providers. Hence, with increased competition, returns on
investments that were made with the assumption of restricted competition will
change. This adjustment is significant for the investors and requires a clear
and transparent introduction.

Content

Privacy and law enforcement

If VoIP calls travel over public
Internet or other publicly accessible networks, it is possible that the privacy
of telephone calls, which is a legal guarantee in most countries, will be
compromised. On the other hand, VoIP might be a

security threat in case government or
law enforcement agencies want to survey voice conversations. Since these calls
do not travel over a circuit switched network, and do not have constant telephone
numbers associated with the caller or receiver, they might be able to escape
surveillance. Governments will thus have to balance privacy rights with law
enforcement or surveillance objectives.

Content regulation

With converged content delivery
mechanism, content formerly dedicated to specific networks now can be conveyed
on different infrastructures and delivery platforms. This poses a potential
conflict in regulation as governments usually apply different standards of
content regulation to telephony, sound and television broadcasting, print media
and the Internet. With convergence, policies may need to be changed to achieve
the common.

Some of the issues regulators face
regarding content regulation are:

· Applicability
of public service provisions

· Cultural
diversity, local content quotas and local production of content

· Programming
standards associated with accuracy and impartiality in the reporting of new and
current affairs

· Intellectual
property rights

· Role and
means of supporting public broadcasting

· Programming
standards associated with decency, censorship, and freedom of speech

· jurisdictional
issue is the concept of data sovereignty, in other words that digital
information is subject to the laws and regulations of the country in which it
is stored.

Every government has to make decisions
about how to react to convergence. For many, the choice is between continuing
with the status quo and modifying their regulatory regimes to respond to
convergence. However, given the almost certain migration of networks towards
IP-based convergence in the next few years, the question becomes – how should
governments pace themselves to respond to convergence. Local
cultural,political, and economic realities play a role in the decision-making
process and timing of regulatory reform.

To get some guidance on how other
countries have responded to convergence lets look at these 3 countries :

Case studies

US case.

The main regulator in the ‘information
delivery’ market is the Federal Communications Commission (FCC). The FCC is in
itself not a ‘converged’ regulator, as it shares its competences at the federal
level with the Department of Justice (DoJ) and the Federal Trade Commission
(FTC), dealing with competition and consumer protection policy; and at the
state and local level with the state public utility commissions (PUCs).

Also with respect to convergence, there
is no grand strategy but more of a ‘muddling through’ approach. The US system
depends to a great extent on court rulings, and an active civil society
involvement. However, where the FCC intervened, its decisions had a major
impact on Multi sectorial approach convergence and market developments. The
intervention to ensure local market competition lead to a nation wide
telecommunication duopoly; deregulation of broadband access supported cable
operators, as telecommunication networks remained regulated; and the dilution
of media ownership rules have boosted the online presence of major broadcasters.

The reactive nature of the US approach
provides for a very predictable, robust regulatory environment in which new
entrants can challenge existing practice. This has allowed breakthrough rulings
and keeps the FCC at the forefront of setting policies dealing with the effects
of convergence. However this comes at a high legal cost and allows incumbents
to delay or stop new players from entering. The US is one of a few countries
with strong inter-modal broadband competition between Digital Subscriber Lines
(DSL) and cable modem, and with a significant Fibre-to-theHome (FTTH)
development. However, the FCC has been less effective to ensure competition
over the networks, which is also reflected in the fierce debate over net
neutrality, which has not (so far) been much of a concern to European
regulators. All in all the US market and its regulators provide a lot of
interesting cases as it is here where the innovation is highest and regulatory
challenges come to the fore. The US is also an interesting market to observe as
it has pioneered with new policy instruments like selfregulation and
sophisticated spectrum auctions. A major difference between the US and many
other countries is the comparatively low level of content regulation in the US,
making it easier to accommodate convergence of content distribution.

UK case.

The UK communications market is one of
the more competitive in Europe and is characterised by a complex industry
structure with a dominant telecom incumbent, a mix of good (uptake of digital
television, content diversity) and bad (broadband penetration, price and
quality) performance, a content industry strongly affected by a public sector
incumbent, the BBC and a converged regulator employing highly sophisticated
tools and closely engaged with industry, community and academic communities.

The UK case stands out as having the
most ‘converged’ regulator, (office of communications) Ofcom, which was
deliberately formed out of a merger of five existing regulators to deal with
the new realities of integrated information delivery markets. However, Ofcom
does not serve as a comprehensive and independent regulator of all aspects of
the information delivery chain. It is more appropriate to think of it as a
central platform on which converging issues, tools and styles of analysis can
be integrated and through which the activities of key policy stakeholders can
be coordinated. Ofcom is independent and has significant policy setting,
supervisory and regulatory powers, which it applies with a strong inclination
towards liberalised markets and deregulation. Ofcom’s duties fall under
separate government departments and thus separate Commons Select Committees.
There is no single structured House of Lords system of oversight of Ofcom. The
UK case is interesting as Ofcom strives to lead the way in many areas; actively
procuring and conducting research, piloting new spectrum auction designs,
conducting wide scale consultations, engaging stakeholders and supporting self
regulatory solutions, especially in the internet domain and the area of
audiovisual content. It uses its position to support innovation and
competitiveness whilst protecting the interests of consumer support innovation
and competitiveness whilst protecting the interests of consumers.

