Improvement is anything done by a tenant which adds to the value of a demised property. It comprises of structural alterations such as removal of, addition to, or substitution for a thing in existence. Black’s Law Dictionary also defined an improvement as an addition to real property, whether permanent or not, especially one that increases its value or utility or that enhances its appearance[1]. The Land use Act further defined an improvement as anything of any quality permanently attached to the land, directly resulting from the expenditure of capital or labour by an occupier or any person acting on his behalf, and increasing the productive capacity, the utility or the amenity thereof and includes buildings, plantations of long-lived crops or trees, fencing, a well, roads and irrigation or reclamation works but does not include the result of ordinary cultivation other than growing produce[2].The position of the law is that the prior approval of the landlord should be received before any improvement is executed by the tenant.
However, a fixture can best be defined as an object which, although originally a moveable chattel, is by reason of its annexation to, or association in use with land is regarded a part of the land. The law of fixtures provides that the chattels annexed still retain a separate identity despite annexation, for example, light fixtures, floors, walls, doors, ceilings, a furnace etc. In situations where the chattel annexed loses such identity, as in the case of nails, boards, etc. the problem becomes one of accession. A fixture is seen as one of the exceptions to the old rule of Quic quid plantatur solo, solo cedit unlike an improvement which is a permanent alteration to the land and thereby forms part of the land.
TENANT’S IMPROVEMENTS DISTINGUISHED FROM FIXTURES:
Improvements and Fixtures may look similar, but they are not as there is a difference between the two terms. While improvements are those alterations made by a tenant that are attached permanently to the structures of the demised property, fixtures are alterations or additions not permanently fixed to the premises which the tenant can remove at the expiration of his tenancy. A tenant can remove his fixtures after the expiration of his tenancy provided no damage is done to the demised premises, where this is done, he is not entitled to be paid any form of compensation.
At common law and in the absence of any agreement to the contrary by parties, tenants are free to improve the property let to them in any way they so desire unless the improvement constitute a waste. Where an improvement done affects the reversionary interest of the owner, such tenant is not entitled to compensation with respect to the improvements made. The common law approach benefits the landowner since most improvements add to the letting value of the property. From the foregoing, a tenant is at liberty to remove his fixtures at the end of his tenure and not the improvements because some improvements that a tenant carried out on land is to make his stay more enjoyable and may not be removable.
The law provides that “where a tenant executes on his holding any improvement, he shall be entitled to compensation subject to the provisions of section 15 of the said law, at the termination of the tenancy, to receiving compensation from his landlord in respect of any such improvement which constitutes unexhausted”[3]. The section 15 further provides that “a tenant shall not be entitled to compensation in respect of any improvement, unless he has executed it with the previous consent in writing of landlord[4].
The question of note is whether or not a tenant can unilaterally make improvement and be entitled to compensation. The core of every contract is that the parties must be ad idem to enable the contract to be binding on both, therefore, a tenant cannot without prior written consent of the landlord, make any improvement to the demised property and still be entitled to compensation.
Nonetheless, it’s our view that where an improvement has been made on the landlord’s property which evidences an appreciative increase in the rental value of the premises, law should not shut out the residual equity jurisdiction of the courts. A court of equity should fall back on its inherent jurisdiction to award a restitutionary relief which is found in the law of unjust enrichment and restitution.
WHAT CONSTITUTES AN IMPROVEMENT ON LEASED/RENTED PROPERTIES?
As stated earlier, virtually all the recovery of premises laws of the states makes provision for compensation for improvement, however, not all of them define what will constitute an improvement to be worthy of compensation.
The tenancy laws of Lagos State and Rivers State on the one hand are silent about what constitutes an improvement or improvement. It could then mean that a tenant cannot unilaterally assume that the fixtures made by him will amount to an improvement, likewise, the landlord cannot assume that the fixtures made by the tenant will automatically be regarded as an improvement to form part of the land. However, the litmus test in this instance are the fixtures of such a nature that, the tenant had a right to remove them during the period of his lease without constituting a waste. If it is such, then the fixture will be regarded as the tenant’s fixture and not an improvement[5]. In a decided matter, it was held that, it is in the public interest that the sanctity of tenancy agreements like all contracts be protected, and the rule of law upheld at all times. Also, the primary function of the court is to interpret the agreement in enforceable terms without motives. It is imperative, therefore, that the written consent of the landlord expressly states the nature of the improvements to be carried out and the right of the tenant over the improvement[6].
THE CONCEPT OF UNJUST ENRICHMENT AND RESTITUTION AS AN EQUITABLE REMEDY:
In laws of equity, unjust enrichment occurs when one person is enriched at the expense of another in circumstances that the law sees as unjust. Where an individual is unjustly enriched, the law imposes an obligation upon the recipient to make restitution, subject to defenses such as change of position. Liability for an unjust (or unjustified) enrichment arises irrespective of wrongdoing on the part of the recipient[7].
The concept of unjust enrichment can be traced to Roman law and the maxim that “no one should be benefited at another’s expense” nemo locupletari potest aliena iactura or nemo locupletari debet cum aliena iactura[8]. The law of unjust enrichment is closely related to, but not co-extensive with, the law of restitution. The law of restitution is the law of gain-based recovery. It is wider than the law of unjust enrichment. Restitution for unjust enrichment is a subset of the law of restitution in the same way that compensation for breach of contract is a subset of the law relating to compensation.
INSTANCES OF UNJUST ENRICHMENT:
It can be examined in the following way:
- Was the landlord enriched?
- Was the enrichment at the expense of the tenant?
- Was the enrichment unjust?
- Does the landlord have a defence?
- What remedies are available to the tenant?
Generally speaking, the mere receipt of a benefit from another is unobjectionable and does not attract legal consequences. The exception is where such receipt is “unjust” or “unjustified”. Both civil and common law legal systems have bodies of law providing remedies to reverse such enrichment. However, the remedy for unjust enrichment is restitution: the restoration of what was conferred to the claimant. In context it is the correcting of the injustice that occurred when a tenant suffers a subtraction of wealth and the landlord received corresponding benefit. Restitution can take the form of a personal or a proprietary remedy.
EQUITABLE REMEDY/SOLUTION:
An equitable remedy through restitution should be applied in situations where a tenant has made an improvement without landlord’s prior written consent and such improvement has added considerable value to the demised property. The landlord should be made to pay the money value of the benefit received so far as such improvements caused an increase in the rental value of the demised property. This personal money award will be more effective and should be adopted by the courts.
Caveat: This Article is not a Legal advice and under no circumstance should you take it as such. This information is for general knowledge only. For Consultations, please contact ezinne.okereke@kbandco.com.ng.
[1] Black’s Law Dictionary Seventh Edition, page 761, Edited by Bryan A. Garner 1999
[2] Section 51 of the Land Use Act LFN 2004 Volume 8
[3] Section 14 of Oyo State Recovery of Premises Law 2007.
[4] Oyo State Recovery of Premises Law 2007.
[5] Safuratu Ige & Ors v. La Campagnie General Des Comptoirs Africains
[6] Robinet Nigeria Ltd v Shell Nigeria Gas Ltd [2013] LPELR-22144
[7] https://en.wikipedia.org/wiki/Unjust_enrichment
[8] “No one should be benefited at another’s expense”.
