MESNE PROFIT AND COMPENSATION FOR USE AND OCCUPATION A MYTH OR A REALITY.

MESNE PROFIT AND COMPENSATION FOR USE AND OCCUPATION A MYTH OR A REALITY.

SEMINAR PRESENTATION BY

HALIMA MUSA-BAKWUNYE (MRS)

COURSE: LANDLORD AND TENANT LAW

INRODUCTION.

The law of landlord and tenant is closely related to the law of contract. It deals with the relationship between Landlord and tenant and possible issues that may arise between the two. This seminar paper shall deal with one of such issues, and that is the issue of Mesne profit,  compensation for use and occupation.  This seminar paper shall also deal with the issue of rent,  the various types of rent, the meaning of mesne profit and the difference between mesne profit and compensation for use. These issues are very wide, but what i have attempted to do in this seminar paper is to throw some light on all areas as best as i can with references to decided cases within and outside Nigeria. I also ensured that i made  references to the new law that is the Lagos State Tenancy Law 2011, hereinafter referred to as TL 2011, with particular focus on Section 31TL 2011 and Section 47 TL 2011. The inadequacies contained therein shall be dealt with. At the end of this Seminar presentation you would be able to differentiate between Mesne profit and compensation for use and occupation. I shall conclude by answering the main question of whether Mesne profit and compensation for the use and occupation is a myth or a reality.

 MEANING OF RENT.

Rent is a retribution or compensation for the land demised. It is defined to be certain profit issuing yearly out of land and tenements corporeal: and may be regarded as of two folds nature: first as something issuing out of the land, as a compensation  for possession during the term; and, secondly, as an acknowledgement  made by the tenant  to the lord of the fealty or tenure[1].

The primary liability to pay rent arises from privity of estate and not from covenant because the liability issues out of land. At common law, the profit may be either a sum money, chattel or services which are profits in the eye of the law or partly in one way and partly in another[2].

Rent is consideration paid usually periodically for the use or occupancy of property(esp. Real property)

T

here are different types of rent[3]:

1.   Ceiling rent: this is the maximum rent that can be charged under the rent –control regulations.

2.   Double rent: twice the amount of rent agreed to; specify a penalty of twice the amount of rent against a tenant who holds possession of the leased property after the date provided in the Tenant’s notice to quit.

3.   Dry rent: rent reserved without a distress clause allowing the rent to be collected by distress; rent that can be collected only by an ordinary legal action.

4.   Ecomomic rent: the return gained from an economic resource( such as a worker or land) above the minimum cost of keeping the resource in service. It is rent that yields a fair return on capital and expenses.

5.   Ground rent: rent paid by a tenant under a long term for the use of undeveloped land usually for the construction of a commercial building.

6.   Guild rent: rent payable to the crown by a guild.

7.   Net rent: the rental price for property after payment of expenses such as repairs , utilities and taxes.

8.   Rack rent: rent equal to or nearly equal to the full annual value of the property, excessively or unreasonably high rent.

9.   Rent Charge: the rent to receive an annual sum from the income of land usually in perpetuity, and to retake possession if the payments are in arrears.

10.               Rent sack: a rent reserved by deed but without any clause of distress.

11.               Rent service: a rent with some corporeal service incident to it( as per fealty) with a right to distress.

MEANING OF MESNE PROFIT.

The profits of an estate received by a tenant in wrongful possession between two dates- also termed archaically (medium tempus)[4]

‘Mesne’ (pronounced mean) literally means intermediate or middle,  ‘profit’ is another word for pecuniary value. Thus mesne profit refers to the intermediate pecuniary value of the premises between the time when tenancy terminates and the time when the tenant yields up possession. During the tenancy the tenant is contractually obliged to pay the agreed rent. At the end of the tenancy the tenant is obliged to yield up possession. If he fails he is considered a trespasser, his continued possession being a wrongful act. As a trespasser he is liable to damages for trespass, but instead of calling it damages, a unique phrase is coined for it namely Mesne profits.[5]

