May 8, 2018
On 12 April 2018, the High Court of the Federal Capital Territory (the Court), Abuja held that the collection of Tenement Rates by all the Area Councils in the Federal Capital Territory (FCT) is illegal in the case between Planned Shelter Limited vs Abuja Municipal Area Council (AMAC) & 5 Others. The Court arrived at this judgment on the grounds that the National Assembly had not passed a law prescribing the Tenement Rates to be collected from residents in the FCT.
Planned Shelter Limited (the Plaintiff) was served demand notices by AMAC to pay Tenement Rates of N156,000, N75,000, N600,000, N219,784,000 and N277,762 for the years 2011-2016, respectively, with respect to its property within the AMAC.
In response, the Plaintiff filed an action against the six Area Councils of the FCT before the Court for itself and on behalf of other persons who are liable to tenement rates on real estates in all the Area Councils of the FCT. Amongst other reliefs, the Plaintiff sought a declaration that the Bye-laws, pursuant to which the Area Councils are charging Tenement Rates in the FCT, are unconstitutional, illegal, null and void by virtue of Section 1(j) of the 4th Schedule to the 1999 Constitution.
Based on the argument of the Counsel to the Plaintiff, Section 1(j) of the 4th Schedule to the 1999 Constitution empowers the Local Government to assess privately owned houses or tenement for the purpose of levying such rates as prescribed by the State House of Assembly. According to the Counsel such rates should be prescribed by the National Assembly in the case of the FCT before it can become binding. Therefore, the Bye-laws of the Area Councils prescribing Tenement Rates are unconstitutional in the absence of any enabling law by the National Assembly.
The Court declared that the Tenement Rates Bye-laws are unconstitutional and constitute a usurpation of the powers of the National Assembly. The Court further prohibited the Area Councils in the FCT from collecting Tenement Rates from any person or entity pending when the National Assembly shall enact a law to give effect to the provision of Section 1(j) of the 4th Schedule to the 1999 Constitution.
This Judgment restricts the FCT Area Councils from assessing and collecting Tenement Rates in the FCT until the National Assembly prescribes the rates to be collected. However, it is important to note that the Court of Appeal had reached a contrary decision in the case between Afdin Venture Limited vs Chairman, AMAC in 2014. In that case, the Court of Appeal upheld the constitutionality of the Bye-law which empowers AMAC to assess and collect Tenement Rates. Specifically, the Court of Appeal held that it is fallacious to submit that AMAC lacks the power to enforce Paragraph 1(j) of the 4th Schedule to the Constitution by invoking the AMAC Bye-law, without the passage of a National Assembly Bill.
Given the superiority of the Court of Appeal to the FCT High Court, AMAC may not be deterred by the judgment of the FCT High Court. Also, Magistrates’ Courts exercising jurisdiction over suits bordering on tenement rates may continue to hear such pending suits until a clear ruling is given by a superior court.