South Korean case .

South Korea has a dynamic market
environment, high broadband penetration, and apparent leadership in the
development of converged services. Its market development is mostly dominated
by large telecommunications companies, less by bottom up innovation of new
entrants or content industry. The government has actively supported the roll
out and access to broadband (FTTH) and embraces ICT as the main driver of
competitiveness for the Korean economy. The convergence trend in South Korea
was lead by the market and the government was relatively slow to follow. After
2004 it has initiated a reform process of its market governance and regulation,
in response to convergence.

The government sees convergence as a
positive development and a policy goal in itself, with high potential for
innovation and new service development. South Korea chose to adopt the single
regulator model by merging the telecommunications regulator MIC and the
Broadcast regulator KBC in the new KCC(Korean communications commission). KCC
has been given a broad remit involving a range of technical, economic, and
societal objectives. However, this converged approach is only partially
implemented, as its reporting structure continues to follow the segregation
between broadcast and telecommunication and there remains a rift between the legacy
regulators as to the structure of a new ‘converged’ communication regulation.
Overall South Korea demonstrates the ability and drive to balance the
technological, economical and societal (TES) objectives.

This balance is influenced by
regulatory legacy, with content policy being dominated by societal concerns and
telecommunication policy by the market and technology perspectives.

In the application of new policy
instruments South Korea is less advanced than the UK and the US. Spectrum
auctions have so far not been used as allocation mechanism. SK still relies
mostly on beauty contests and administrative pricing, with a very prescriptive
approach to usage and technologies to be applied. Much effort has gone into creating secondary spectrum markets and reuse of
abandoned spectrum, but without notable effect so far. South Korea has access
to significant private and public research capacities to support forward
looking policy making, but is slow to integrate scientific knowledge into
regulatory practice.

Conclusion

In conclusion these 3 case studies show
that is no ideal or perfect way of responding to the process of convergence but
three cases share a number of important features. They all acknowledge
convergence as a relevant trend that has the potential for disrupting the
market and the existing governance structures and regulation. This awareness
has lead to regulatory adjustments in the case of the US, and a total
overhaul of the regulatory landscape in the UK; with a more modest review in
Korea currently being implemented. These change processes were strenuous and
encountered a lot of internal resistance, which required political leadership
and perseverance to succeed.The impact of regulators on the market proves to be
strong. In all cases a degree of path dependency can be observed in the market
based on the legacy regulatory system. This tends to have a distorting effect
on the market, and often leads to incoherent policies across the information
delivery chain; e.g. biasing (large) telecom operators in South Korea; strengthening the duopoly, and
discriminating between (unregulated) cable and (regulated) telecommunication
infrastructure in the US; and strong ties between the regulator and the
incumbent telecommunications provider, and favouring economic over societal
objectives in the UK.

None of the cases have a fully
converged solution. In the UK Ofcom is not fully in charge of content and media
policy; whilst the FCC does not have powers over the internet. The South Korean
situation is still developing, but the current set up suggests that
communications and audiovisual content policy will retain certain of its
traditional characteristics. In all cases a general competition authority plays
a complementary role.

Typically all cases have chosen to
integrate spectrum policy in the mandate of the ‘information’ regulator; as it
is considered a key strategic ex ante policy tool with large impact on the
‘information’ market and society as a whole. The traditional technological
objectives have been replaced by a more strategic balancing of TES objectives,
which requires coherence and consistency in their application. The allocation
mechanism of choice is the increasingly
sophisticated spectrum auction. Differences occur in the views on the need to
ensure technological and service neutrality, and mechanisms on reuse, and
extending licenses.

How to respond to convergence will
depend on local political and technical factors, but this issue needs to be debated
and discussed by countries.

Thank You.

Being a paper delivered at the
COMMONWEALTH BROADCASTING SUMMIT 2016 held in lagos 11 – 13 May 2016

Yahaya Maikori – Partner Law Allianz

Ed’s Note – This article
was originally published here.

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

by Legalnaija | Sep 6, 2016 | Uncategorized

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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Prince-Alex Iwu is an associate at Aelex Legal Practitioners & Arbitrators

Ed’s Note – This article was originally published here. Photo Credit – here

Ed’s Note – This article was originally published
here.

Photo Credit – here