Mesne profit can also be define as the value or compensation or damages for wrongful use and occupation of another’s land which would have been rightly in the owners possession and which is sometimes measured in terms of loss of rents by the landlord. It is technically a form of damages for trespass in a relationship that could have been that of the landlord and tenant save that there is either no agreement for a tenancy or that the formerly existing agreement had expired.[6]

Profits intermediate from the date tenant ought to have given up possession and the date he actually gave up possession, and is the amount tenant had been paying in the rent for the period he was lawfully in occupation as tenant.[7]

MESNE PROFITS : CALCULATION OF

If a tenant is still in possession and the award of mesne profits is upheld, the mesne profit will be calculated up to the date he gives up possession. If the person has already given up possession and the award of mesne profit is upheld, the mesne profits will be calculated up to the date he gave up possession.[8]

In WEMABOD ESTATES LTD Vs PETERS (1974) ICCHJ 87 High court(Lagos) the rent paid by the tenant was N25.00k  whereas the real value of the premises was N40.00k per month. The rent was that low because the tenant was the plaintiff’s employee and was part of his conditions of service. In determining the mesne profits the court held that it should be based on the real value of the premises and not on the rent paid.

RENT- WHEN DUE AND WHEN IN ARREARS

The position of the law with regards rent and when their due and the tenant is in arrears is clearly provided for under Section 13 TL 2011, and it states as follows;

In the case of a monthly tenancy , where the tenant is in arrears of rent for six months, the tenancy shall lapse and the court shall make an order for possession and arrears of rent upon proof of the landlord.

In case of a quarterly or half- yearly tenancy , where the tenant is in arrears of one (1) year rent, the tenancy shall lapse and the court shall make an order for possession and arrears of rent upon proof by the landlord.

Notice for tenants under Subsection (1),(c), (d) and (e) of section 13 need not terminate at the anniversary of the tenancy but may terminate on or after the date of expiration of the tenancy.

LIABILITY OF STATUTORY TENANT TO PAY MESNE PROFIT.

A statutory tenant is one who holds over after the determination of a contractual tenancy which is subject of statutory protection. The question to be asked is whether a statutory tenant is liable to pay Mesne Profits. Section 31 of the Lagos state Tenancy Law 2011 provides that Landlord may claim for mesne profits or use and occupation of premises. It states as follows:

   ‘ where mesne profits or sum for use and occupation of the premises are claimed, the claim shall show the rate at which such sum is claimed and where it is proved , judgment shall be entered for the amount proved’

Is a statutory tenant liable to pay mesne profits? Smith answers in the negative. He proposes that since a claim for mesne profits can only be maintained when the tenancy has been duly determined and the tenant becomes a trespasser, only when a court orders him to vacate possession. ‘ where the defendant remains in possession after the date mandated by the court and execution does not follow immediately, subsequently liability of the tenant may lie in mesne profits for it is only on such rare occasion that his occupation can be said to be wrongful and there after becomes a trespass.’[9] 

The judiciary authorities on the point are conflicting. This is based on the fact that different judges have given their own independent judgements and opinion on the subject matter of mesne profits. We shall however analyse these different views and statutory provisions.

The earliest reported   decision on the point appears to be YEKINNI VS ETTI[10], 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 made based under the Rent Restriction Act which at that time was the subject of the construction in the case cited above. 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 says 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[11]  for example Section 20, of the Lagos Rent Control Provides;

‘the landlord may claim to recover..... rent  or mesne profits, or both accruing in respect of such premises since the ending or determination of the tenancy down to the day appointed for the hearing, or to any proceeding day named in the plaint’

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 appointed for hearing, or any day named in the plaint in other words it must not be from the date judgement.

Section 17, Rent Control & recovery of Residential Premises Law, also provides as follows;

‘the landlord may in his writ or plaint for the recovery  of any premises or in answer to any claim or counterclaim made in respect of any un exhausted improvements as herein provided claim to recover, or to set off rent or mesne profits or both, accruing in respect of such premises between the date appointed for hearing or to any subsequent date named in the claim’

On the other hand the Lagos State Tenancy law 2011, the latest law on tenancy here in Nigeria has a different view as to how and when mesne profits can be claimed first we shall look at Section 47 TL 2011, it 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 also states that the landlord may claim for mesne profits or for use and occupation of premises’

The Lagos State Tenancy Law 2011 does not state clearly when mesne profit may be claimed, it only states in Section 31, where mesne profits or sum for the use and occupation of premises are claimed , the landlord shall show the rates at which such sum is claimed and WHERE IT IS PROVED, JUDGMENT SHALL BE ENTERED FOR THE AMOUNT SO PROVED.

