MAIULU NIG. LTD. v. MAILILU NIG. LTD.
SUPREME COURT OF NIGERIA
(ABBA-AJl; SAULAWA; SANKEY; ADAH; UMAR, JJ.SC)
BACKGROUND FACT
Maililu Nigeria Limited (“The Respondent”) instituted an action against the Minister of the Federal Capital Territory, the Federal Capital Territory Development Authority, and Marinzo Nigeria Limited at the High Court of the Federal Capital Territory, Abuja. The Respondent claimed the ownership of Plot No. 96, Cadastral Zone C10, Wumbai District, Federal Capital Territory, Abuja, on the ground that the plot of land was allocated to it by the 1st and 2nd Defendants. Later, the names of the Minister of the Federal Capital Territory and the Federal Capital Territory Development Authority were struck out of the suit on their unopposed application to that effect thereby leaving Marinzo Nigeria Limited as the sole defendant to the suit. Maiulu Nigeria Limited (“The Appellant”) was later joined as the 2nd Defendant.
It was the Respondent’s case that prior to its incorporation on 19th April 2011, its promoters applied for the plot of land in dispute in the name of Maililu Nigeria Limited and its application was granted by a letter of allocation dated 24th November 2010, and that it ratified the allocation at its first meeting after it was incorporated. The Respondent stated that it took possession of the land and leased it to one Maclowe Properties Limited for ten years and when its lessee mobilised to the site, it was stopped from working on the land by some military officers who claimed that the property was allocated to Marinzo Nigeria Limited. The Respondent stated that it then briefed its lawyer to conduct a legal search on the property from the office of Abuja Geographical Information System (AGIS) to confirm the claim that the plot of land was allocated to Marinzo Nigeria Limited, but the report showed that the property was actually allocated to the Respondent.
On its part, the Appellant’s case was that it was incorporated on 26th April 1986. The Appellant presented that by its letter dated 25th October 2010, it applied to the Minister of the Federal Capital Territory for allocation of land and a certificate of allocation was issued wrongly in the name of Maililu Nigeria Limited instead of its correct name Maiulu Nigeria Limited. In its judgment, the trial court dismissed the Respondent’s claim.
Dissatisfied with the judgment of the trial court, the Respondent appealed to the Court of Appeal. The Court of Appeal allowed the appeal and set aside the judgment of the trial court. Aggrieved, by the decision of the Court of Appeal, the Appellant appealed to the Supreme Court. One of the issues that was raised for determination was: Whether in view of the evidence led by the appellant at the lower court, the court below was right when it held that the lower court ought to have made a declaration of title of the disputed land in favour of the appellant.
ARGUMENTS
Learned Counsel for the Appellant contended that the Respondent, not being a registered legal entity at the material time, lacked the legal capacity to acquire any interest, title, or proprietary right over the parcel of land in dispute. Counsel argued that such acquisition by an unregistered body would contravene established legal provisions, which require that only duly incorporated and registered entities may hold title to land in their corporate name. Counsel argued that it was the Appellant that duly applied for the allocation of the said land from the Abuja Geographic Information Systems (AGIS); however, in the allocation letter issued by AGIS, the company’s name was mistakenly typed as “Maililu” instead of “Maiulu,” a typographical error that was later confirmed during trial by a witness from AGIS. Counsel for the Appellant submitted that this clerical mistake does not negate the fact that the Appellant was the genuine applicant, and that AGIS intended to allocate the land to the Appellant.
The Learned Counsel argued further that the Respondent, throughout the proceedings, failed to produce any credible evidence demonstrating that it had taken steps to ratify or adopt the purported land allocation upon its eventual incorporation. The learned Counsel also pointed out a significant chronological inconsistency, stating that the Respondent could not have lawfully acquired title to the land on November 24, 2010, when it was not even in legal existence at the time, as its incorporation records clearly show that it was only registered on April 19, 2011.
Responding to the argument, Learned Counsel for the Respondent argued that the Appellant had misconstrued and misapplied the relevant legal provisions concerning corporate legal personality and land ownership. Counsel contended that the legal framework governing company law in Nigeria does not prohibit unincorporated entities from entering into pre-incorporation agreements, particularly in contemplation of their forthcoming registration. According to Counsel, it is well-established that such contracts, once ratified after incorporation, become binding and enforceable. Counsel further argued that the Appellant’s interpretation of the court’s ruling was flawed, particularly its insistence that the Respondent lacked the capacity to acquire interest in the land due to its unregistered status at the time. It was submitted that the lower court correctly considered the principle that a company may adopt or ratify pre-incorporation contracts upon being duly registered.
Learned Counsel challenged the reliability and coherence of the Appellant’s evidence, particularly the testimony of the AGIS official who attributed the name discrepancy in the allocation letter to a typographical error caused by the alleged similarity between the names “Maililu” and “Maiuli.” Counsel argued that this explanation was inconsistent and unconvincing, stating that no documentary evidence was tendered by the Appellant to demonstrate that any statutory payments were made for the land allocation, nor was there evidence of a waiver granted by the Minister responsible for the Federal Capital Territory.
DECISION OF THE COURT
In resolving this issue, the Supreme Court held that:
An unincorporated or unregistered company cannot enter into a pre-incorporation contract in a manner that portrays it as an incorporated or registered entity. Specifically, a pre-incorporation contract can only be entered into on behalf of an unincorporated or unregistered company by the promoters of the company, either in the name of the promoters themselves or, at most, in the proposed name of the company without including the words “Limited” or “Ltd.” or “Plc.”
The Court further explained that the rationale behind this principle of law is to ensure transparency and to protect third parties who may wish to enter into contractual relations with a company yet to be incorporated. By excluding the use of “Limited” or “Ltd.” or “PLC” from pre-incorporation contracts, the law ensures that members of the public are not misled into believing they are dealing with a legally constituted corporate body, when in fact they are transacting with individuals or promoters acting in anticipation of incorporation. Additionally, the Court emphasised that the capacity of an incorporated entity to own land or deal in land transactions only comes into effect after incorporation, and such rights cannot be exercised by an entity before it is officially incorporated.
Issue resolved in favour of the Appellant.
Rex Erameh, Esq., with U. C. Okolo, Esq., for the Appellant.
A.D. Zubairu, Esq., with D. D. Killi, Esq. and S. Mohammed, Esq. and O. Joel, for the Respondent.
This summary is fully reported at (2024) 9 CLRN in association with ALP NG & Co.
See www.clrndirect.com ; www.alp.company.
