THE CASE FOR THE REGULATION OF HIRE-PURCHASE BY STATES OLUWAKEMI STEPHEN ADEYEMI[1]
1.0. INTRODUCTION
Hire-Purchase is a concept that has been known in Nigeria since the colonial times. However, in 1965, the Federal Parliament enacted the Hire Purchase Act No. 3 of 1965 with the aim of removing certain categories of hire-purchase and credit-sale agreements from the coverage of the Common Law. This Act was amended by Decree No. 23 of 1970 and is presently codified as the Hire Purchase Act CAP. H4 LFN 2010.[2]
Presently, the National Assembly has arrogated to itself the power to regulate Hire-Purchase agreements in Nigeria.
However, it seems to this writer that, for hire-purchase to truly take its place as a catalyst for national growth and development, there will definitely be a need for States' Houses of Assembly to recognise their law-making powers over Hire-Purchase transactions.
2.0. PRESENT REGULATORY LEVELS OF GOVERNMENT AND BASIS FOR THEIR REGULATORY AUTHORITY
Presently, the National Assembly is the law-making authority over hire-purchase in Nigeria and thus, the Minister of Commerce is the appropriate regulating minister for the Act.[3] Since, the Constitution is the grundnorm of the Nigerian legal ecosystem[4] and the defining authority of the powers of elected representatives,[5] the Constitution must be the point of call if one desires to know the basis of the National Assembly’s regulatory authority.
Section 4(2-4) of the 1999 Constitution (as amended) (simply ‘The Constitution’) empowers the National Assembly to make laws for the peace, order and good government of Nigeria on matters listed in the Exclusive Legislative List to the exclusion of States’ Houses of Assembly;[6] matters within the concurrent Legislative List subject to the limitations in the second column opposite the list;[7] and any other matter it is empowered to make laws in accordance with the provisions of the Constitution.[8] Furthermore, by the principle of covering the field, if a law passed by the House of Assembly of a State is inconsistent with any law validly[9] made by the National Assembly, the law made by the National Assembly shall prevail, and that other Law shall to the extent of the inconsistency be void.[10]
The Exclusive Legislative List does not list any item under which the National Assembly could have enacted the Hire-Purchase.[11] The closest item is perhaps Item 62 which provides that: Trade and commerce, and in particular –
a. trade and commerce between Nigeria and other countries including import of commodities into and export of commodities from Nigeria, and trade and commerce between the states;
b. establishment of a purchasing authority with power to acquire for export or sale in world markets such agricultural produce as may be designated by the National Assembly;
c. inspection of produce to be exported from Nigeria and the enforcement of grades and standards of quality in respect of produce so inspected;
d. establishment of a body to prescribe and enforce standards of goods and commodities offered for sale;
e. control of the prices of goods and commodities designated by the National Assembly as essential goods or commodities; and
f. registration of business names.
None of these items relate to hire-purchase transactions which are usually between individuals (corporate and natural) and could be between the State and an Individual or a State and another State. However, to the extent that a State can enter into an Hire-Purchase agreement (which is a form of trade) with another State, the National Assembly is the exclusive law-making authority. In every other regard, the National Assembly is not.
Items 17 – 20 of the Concurrent Legislative List provides the closest provisions defining legislative powers in relation to hire-purchase:
The National Assembly may make laws for the Federation or any part thereof with respect to –
a) the health, safety and welfare of persons employed to work in factories, offices or other premises or in inter-State transportation and commerce including the training, supervision and qualification of such persons;
b) the regulation of ownership and control of business enterprises throughout the Federation for the purpose of promoting, encouraging or facilitating such ownership and control by citizens of Nigeria;
c) the establishment of research centres for agricultural studies; and
d) the establishment of institutions and bodies for the promotion or financing of industrial, commercial or agricultural projects.
Item 18 is to the effect that: “Subject to the provisions of this Constitution, a House of Assembly may make Laws for that State with respect to industrial, commercial or agricultural development of the State.” Item 19 meanwhile provides that: “Nothing in the foregoing paragraphs of this item shall be construed as precluding a House of Assembly from making Laws with respect to any of the matters referred to in the foregoing paragraphs.” Item 20 concludes by providing that: “For the purposes of the foregoing paragraphs of this item, the word "agricultural" includes fishery.”