From the above underlined it means that mesne profit can only be claimed where it is proved and judgment has been given for the amount proved. The operative words here are prove and judgment. What i can therefore deduce from Section 31 TL 2011, is that  its only when mesne profits is proved and judgment is given that a landlord can claim his mesne profit.  

 DIFFERENCE BETWEEN RENT AND MESNE PROFIT.

Rent is different from mesne profits, in the sense that rent is liquidated, mesne profits are not liquidated. Also rent is operative during the subsistence of the tenancy, while mesne profits starts to run when the tenancy expires and the tenant holds over. The action for mesne profits does not lie unless either the landlord has recovered possession, or tenants’ interest in the claim is joined with a claim for possession.[12]

MEASURE OF MESNE PROFIT

How is mesne profits measured? In other words, what is the measure of damages where a tenant wrongfully holds over after termination of his contractual tenancy? About a century and one half ago, MARTIN B noted that the reserved rent is not the measure of the compensation’ the normal measure of the damages is open market rental value of the property. Blackburn J said it was ‘what the rent would have amounted to from the time the landlord was kept out of possession[13].

The law does not saddle the landlord with the obligation to prove that he would have let the property to someone else in the absence of the trespassing Tenant. A landlord can recover damages from a tenant who has wrongfully used his property whether or not he can show he would have left the property to anybody else and whether or not he would have used the property himself. The seminal statement is that of Megaw LJ ins SWORDHEATH PROPERTIES VS TABET[14]

‘the plaintiff , when he has established that the defendant has remained on as a trespasser in a residential property, is entitled without bringing evidence that he could or would have let the property to someone else in absence of the trespassing defendant, to have as damages for the trespass the value of the property as it would fairly be calculated, and in the absence of anything special in the particular case it would be the ordinary letting value of the property that would determine the amount of the damages’[15]

The landlord should call expert evidence to show what the current rental value is and where the defendant fails to controvert this testimony, the court is bound to award the mesne profits in accord with the expert’s testimony. Of course, where the tenant fails to controvert the landlord’s pleadings the court should grant the landlord’s claim[16].

Under Section 31 of  Lagos State Tenancy 2011, the mesne profits is based on the landlord’s claim, the landlord is free to show the rate at which such sum is claimed and must prove same.

Its my believe that based on Section 31 TL 2011, that the judge is left with the discretion of ascertaining whether the landlord’s claims are justifiable. However it is expected that to assist the court arrive at a fair decision either party must bring its own expert witness on ascertaining the current rental value of the property based on its location.

ARREARS OF RENT: DETERMINATION OF .

Section 28, of TL 2011 provides as follows:

‘where there is any matter for determination before a court under this law and the tenant admits the arrears of rent or a portion of the rent, the court may order the tenant to pay such arrears of rent while the court proceeds with the matter.

Where arrears of rent are claimed for the use and occupation of the premises, the claim shall show the rate at which such sum is claimed and where it is proved, judgment shall be entered for the amount so proved.

COMPENSATION FOR USE AND OCCUPATION

A close cousin of mesne profit is another remedy open to the landowner alternatively called compensation for use and occupation. Since the occupier is not in wrongful occupation perhaps the word ‘damages’ is  in apt.[17]

We have now to consider the case of a relationship of landlord and tenant existing without any arrangement at all for the payment of rent property so called , and the case in which the law implies from the conduct of the parties a promise to compensate  the landlord for his loss by reason of the tenant’s occupation of his premises. The action which can in such case be, maintained is not to recover rent, but damages due on an implied agreement to pay for the use of the landlord’s property, and arises rather out of what may be called a quasi- Tenancy than from the strictly relation of landlord and tenant. To quote the words of Lord Ellen Borough ‘ the action for use and occupation does not necessarily suppose  any demise; it is enough that the defendant used and occupied the premises by the permission of the plaintiff’[18]

