Savannah Bank V Ajilo: The Land Use Act by the virtue of its section 1 vested all lands in the state in the Governor of that state to be held in trust for the use and benefit of all Nigerian. This vesting of land in the Governor has its effect implicated in section 22 of the same Act which requires that the consent of the Governor must first be sought and obtained prior to alienation of interest in Land. This consent provision was implemented in its full force in this case.
The court however, did not answer the question as to whether the mortgagor whose duty it is to obtain Governor’s consent should be allowed to rely on his own irregularity as a defense to the detriment of the mortgagee.
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Issues raised in Savannah Bank OF Nigeria Ltd v Ammmel o Ajilo – LOR (27/1/1989) SC
a. Where Governor’s consent is not first sought and obtained prior to the execution of a mortgage transaction, as provided in the Land Use Act.
b. Whether the consent provision in the Land Use Act is applicable to land owners who had their lands vested in them prior to the commencement of the Act (deemed grantees).
Fact Summary of Savannah Bank V Ajilo
The plaintiffs/respondents were the owner of the land in dispute prior to the commencement of the Land Use Act, making him a deemed grantee of right of occupancy. Subsequently in 1980, the plaintiff entered into a mortgage transaction with the 1st defendant (Savannah Bank). The land was then mortgaged in favour of the 1st defendant as a security for the money owed to it by the 2nd plaintiff. The 1st plaintiff is the managing director of the company which is the 2nd plaintiff. The defendants defaulted in payment of the secured debt.
Upon this default, the 1st defendant (Savannah Bank) entered to exercise their statutory right of sale with respect to the mortgaged land. The plaintiff then instituted this action in the High Court of Lagos State contending that the defendant cannot exercise their right of sale with respect to the mortgaged land, since they did not obtain Governor’s consent prior to the execution of the legal mortgage as required by section 22 of the Land Use Act.
In this action, the plaintiff sought a declaration that the mortgage transaction is null and void on the ground that neither the plaintiff nor the defendant had obtained Governor’s consent prior to executing the mortgage.
He also sought a declaration that the public notice of auction sell advertised by the defendant in respect to the sale of the mortgaged land is null and void since the power of sale cannot be exercised in respect to it in the absence of Governor’s consent being obtained prior to the mortgage, and an order of perpetual injunction restraining the defendants from selling or dealing with the land in any manner inconsistent with the rights and interest of the plaintiff with respect to the mortgaged.
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The defendant argued that section 22 of the Land Use Act is only applicable lands in respect of which the Military Governor had granted a statutory right of occupancy; that it does not apply to deemed right of occupancy holders (that is, land owners who had their lands vested in them prior to the commencement of the Land Use Act). The plaintiff made an argument to its contrary which the court upheld, holding that the requirement of consent applies to both deemed grantees and those granted statutory right of occupancy by the Governor.
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Judgment of the court in Savannah Bank OF Nigeria Ltd v Ammmel o Ajilo
The High Court granted the plaintiff all the relief sought, accordingly. The defendants being dissatisfied filed an appeal to the Court of Appeal on the ground that the trial court erred in law to have held that the requirement of Governor’s consent before alienation of interest in land applies to a deemed grantee.
The defendants being dissatisfied went a step further to the Supreme Court, stating the same question for determination.
Supreme Court examined the submissions of the learned counsel from both sides and even invited amicus curia who is a professor of law and Senior Advocate, to proffer his submission in respect to the issue. On the interpretation of section 34(2) of the Land Use Act, Supreme Court defined the term ‘deemed’ as having the same effect and consequences to the same extent as that which it is deemed to be.
Therefore, that the deemed grant and the statutory right of occupancy has equal regard and are both covered by the Act. It is on this basis that Supreme Court held that section 22 which id the consent provision also applies to deemed grant; those who had their land vested in them prior to the commencement of the Act. Going further, section 22 of the Land Use Act did not mention ‘deemed grants’ or ‘right of occupancy’; it rather expressly mentioned ‘statutory rights of occupancy’.
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This reads to the effect that the requirement of consent is applicable to holders of statutory right of occupancy granted by the Governor. The Supreme Court however, reiterated that to discover the intention of the Act, it must be read wholly and not in parts. Supreme Court therefore held that the combined perusal of sections 34(2(, 15, 20, 22, 28 and 38, is to the effect that the requirement of Governor’s consent as required by section 22 of the Land Use Act is applicable to both deemed grant and holders of statutory right of occupancy granted by the Governor. The court further stated that to exclude its application in respect to deemed grant would defeat the purpose of the law.
Supreme Court held on the substance of the appeal that the mortgage transaction failed for noncompliance with the consent provision. The appeal therefore failed, upholding the decision of the High Court and the Court of Appeal.
The Supreme Court observed and agreed with the submission of the learned counsel to the appellants on the hardship which this consent provision poses to commercial transactions, as it would pose greater impossibility for the Governor to sign the consent papers in respect to the numerous land transactions that goes on in the state. The Supreme Court further commented in this case that this consent provision of the Land Use Act needs to be reviewed.
Edeh Samuel Chukwuemeka, ACMC, is a lawyer and a certified mediator/conciliator in Nigeria. He is also a developer with knowledge in various programming languages. Samuel is determined to leverage his skills in technology, SEO, and legal practice to revolutionize the legal profession worldwide by creating web and mobile applications that simplify legal research. Sam is also passionate about educating and providing valuable information to people.