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.
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.
Rent is consideration
paid usually periodically for the use or occupancy of property(esp. Real
property)
T
here are different
types of rent:
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)
‘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.
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.
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.
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.
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.’
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, 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 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.
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.
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
‘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’
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.
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.
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’
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.
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.
In Adebajo Vs
Tennessee Nig Ltd 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 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’
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.
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.
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.
In Peenock Investment
Ltd Vs Hotel presidential Ltd 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 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.