It follows from the nature of hire-purchase that a law on it is a law aimed at the industrial, commercial or agricultural development of a State and should thus be under the law-making powers of each State subject to the provisions of the Constitution as provided in Item 18 of the Concurrent Legislative List. Indeed by Item 19 of the said list, nothing in paragraphs 17-18 can be construed as precluding a House of Assembly from legislating on matters covered by those paragraphs. As Learned writers Akanki et al put it: “The hire-purchase system is one of the greatest inventions of the lawyer; a very important contribution to the commercial development of the world.[12]” The Learned Authors went on at page 339 when discussing the reception of the hire-purchase device in Nigeria to observe that: “The need for the instalment buying of passenger cars and lorries and other commercial vehicles was realised when it was discovered that the full purchase price of any of these goods could be applied through the system of hire-purchase, in obtaining possession and use of more than one of them for making profit. If the goods obtained under a hire-purchase agreement are properly used and the risk of loss or damage to them is guarded against by a proper insurance policy, they could be owned in due course without financial hardship.” See for example the case of Civil Design Construction Company Ltd. v. SCOA (Nig.) Limited[13] where rigs were sold by hire-purchase.
It is therefore submitted on the authority of Section 315(1) of the 1999 Constitution (as amended) that The Hire Purchase Act 1965 being an existing law as at May 29, 1999,[14] the date the 1999 Constitution came into effect must be deemed as a Law of the various States’ Houses of Assembly and not an Act of the National Assembly. It will therefore follow from the foregoing that each State House of Assembly has the power to amend the Law to meet their peculiar need. It is also flows from the foregoing and Section 299(a), that the National Assembly shall have the power to amend the Act as it relates to the Federal Capital Territory.
3.0. THE CASE FOR THE REGULATION OF HIRE-PURCHASE BY STATES
Nigeria is at a cross-road as a Nation. There are at least two parallel discussion on the fate of the Nation namely: economic restructuring and maintenance of the overly strong central which leaves the States as mere beggars. Current trends on the argument favour restructuring more than the maintenance of the status quo. This Writer is equally an advocate for restructuring. However, in the short run before the desired restructuring is effected, whatever the State is empowered to do in the light of the present constitutional framework should be exploited by the States as means to ensure their economic emancipation from the grip of the Federal Government and to further their argument for a more ‘federal’ Nigeria.
I will highlight in the paragraphs that follow, the advantages that will accrue from States regulating hire-purchase transactions.
3.1. PROPER MONITORING OF HIRE-PURCHASE AGREEMENTS: One obvious advantage of States’ (as against the Federal Government’s) regulation of hire-purchase agreements is the need for a proper monitoring of hire-purchase transactions. The spirit and letter of the Hire-Purchase Act 1965 and its amendment are to ensure proper monitoring of hire-purchase agreements in order to better protect the interests of the hirers. Now, it may have been easier for the Federal Ministry of Trade, Industry and Commerce in 1970 to monitor these transactions.[15] However, today, Nigeria is a country of 36 States and a Federal Capital Territory, where huge commercial, industrial and agricultural activities depend on hire-purchase transactions and effective monitoring from Abuja cannot be effective like monitoring by each State.
3.2. ADAPTATION OF LAWS FOR EACH STATE’S SPECIAL NEEDS: Each State of the Federation is different in its economic needs. Some need to encourage the commercialisation of vehicles, others livestocks, machineries, yet others fishery instruments, etc. A blanket legislation that defines transactions specially protected by the Act without due regard for the peculiar needs of the federating units is counter-productive. The English Hire Purchase Act of 1938 for example covers the sales of livestock where the hire-purchase price did not exceed ￡1,000 and all other goods where the price did not exceed ￡300.[16] This shows an adaptation of the Law for the actualisation of some objectives. While the English are a majorly homogenous people, Nigerians cannot be said to be homogenous even in their developmental needs. Thus, while Lagos State may favour the protection of machineries, States like Osun, Ekiti, Jigawa may favour special protection for hire-purchase transactions that relate to livestocks. Akwa Ibom and Cross-River may favour the protection of hire-purchase of ships in order to promote its maritime potentials in the Ibom Seaport and the Bakassi Seaport. This will be based on their peculiar needs and can be amended from time-to-time to reflect their presence economic status.
3.3. ADDITIONAL REVENUE FOR STATES: The money that should presumably be coming to the Federal Government from regulating hire-purchase transactions under the present arrangements will be those of the various State Governments.