Where a person occupies the land of another without the latter’s assent or acquiescence he is considered a trespasser and the landowner may recover damages from him. If the occupier is let in as a tenant and he holds over against the will of the landlord, the sum recoverable is termed either mesne profits or damages for trespass to land. It is mesne profits where the landlord seeks, in addition to the recovery of the sum, recovery of possession of the premises. Where he fails to claim possession damages for the trespass to land is the appropriate relief.[19]

Where the occupier is in possession with the land owner’s consent he may be either a tenant or a licensee. If he is the former and there is an agreement as to how much he should pay, the sum is called rent, and if the occupier is a licensee, the agreed sum properly called license fees. The failure of the parties to reach an agreement on this point does not bar the landowner from recovering a sum equivalent to the open market rental value of the property from the occupier. The sum is termed compensation for the occupier’s use and occupation of the land.[20]

In Adebajo Vs Tennessee Nig Ltd[21] 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 tenants use and occupation of the premises from February to August 1966 Elias CJN 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[22] a monthly tenant held over after a valid determination  of his tenancy . in the land lord’s action to recover possession he 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.

The tediously technical aspect of real property law should however not be permitted to adversely affect a landowner in his just claim. Odesanya J. Expressed the right approach in Dafe Vs Macaulay (1975) CCHCJ 381. 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’[23]

OCCUPATION AS TENANT TO ANOTHER PERSON OR A WRONG DOER.

To entitle a man to this compensation there must have been some tenancy, express or implied, between the plaintiff and the defendant during the period in respect whereof the compensation is claimed and it is not enough that the plaintiff was really entitled  to the property for example , where the defendant occupied as tenant to another person, from whom he obtained the possession, or as a mere wrong doer or wilful trespasser, no such action would be maintained.[24]

MEASURE AND AVAILABILITY OF RELIEF.

The normal measure of damages in compensation for use and occupation and mesne profits is the same, namely the open market rental value of the property for the period of occupation. If the rental value varies due to market fluctuations during the period of user, these fluctuations should be taken into account[25].

Thus the fact that the parties never agreed on the amount the occupier should pay , would not bar the landowner from recovering the market rental value of the property.[26]

In Peenock Investment Ltd Vs Hotel presidential Ltd[27] the plaintiffs were tenants of the state government under the state lands law. They attempted to sublet the premises to the defendants but having failed to obtain the governor’s consent to the transaction, the defendants repudiated the inchoate agreement for a sublease, meanwhile the defendants had been put in occupation of the premises. In this action the plaintiff’s successfully recovered compensation for use and occupation of the property. Okagbue J said the validity of the proposed sublease was irrelevant to the plaintiff’s claim.

In another case Ferah Film Services Ltd  Vs American Oversea Petroleum Ltd[28] the decision was different. In this case the parties to a lease agreement were aliens. The plaintiff did not obtain the governor’s consent to the agreement based on the requirement of law. As a result their action to recover the rental for the term was dismissed for non-compliance with the law. By way of obiter, Kassin J said the occupier would have been liable for damages for use and occupation if the action on that head had been made.

CONCLUSION

Having analysed the terms ‘Rent’, ‘mesne profits’ and ‘compensation for occupation’ the next issue to address in this seminar work is whether everything discussed and analysed above is a myth or reality? In my opinion it is a rhetorical question, the concepts mentioned above are included in our laws, from time immemorial, infact the principle of mesne profits originated from Common law. What mesne profit and compensation for occupation means is that a landlord must be paid or compensated for use of his property after the termination of the agreed period of tenancy. The difference between mesne profit and compensation for occupation is that wheras Mesne profit arises when after the expiration of the tenancy , a tenant continues to hold over, it would be great injustice if such a tenant is allowed to get away without compensating the landlord for his extended stay. On the other hand compensation arises when, an occupier or tenant so to say stays or occupy’s the landlord’s property, the landlord has the right to sue and ask for compensation or damages.

A society without laws is said to be one in anarchy, these laws have been put in place to protect the interest of the landlord.  It must be noted that it is not in all cases that a landlord must ask for compensation. In a situation where people occupy an abandoned property and were not cautioned by the owner, such a landlord cannot make a claim for compensation of use. Whereas compensation and mesne profits is a right, the judge must look carefully into the circumstances, and current rental value.

