Duty of a tenant who wishes to exercise an option to renew a lease

CASE TITLE: OTERI HOLDINGS LTD v. HERITAGE BANKING CO. LTD (2020) LPELR-50802(CA)

JUDGMENT DATE: 17TH SEPTEMBER, 2020

PRACTICE AREA: PROPERTY LAW

LEAD JUDGMENT: EBIOWEI TOBI, J.C.A.

SUMMARY OF JUDGMENT:

INTRODUCTION

This appeal borders on a Lease Agreement.

FACTS

The brief set of facts of the case are that the Appellant (Claimant at the High Court) entered into a lease agreement with the Respondent (Defendant at the High Court) wherein the Appellant leased to the Respondent all four (4) floors left wing of the premises known as Ibru Glass House situate at 33, Olorogun Michael Ibru Boulevard, Apapa Lagos for a term of 20 years with an option to renew. After the expiration of the term, the Appellant instituted an action against the Respondent at the trial Court vide a Writ of Summons and in its 3rd Amended Statement of Claim, claiming the following:

a. The sum of N35,770,479.00 (Thirty Five Million, Seven Hundred and Seventy Thousand, Four Hundred and Seventy Nine Naira) being mesne profits for all the four (4) floors left wing of the premises known as Ibru Glass House, situate and being at 33 Olorogun Michael Ibru Boulevard, Apapa Lagos from the 1st March, 2005 to 28th March 2012 at the rate of N425,417 (Four Hundred and Twenty Five Thousand, Four Hundred and Seventeen Naira) per month.

b. The sum of N93,164,814.00 (Ninety-Three Million, One Hundred and Sixty Four Thousand, Eight Hundred and Forty One Naira) being damages for willful destruction of the Claimant’s premises by the Defendant and in breach of the Defendant’s covenants to put the premises to a tenantable state.

c. The sum of N5,950,000.00 (Five Million, Nine Hundred and Fifty Thousand Naira) being professional fees in respect of Quantities Surveyors, estate Surveyors and Solicitors engaged by the Claimant to remedy the Defendant’s breach of covenant.

d. Interest on the sum of N128,935,320.00 (One Hundred and Twenty Eight Million, Nine Hundred and Thirty Five Thousand, Three Hundred and Twenty Naira) (claims A and B) at the rate of 21% per annum with effect from 16th day of May 2012 until judgment is given and thereafter at the rate of 6% per annum until the entire sum is finally liquidated.

The High Court after the conclusion of trial gave a considered judgment where it held thus:

“To answer the sole issue formulated by the Court above, that is, whether the Claimant based on the evidence proffered has proved that it is entitled to its claims, the answer to that is No! In sum total, the Court finds no merit in this suit. Same is hereby dismissed.”

The Appellant dissatisfied with the above decision appealed to the Court of Appeal.

ISSUES FOR DETERMINATION

The Court determined the appeal on these issues couched as follows:

1. Was the learned trial Judge correct in holding that upon the expiration of the Lease Agreement (Exhibit “H”), the Respondent became a statutory tenant, so as to disentitle the Appellant from claiming mesne profit from the Respondent?

2. Whether the Appellant was entitled to claim mesne profit for the period 1st day of March 2005 to the 28th day of February 2012 and if yes, whether the Appellant before the lower Court proved by admissible evidence the claim of N35,770,479.00 (Thirty-Five Million Seven Hundred and Seventy Thousand, Four Hundred and Seventy-Nine Naira) claimed mesne profit?

3. Did the Appellant in line with the requirement of the law plead and prove by admissible evidence the claim in the sum of N93,164,841.00 (Ninety-Three Million, One Hundred and Sixty-Four Thousand Eight Hundred and Forty-One Naira) made as special damages for the alleged willful destruction caused to the premises?

4. Whether the Appellant established by admissible evidence the claim made in respect of the sum of N5,950,000.00 (Five Million, Nine Hundred and Fifty Thousand Naira) paid as professional fees?

DECISION/HELD

On the whole, the Court found merit in the appeal and accordingly allowed same. The decision of the High Court was therefore set aside.

RATIOS:

• LANDLORD AND TENANT – OPTION TO RENEW A LEASE: The position of the law as regards an option to renew a lease
• LANDLORD AND TENANT – STATUTORY TENANT: Who is a statutory tenant and whether a limited company is capable of being a statutory tenant
• LANDLORD AND TENANT – ARREARS OF RENT/MESNE PROFIT: Difference between arrears of rent and mesne profit; when a landlord will be entitled to arrears of rent and when he will be entitled to mesne profit
• LANDLORD AND TENANT – LEASE: Ways in which a lease agreement can be determined