3.4. PROVISIONS OF COMPETITIVE LAWS THAT CAN ENGENDER CHANGE IN LAWS: I will use the Lagos State Administration of Criminal Justice Law No 10 of 2007 to illustrate this point. The now repealed ACJL 2007 broke away from the tradition of the Criminal Procedure Act that was initially in force throughout the South of Nigeria. This Law was repealed and re-enacted as the Lagos State Administration of Criminal Justice Law No 32 of 2011. This Law inspired the passing into law of the Administration of Criminal Justice Act 2014 (which is an improvement on the ACJL) and the Administration of Criminal Justice Laws of various States of the Federation including Ekiti State Law No. 2 of 2014. When States start exercising their powers in respect to hire-purchase transactions, other States can then learn from the practices of other States and attempt to put these practices in place in their States. They can thus enjoy similar results.
3.5. EASE IN CHANGING THE LAW TO ALIGN WITH CHANGING SITUATION: It is easier to amend laws at the level of the Houses of Assembly than it is to amend an Act of the National Assembly. The reason is quite clear: the former is made up of a single chamber while the latter is made up of two chambers. Thus, while just one legislative process is required to pass a law; the process is usually repeated twice in the two chambers of the National Assembly before an Act of the National Assembly is passed.[17] This slows down the rate at which Acts are passed by the National Assembly. A case in point is the Petroleum Industry Bill which has been before the National Assembly for upward of 14 years and has had to be unburdened to clear the way for the passage of the Petroleum Industry Governance Bill.
4.0. CONCLUSION
The foregoing would have gone to show that the Hire Purchase Act must be deemed to be Laws of the various States’ Houses of Assembly and subject to their legislative control ranging from amendment, repeal and re-enactment, etc. However, States must exercise these powers by amending the said Act to reflect their need and desires. Presumably, the Federal Republic of Nigeria as against the Federal Government of Nigeria[18] and/or the National Assembly may desire to challenge this exercise of legislative power as an affront on their powers. When this happens, the Supreme Court will be in a vintage position to settle the extent of the powers of the National Assembly vis-à-vis the Houses of Assembly in relation to hire-purchase transactions.
[1] The Author is a Barrister and Solicitor of the Supreme Court of Nigeria and practices at P O Bajowa Chambers and may be contacted on [email protected]
[2] Simply The Act.
[3] Section 20 of The Act.
[4] See generally Section 1 of The 1999 Constitution (as amended) (simply The Constitution and in particular Section 1(2) which provides inter alia that: The Federal Republic of Nigeria shall not be governed… except in accordance with the provisions of this Constitution.
[5] See Case for a new Constitution published in the back page column of The Nation Newspapers of Friday, June 22, 2018 by Segun Gbadegesin.
[6] Section 4(2-3) of The Constitution
[7] Section 4(4)(a) of The Constitution
[8] Section 4(4)(b) of The Constitution.
[9] Emphasis mine
[10] Section 4(5) of The Act. See also https://medium.com/@aolulaw17/state-pencoms-vis-à-vis-pencom-under-the-pension-reform-act-2014-and-the-1999-constitution-as-a3b8b2ebb211 on the application of the principle in respect to the regulation of Nigeria’s pension market.
[11] By Section 315(1) of The Constitution, The Act is an existing law and upon the coming into force of The Constitution, it will take effect either as an Act of the National Assembly to the extent that it is a law with respect to any matter over which the National Assembly is empowered by the Constitution to make laws or a Law made by a House of Assembly to the extent that it is a law with respect to any matter over which a House of Assembly is empowered by The Constitution to make laws.
[12] See Commercial Law in Nigeria, edited by Akanki (2007) at page 334.
[13] (2007) LPELR-870 (SC)
[14] See Section 320 of the 1999 Constitution (as amended) as well as Section 1(2) of The Constitution of the Federal Republic of Nigeria (Promulgation) Decree No. 24 of 1999.
[15] Section 18 of The Act and See Hire Purchase Regulations L.N. 91 of 1968 made thereunder.
[16] See page 341 of Akanki et al
[17] See in this light Sections 58(3) and 100(3) of the 1999 Constitution (as amended)
[18] See https://drive.google.com/file/d/1qkiDKHaYJqoxDX3Oicnv6zKgGpM_dJW2/view?usp=sharing