A landlord should not abuse the right  to request for mesne profit or compensation for occupation by inflating prices and asking for too much. Section 31 of TL 2011, clearly allows a landlord to seek for mesne profit, this has also being the position of other laws relating to tenancy. It is based on this that i hereby humbly submit that Mesne profits and compensation for occupation are a reality and not a myth.  

FOOT NOTES

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[1] Woodfall’s law of landlord and tenant, Vol1, 27^th edition, by LionelA. Blundell &V.G Wellings, Publisher. Sweet &Maxwell(1968)pg297.

[2] Emeka chianu, law of landlord and tenant 2^nd edition, pub: Panaf press 2010, pg 251

[3] Types of rent was extracted from Blacks law Dictionary 7^th edition pg 1299

[4] Blacks law dictionary 7^th edition pg 1227

[5] Emeka chianu, law of landlord and tenant 2^nd edition, pub: Panaf press 2010, pg 324

[6] Debs Vs Genico ltd(1986) 3NWLR(Pt32)

[7] Udoh Vs Izedonmwen (1990)2 NWLR( pt1 32) 351

[8] Justice J.O IGE, landlord and tenant(useful hints) practice notes no6, pg 37

[9] Smith , IO ‘the status & liability of a tenant holding over under the rent conrol & recovery of premises law in Nigeria’’ (1992)3 Nos (9-10)

[10] (1964)ANLR 482, (1964)ALL NLR 69, Nweke VS Ibe (1974) 4 ECSLR)

[11] Emeka chianu, law of landlord and tenant 2^nd edition, pub: Panaf press 2010, pg 326

[12] MC AGBAMOR Vs Ofili (2004), ALL FWLR, (PT 197) 1060. See also Justice J.O IGE, landlord and tenant(useful hints) practice notes no6, pg 38

[13] Emeka chianu, law of landlord and tenant 2^nd edition, pub: Panaf press 2010, pg329, see alos Henderson Vs Squire(1869) LR 4 QB170,174.

[14]  1979 1 WLR 285,288 see also Emeka chianu, law of landlord and tenant 2^nd edition, pub: Panaf press 2010, pg33

[15] ibid

[16] Ajanaku Vs Egbede(1979), 40 Yshc(pt11) 146, 167, Clifton VsHuntley(1948) 2ALL ER 283

[17] Emeka chianu, law of landlord and tenant 2^nd edition, pub: Panaf press 2010, pg335

[18] Woodfall’s law of landlord and tenant, Vol1, 27^th edition, by LionelA. Blundell &V.G Wellings, Publisher. Sweet &Maxwell(1968)pg437

[19] Emeka chianu, law of landlord and tenant 2^nd edition, pub: Panaf press 2010, pg335

[20] Ibid pg 336

[21] (1974) 1 ALL NLR 24

[22] (1958) WNLR 122

[23] Emeka chianu, law of landlord and tenant 2^nd edition, pub: Panaf press 2010, pg337

[24] Woodfall’s law of landlord and tenant, Vol1, 27^th edition, by LionelA. Blundell &V.G Wellings, Publisher. Sweet &Maxwell(1968)pg439

[25] Mcgregor on Damages 14^th Ed art 1136

[26] Emeka chianu, law of landlord and tenant 2^nd edition, pub: Panaf press 2010, pg 338

[27] (1973) 3 ECSLR 109

[28] (1974) 9CCHCJ 1409

Bibliography.

1.     Emeka Chianu, law of landlord and tenant 2^nd edition, pub: Panaf press 2010,

2.     Woodfall’s law of landlord and tenant, Vol1, 27^th edition, by LionelA. Blundell &V.G Wellings, Publisher. Sweet &Maxwell(1968)

3.     Justice J.O IGE, landlord and tenant(useful hints) practice notes

4.     Blacks law Dictionary 7^th edition

5.     Lagos state tenancy law 2011

6.     Emeka Chianu, Nigerian law of land lord and Tenant, pub 1990. 1^st edition