Paterson Zochonis Ltd v Lagos Island Local Government

I was opportuned to act whilst at the Nigerian Bar, for Paterson Zochonis Ltd - a Greek trading Company in an Administrative Law brief, the facts being thus:

a. PZ Ltd had been levied a Charge by the Lagos Island Local Government- in the form of a Commercial Premises permit being basically a permit to trade within the territory administered by the Local authority. A bit of a background being that this Local authority was at the time one of the most affluent Governmental entities in Africa, with a budget/revenue equivalent to the GNP/GDP of most African countries.

b. PZ as a matter of policy refused to pay this and sought advice from Irving and Bonnar- Solicitors in Lagos, who advised that the Commercial Premises Bye-Law by which the Local authority levied the charge was Ultra-Vires and thus void and instructed the Chambers of Bentley Edu for the purpose of contesting the Charge and indeed the Bye-Law. This advice being on the basis of research by Chuma Uwechia (later renowned as the author of the authoritative- Nigerian Arbitration and Conciliation Law and Practice).

c. We proceeded to prepare an Originating Application, seeking a Declaratory relief from the Court voiding the Commercial Premises Bye-Law as Ultra-Vires.

The Commercial Premises Bye-Law, 1991, had as its parent Law the Local Government Law of Lagos State, what was however noted was that this Law did not give the Local Government the power to levy taxes against Companies, but against individuals, furthermore this in itself amounted to double taxation. Additionally the Nigerian Constitution specifically provided a bar to Local Governments levying Corporate Taxes.

I was fortunate to be handed the brief by Anthony George-Ikoli, the Chambers Head of Commercial Litigation and worked under the supervision of Wale Abiru (now Mr Justice Abiru- Lagos High Court).

The first hearing of the matter was heard before Mr Justice Hunponu-Wusu at the Lagos High Court in February 1992, which was adjourned on account of the Counsel for the Local autority turning up late and seeking an adjournment, to discuss "settlement". Our instructions were clearly to the effect that there was no basis for compromise, that the change of the Law was a matter of public policy which must be addressed by Legislative or Judicial prescription.

I prepared the Affidavit evidence and the submissions for the first hearing and presented arguments on the adjourned application in April 1992, on a whole day hearing which still was part-heard in that the Court could not accommodate the full vista of submissions. The hearing was further adjourned till October 2002 and the application was then completed by Koye Edu- Senior Counsel in Chambers, as I had at this stage left the Chambers to take on a Corporate role as General Counsel in a Financial Institution.

The decision of the Court was to conclusively declare the Commercial Premises Bye-Law Ultra-Vires and in essence creating a huge lacuna in that the Judgement did not provide for a refund of all payments made by Companies to the Local Authority amounting to close to N400 Million (£100 Million at the time). We had not sought this as our client had made no payments requiring refund.

This was one of the more important Administrative Law decisions of the period and moreso on account of its direct challenge of the Executive fiat of the Military Government in power at the time.

This decision was relied upon as persuasive authority in a number of similar cases and eventually on appeal in one similar case, the principle operative was upheld by the Court of Appeal and remained Law until the Constitution was amended in 1999. I note that there was a similar case on the same subject matter which involved another Local authority which had appearances from the late Ben Nwazojie SAN and Kola Awodein SAN (for the local authority), in which the Local authority succeeded, which decision was later overturned on Appeal, based on the reasoning in the PZ decision.